MBA Assignments


MB0050 –Research Methodology

Assignment Set- 1

Q1a. Differentiate between nominal, ordinal, interval and ratio scales, with an example of each.

Nominal scales:This, the crudest of measurement scales, classifies individuals, companies, products, brands or other entities into categories where no order is implied. Indeed it is often referred to as a categorical scale. It is a system of classification and does not place the entity along a continuum. It involves a simply count of the frequency of the cases assigned to the various categories, and if desired numbers can be nominally assigned to label each category as in the example below:

An example of a nominal scale

Which of the following food items do you tend to buy at least once per month? (Please tick)
Okra   Palm Oil   Milled Rice
Peppers   Prawns   Pasteurized milk

The numbers have no arithmetic properties and act only as labels. The only measure of average which can be used is the mode because this is simply a set of frequency counts. Hypothesis tests can be carried out on data collected in the nominal form. The most likely would be the Chi-square test. However, it should be noted that the Chi-square is a test to determine whether two or more variables are associated and the strength of that relationship. It can tell nothing about the form of that relationship, where it exists, i.e. it is not capable of establishing cause and effect.

Ordinal scales :Ordinal scales involve the ranking of individuals, attitudes or items along the continuum of the characteristic being scaled. For example, if a researcher asked farmers to rank 5 brands of pesticide in order of preference he/she might obtain responses like those in table 3.2 below.

An example of an ordinal scale used to determine farmers’ preferences among 5 brands of pesticide.

Order of preference












From such a table the researcher knows the order of preference but nothing about how much more one brand is preferred to another, that is there is no information about the interval between any two brands. All of the information a nominal scale would have given is available from an ordinal scale. In addition, positional statistics such as the median, quartile and percentile can be determined.

It is possible to test for order correlation with ranked data. The two main methods are Spearman’s Ranked Correlation Coefficient andKendall’s Coefficient of Concordance. Using either procedure one can, for example, ascertain the degree to which two or more survey respondents agree in their ranking of a set of items. Consider again the ranking of pesticides example in figure 3.2. The researcher might wish to measure similarities and differences in the rankings of pesticide brands according to whether the respondents’ farm enterprises were classified as “arable” or “mixed” (a combination of crops and livestock). The resultant coefficient takes a value in the range 0 to1. Azero would mean that there was no agreement between the two groups, and 1 would indicate total agreement. It is more likely that an answer somewhere between these two extremes would be found.

The only other permissible hypothesis testing procedures are the runs test and sign test. The runs test (also known as the Wald-Wolfowitz). Test is used to determine whether a sequence of binomial data – meaning it can take only one of two possible values e.g. African/non-African, yes/no, male/female – is random or contains systematic ‘runs’ of one or other value. Sign tests are employed when the objective is to determine whether there is a significant difference between matched pairs of data. The sign test tells the analyst if the number of positive differences in ranking is approximately equal to the number of negative rankings, in which case the distribution of rankings is random, i.e. apparent differences are not significant. The test takes into account only the direction of differences and ignores their magnitude and hence it is compatible with ordinal data.

Interval scales :It is only with an interval scaled data that researchers can justify the use of the arithmetic mean as the measure of average. The interval or cardinal scale has equal units of measurement, thus making it possible to interpret not only the order of scale scores but also the distance between them. However, it must be recognised that the zero point on an interval scale is arbitrary and is not a true zero. This of course has implications for the type of data manipulation and analysis we can carry out on data collected in this form. It is possible to add or subtract a constant to all of the scale values without affecting the form of the scale but one cannot multiply or divide the values. It can be said that two respondents with scale positions 1 and 2 are as far apart as two respondents with scale positions 4 and 5, but not that a person with score 10 feels twice as strongly as one with score 5. Temperature is interval scaled, being measured either in Centigrade or Fahrenheit. We cannot speak of50°F being twice as hot as25°F since the corresponding temperatures on the centigrade scale,10°C and -3.9°C, are not in the ratio 2:1.

Interval scales may be either numeric or semantic. Study the examples below in figure 3.3.

Examples of interval scales in numeric and semantic formats

Please indicate your views on Balkan Olives by scoring them on a scale of 5 down to 1 (i.e. 5 = Excellent; = Poor) on each of the criteria listed
Balkan Olives are:           Circle the appropriate score on each line
Succulence 5 4 3 2 1  
Fresh tasting 5 4 3 2 1  
Free of skin blemish 5 4 3 2 1  
Good value 5 4 3 2 1  
Attractively packaged 5 4 3 2 1  



Please indicate your views on Balkan Olives by ticking the appropriate responses below:

  Excellent Very Good Good Fair Poor
Freedom from skin blemish          
Value for money          
Attractiveness of packaging          


Most of the common statistical methods of analysis require only interval scales in order that they might be used. These are not recounted here because they are so common and can be found in virtually all basic texts on statistics.

Ratio scales :The highest level of measurement is a ratio scale. This has the properties of an interval scale together with a fixed origin or zero point. Examples of variables which are ratio scaled include weights, lengths and times. Ratio scales permit the researcher to compare both differences in scores and the relative magnitude of scores. For instance the difference between 5 and 10 minutes is the same as that between 10 and 15 minutes, and 10 minutes is twice as long as 5 minutes.

Given that sociological and management research seldom aspires beyond the interval level of measurement, it is not proposed that particular attention be given to this level of analysis. Suffice it to say that virtually all statistical operations can be performed on ratio scales.

Q1b. What are the purposes of measurement in social science research?

Ans: One of the primary purposes of classifying variables according to their level or scale of measurement is to facilitate the choice of a statistical test used to analyze the data. There are certain statistical analyses which are only meaningful for data which are measured at certain measurement scales. For example, it is generally inappropriate to compute the mean for Nominal variables. Suppose you had 20 subjects, 12 of which were male, and 8 of which were female. If you assigned males a value of ‘1’ and females a value of ‘2’, could you compute the mean sex of subjects in your sample? It is possible to compute a mean value, but how meaningful would that be? How would you interpret a mean sex of 1.4? When you are examining a Nominal variable such as sex, it is more appropriate to compute a statistic such as a percentage (60% of the sample was male).

When a research wishes to examine the relationship or association between two variables, there are also guidelines concerning which statistical tests are appropriate. For example, let’s say a University administrator was interested in the relationship between student gender (a Nominal variable) and major field of study (another Nominal variable). In this case, the most appropriate measure of association between gender and major would be a Chi-Square test. Let’s say our University administrator was interested in the relationship between undergraduate major and starting salary of students’ first job after graduation. In this case, salary is not a Nominal variable; it is a ratio level variable. The appropriate test of association between undergraduate major and salary would be a one-way Analysis of Variance (ANOVA), to see if the mean starting salary is related to undergraduate major.

Finally, suppose we were interested in the relationship between undergraduate grade point average and starting salary. In this case, both grade point average and starting salary are ratio level variables. Now, neither Chi-square nor ANOVA would be appropriate; instead, we would look at the relationship between these two variables using the Pearson correlation coefficient.

Q2a. What are the sources from which one may be able to identify research problems?

Ans: So how do researchers come up with the idea for a research project? Probably one of the most common sources of research ideas is the experience of practical problems in the field. Many researchers are directly engaged in social, health or human service program implementation and come up with their ideas based on what they see happening around them. Others aren’t directly involved in service contexts, but work with (or survey) people who are in order to learn what needs to be better understood. Many of the ideas would strike the outsider as silly or worse. For instance, in health services areas, there is great interest in the problem of back injuries among nursing staff. It’s not necessarily the thing that comes first to mind when we think about the health care field. But if you reflect on it for a minute longer, it should be obvious that nurses and nursing staff do an awful lot of lifting in performing their jobs. They lift and push heavy equipment, and they lift and push oftentimes heavy patients! If 5 or 10 out of every hundred nursing staff were to strain their backs on average over the period of one year, the costs would be enormous — and that’s pretty much what’s happening. Even minor injuries can result in increased absenteeism. Major ones can result in lost jobs and expensive medical bills. The nursing industry figures that this is a problem that costs tens of millions of dollars annually in increased health care. And, the health care industry has developed a number of approaches, many of them educational, to try to reduce the scope and cost of the problem. So, even though it might seem silly at first, many of these practical problems that arise in practice can lead to extensive research efforts.

Another source for research ideas is the literature in your specific field. Certainly, many researchers get ideas for research by reading the literature and thinking of ways to extend or refine previous research. Another type of literature that acts as a source of good research ideas is the Requests For Proposals (RFPs) that are published by government agencies and some companies. These RFPs describe some problem that the agency would like researchers to address — they are virtually handing the researcher an idea! Typically, the RFP describes the problem that needs addressing, the contexts in which it operates, the approach they would like you to take to investigate to address the problem, and the amount they would be willing to pay for such research. Clearly, there’s nothing like potential research funding to get researchers to focus on a particular research topic.

And let’s not forget the fact that many researchers simply think up their research topic on their own. Of course, no one lives in a vacuum, so we would expect that the ideas you come up with on your own are influenced by your background, culture, education and experiences.

Q2b. Why literature survey is important in research? 

Ans: Research is made in order to inform people with new knowledge or discovery.

However, it is not to be expected that everybody would willingly believe what you are tackling in your whole research paper. Thus, what you can do to make your research more credible will be to support them with other works which have spoken about the same topic that you have for your research. This is where literature review comes in.

You can even have literature sources in works such as stories, comments, project, speech, article, novel, poem, essay, program, theory, and others. This is why literature review involves scanning the pages of any published literature like books, newspaper, magazine, website, webpage, collection, paper, pamphlet, and the like where you may be able to find any reference to the same topic that you are researching on.

Q3a.What are the characteristics of a good research design?         

Ans: It reduces wastage of time and cost.

  1. It encourages co-ordination and effective organization.
  2. It is a tentative plan which undergoes modifications, as circumstances demand, when the study progresses, new aspects, new conditions and new relationships come to light and insight into the study deepens.
  3. It has to be geared to the availability of data and the cooperation of the informants.
  4. It has also to be kept within the manageable limits

Q3b. What are the components of a research design?                        

Ans: Components of a research design (Varkevisser, Pathmanathan & Brownlee, 2003)

The key components of research design apply to all types of qualitative, deductive research, whether in the physical or social sciences. These components include theory, hypothesis, choosing an experimental design and collecting data, analyzing data, reporting the results and refining the theory. Different types of research call for different experimental designs, such as laboratory tests for a biochemical research project, or a questionnaire or survey for marketing research.

Theory and Hypothesis

  • A theory is the over-reaching concept behind the research. In this first step, the researcher looks at previous research and literature about the problem at hand. An example of a theory would be a statement, such as “living with a partner is healthier than living alone.” An hypothesis is a testable statement based upon the theory. For example, an hypothesis could be “people living with partners have lower blood pressure than those living alone.”
  • After the hypothesis is defined, the researcher then decides how to collect data. Each type of experimental design has advantages and disadvantages. Questionnaires are cheap to distribute, but the sample returned will not be random. RD Info stresses the importance of a random sample. Random samples ensure that the results of the study are not skewed due to the makeup of the test group. Experimental designs suffer when conducted in an artificial environment. Drug tests involve many ethical issues, such as withholding a promising drug from a control group with a disease. The number of participants needed depends on the number of variables tested. Using the hypothesis above regarding couples and blood pressure, the variables tested would include blood pressure, the presence of a partner, age, marital status, general health, length of relationship, sex and income.
  • A statistical analysis will determine if the findings of the study support the hypothesis. A variety of statistical tests, such as T-tests (which measure if two groups are statistically different from each other), Chi-square tests (where data are compared to an expected outcome) and one-way analysis of variance (allows for the comparison of multiple groups), are conducted depending on the type of data, number and types of variables and data categories. Reporting of findings in scientific journals and other venues enables others to learn from and critique the research.
  • If the hypothesis about living with a partner can lead to lower blood pressure was found to be statistically significant for older adults but not for younger ones, the theory that led to the hypothesis would need to be revised to take the new finding into account. The original theory would be revised to state: “for older adults, living with a partner is healthier than living alone.” In this way, science builds upon and refines knowledge.

Data Collection and Research Design

Statistical Analysis and Reporting

Revision of the Theory

Q4a. Distinguish between Doubles sampling and multiphase sampling.  

Ans Double Sampling: Double and multiple sampling plans were invented to give a questionable lot another chance. For example, if in double sampling the results of the first sample are not conclusive with regard to accepting or rejecting, a second sample is taken. Application of double sampling requires that a first sample of size n1 is taken at random from the (large) lot. The number of defectives is then counted and compared to the first sample’s acceptance number a1 and rejection number r1. Denote the number of defectives in sample 1 by d1 and in sample 2 by d2, then:

If d1 a1, the lot is accepted.
If d1 r1, the lot is rejected.
If a1 < d1 < r1, a second sample is taken.

If a second sample of size n2 is taken, the number of defectives, d2, is counted. The total number of defectives is D2 = d1 + d2. Now this is compared to the acceptance number a2 and the rejection number r2 of sample 2. In double sampling, r2 = a2 + 1 to ensure a decision on the sample.

If D2 a2, the lot is accepted.
If D2 r2, the lot is rejected.


Multiphase Sampling: A sampling method in which certain items of information are drawn from the whole units of a sample and certain other items of information are taken from the subsample.

It is sometimes convenient and economical to collect certain items of information from the whole of the units of a sample and other items of usually more detailed information from a sub-sample of the units constituting the original sample. This may be termed two-phase sampling, e.g. if the collection of information concerning variate, y, is relatively expensive, and there exists some other variate, x, correlated with it, which is relatively cheap to investigate, it may be profitable to carry out sampling in two phases.

At the first phase, x is investigated, and the information thus obtained is used either (a) to stratify the population at the second phase, when y is investigated, or (b) as supplementary information at the second phase, a ratio or regression estimate being used.

Two-phase sampling is sometimes called “double sampling”.


Q4b. What is replicated or interpenetrating sampling?

Ans:  Interpenetrating Sampling: interpenetrating sampling (IPS), also known as interpenetrating sub sampling and replicated sampling. IPS was introduced in the pioneering contribution of P.C. Mahalanobis. It was originally proposed in assessing the non sampling errors as the so-called “interviewer errors”. IPS provides a quick, simple, and effective way of estimating the variance of an estimator even in a complex survey. In fact, IPS is the foundation of modern re-sampling methods like Jackknife, bootstrap, and replication methods. In IPS, three basic principles of experimental designs, namely, randomization, replication, and local control, are used. IPS is used extensively not only in agriculture, but also in social sciences, demography, epidemiology, public health, and many other fields.


Q5a. How is secondary data useful to researcher?

Ans: Secondary data is information gathered for purposes other than the completion of a research project. A variety of secondary information sources is available to the researcher gathering data on an industry, potential product applications and the market place. Secondary data is also used to gain initial insight into the research problem.

Secondary data is classified in terms of its source – either internal or external. Internal, or in-house data, is secondary information acquired within the organization where research is being carried out. External secondary data is obtained from outside sources.

The two major advantages of using secondary data in market research are time and cost savings.

  • The secondary research process can be completed rapidly – generally in 2 to 3 week. Substantial useful secondary data can be collected in a matter of days by a skillful analyst.
  • When secondary data is available, the researcher need only locate the source of the data and extract the required information.
  • Secondary research expenses are incurred by the originator of the information.

There are also a number of disadvantages of using secondary data. These include:

  • Secondary information pertinent to the research topic is either not available, or is only available in insufficient quantities.
  • Data may be in a different format or units than is required by the researcher.
  • Much secondary data is several years old and may not reflect the current market conditions. Trade journals and other publications often accept articles six months before appear in print. The research may have been done months or even years earlier.

Q5b. What are the criteria used for evaluation of secondary data?

Ans: ‘Secondary’ is used to refer to data that the evaluator was not responsible for directly collecting (as opposed to primary data which is generated by the evaluation itself). Usually, use of previously collected data to evaluate programmes is a use other than the original intent of the data.

In the context of data libraries and archives, ‘data’ usually means computer-readable data, since data held in this form is more easily made available for additional research and more easily interrogated. Examples include censuses and large surveys carried out by governments, and administrative data (see below). However, in the current context, ‘data’ is taken to include the whole range of information, since for evaluation purposes it is generally advisable to use as much existing information as possible. Information sources could also include reports and studies of the area under consideration, documents related to the life and management of the programme, information on similar programmes, and so on

The three main sources of secondary information relating to social and economic development programmes are:

  • Programme management documents;
  • Statistical sources;
  • Past evaluations and research.

The purpose of the technique

Secondary data is likely to provide a wealth of information for a range of purposes, depending on the circumstances for the evaluation. For example:

Programme management documents:

  • provide the ‘raw ingredients’ for making evaluative judgments, since they will contain information on planned and actual spending, activities, and outputs;
  • can be used to inform evaluation indicators;
  • record the details of the beneficiaries. This will be crucial if the evaluators plan to involve the beneficiaries directly in the evaluation through fieldwork to collect information to inform the conclusions.


Statistical sources:

  • provide information on the context for the programme;
  • can be used to assess needs (e.g. the rate of new business creation is far lower than the European average);
  • can be used to reveal apparent impacts (e.g. the number of new businesses created has doubled);
  • show whether the objectives remain relevant (e.g. the rate of business creation has now caught up with the European average).

Past evaluations and research:

Can play a major role in all stages of evaluation:

  • reference to specialised literature could help to suggest a relevant indicator;
  • previous studies can identify strengths and weaknesses of different methodologies, or specific tools (e.g. a tested observation grid, an explanatory model of impacts, an extrapolation coefficient, a reference for comparison);
  • can be used to make comparisons, for example the rate of return to work from a Job Training scheme in terms of occupational sectors, to see whether there are significant differences, or to better understand the factors of success.

Usually a number of sources are used in tandem, and often can be presented in a way as to suggest conclusions and compari

sons that can be made. For example, the comparison of observations from administrative data and statistical sources could be used to assess the differences between participants and the population as a whole. It is may also be possible to estimate impacts on the basis of secondary data and/or the modelling of the implementation of the programme

Q6. What are the differences between observation and interviewing as   methods of data collection? Give two specific examples of situations where either observation or interviewing would be more appropriate

Ans: Observation means viewing or seeing. Observation may be defined as a systematic viewing of a specific phenomenon in its proper setting for the specific purpose of gathering data for a particular study. Observation is classical method of scientific study.

Observation as a method of data collection has certain characteristics.

1. It is both a physical and a mental activity: The observing eye catches many things that are present. But attention is focused on data that are pertinent to the given study.

2. Observation is selective: A researcher does not observe anything and everything, but selects the range of things to be observed on the basis of the nature, scope and objectives of his study. For example, suppose a researcher desires to study the causes of city road accidents and also formulated a tentative hypothesis that accidents are caused by violation of traffic rules and over speeding. When he observed the movements of vehicles on the road, many things are before his eyes; the type, make, size and colour of the vehicles, the persons sitting in them, their hair style, etc. All such things which are not relevant to his study are ignored and only over speeding and traffic violations are keenly observed by him.

3. Observation is purposive and not casual: It is made for the specific purpose of noting things relevant to the study. It captures the natural social context in which persons behaviour occur. It grasps the significant events and occurrences that affect social relations of the participants.

4. Observation should be exact and be based on standardized tools of research and such as observation schedule, social metric scale etc., and precision instruments, if any.

Interviewing is one of the prominent methods of data collection. It may be defined as a two way systematic conversation between an investigator and an informant, initiated for obtaining information relevant to a specific study. It involves not only conversation, but also learning from the respondent’s gesture, facial expressions and pauses, and his environment. Interviewing requires face to face contact or contact over telephone and calls for interviewing skills. It is done by using a structured schedule or an unstructured guide. Interviewing may be used either as a main method or as a supplementary one in studies of persons. Interviewing is the only suitable method for gathering information from illiterate or less educated respondents. It is useful for collecting a wide range of data from factual demographic data to highly personal and intimate information relating to a person’s opinions, attitudes, values, beliefs past experience and future intentions. When qualitative information is required or probing is necessary to draw out fully, and then interviewing is required. Where the area covered for the survey is a compact, or when a sufficient number of qualified interviewers are available, personal interview is feasible

Interview is often superior to other data-gathering methods. People are usually more willing to talk than to write. Once report is established, even confidential information may be obtained. It permits probing into the context and reasons for answers to questions. Interview can add flesh to statistical information. It enables the investigator to grasp the behavioral context of the data furnished by the respondents.

Observation is suitable for a variety of research purposes. It may be used for studying
(a) The behavior of human beings in purchasing goods and services.: life style, customs, and manner, interpersonal relations, group dynamics, crowd behavior, leadership styles, managerial style, other behaviors and actions;
(b) The behavior of other living creatures like birds, animals etc.
(c) Physical characteristics of inanimate things like stores, factories, residences etc.
(d) Flow of traffic and parking problems
(e) movement of materials and products through a plant.

MB0050 –Research Methodology

Assignment Set- 2


Q1a. Explain the General characteristics of observation.

Ans: Observation as a method of data collection has certain characteristics.

1. It is both a physical and a mental activity: The observing eye catches many things that are present. But attention is focused on data that are pertinent to the given study.

2. Observation is selective: A researcher does not observe anything and everything, but selects the range of things to be observed on the basis of the nature, scope and objectives of his study. For example, suppose a researcher desires to study the causes of city road accidents and also formulated a tentative hypothesis that accidents are caused by violation of traffic rules and over speeding. When he observed the movements of vehicles on the road, many things are before his eyes; the type, make, size and colour of the vehicles, the persons sitting in them, their hair style, etc. All such things which are not relevant to his study are ignored and only over speeding and traffic violations are keenly observed by him.

3. Observation is purposive and not casual: It is made for the specific purpose of noting things relevant to the study. It captures the natural social context in which persons behaviour occur. It grasps the significant events and occurrences that affect social relations of the participants.

4. Observation should be exact and be based on standardized tools of research and such as observation schedule, social metric scale etc., and precision instruments, if any.

Q1.b.  What is the Utility of Observation in Business Research?

 Ans: Observation is suitable for a variety of research purposes. It may be used for studying (a) The behaviour of human beings in purchasing goods and services.: life style, customs, and manner, interpersonal relations, group dynamics, crowd behaviour, leadership styles, managerial style, other behaviours and actions; (b) The behaviour of other living creatures like birds, animals etc. (c) Physical characteristics of inanimate things like stores, factories, residences etc. (d) Flow of traffic and parking problems (e) movement of materials and products through a plant.

Q2a. Briefly explain Interviewing techniques in Business Research?

Ans: The interview process consists of the following stages:

· Preparation

· Introduction

· Developing rapport

· Carrying the interview forward

· Recording the interview

· Closing the interview



Preparation :The interviewing requires some preplanning and preparation. The interviewer should keep the copies of interview schedule/guide (as the case may be) ready to use. He should have the list of names and addresses of respondents, he should regroup them into contiguous groups in terms of location in order to save time and cost in traveling. The interviewer should find out the general daily routine of the respondents in order to determine the suitable timings for interview. Above all, he should mentally prepare himself for the interview. He should think about how he should approach a respondent, what mode of introduction he could adopt, what situations he may have to face and how he could deal with them. The interviewer may come across such situations as respondents; avoidance, reluctance, suspicion, diffidence, inadequate responses, distortion, etc. The investigator should plan the strategies for dealing with them. If such preplanning is not done, he will be caught unaware and fail to deal appropriately when he actually faces any such situation. It is possible to plan in advance and keep the plan and mind flexible and expectant of new development.

Introduction: he investigator is a stranger to the respondents. Therefore, he should be properly introduced to each of the respondents. What is the proper mode of introduction? There is no one appropriate universal mode of introduction. Mode varies according to the type of respondents. When making a study of an organization or institution, the head of the organization should be approached first and his cooperation secured before contacting the sample inmates/employees. When studying a community or a cultural group, it is essential to approach the leader first and to enlist cooperation. For a survey or urban households, the research organization’s letter of introduction and the interviewer’s identity card can be shown. In these days of fear of opening the door for a stranger, residents cooperation can be easily secured, if the interviewer attempts to get him introduced through a person known to them, say a popular person in the area e.g., a social worker. For interviewing rural respondents, the interviewer should never attempt to approach them along with someone from the revenue department, for they would immediately hide themselves, presuming that they are being contacted for collection of land revenue or subscription to some government bond. He should not also approach them through a local political leader, because persons who do not belong to his party will not cooperate with the interviewer. It is rather desirable to approach the rural respondents through the local teacher or social worker.

After getting himself introduced to the respondent in the most appropriate manner, the interviewer can follow a sequence of procedures as under, in order to motivate the respondent to permit the interview:

1. With a smile, greet the respondent in accordance with his cultural pattern.

2. Identify the respondent by name.

3. Describe the method by which the respondent was selected.

4. Mention the name of the organization conducting the research.

5. Assure the anonymity or confidential nature of the interview.

6. Explain their usefulness of the study.

7. Emphasize the value of respondent’s cooperation, making such statements as “You are among the few in a position to supply the information”. “Your response is invaluable.” “I have come to learn from your experience and knowledge”.

Developing Rapport : Before starting the research interview, the interviewer should establish a friendly relationship with the respondent. This is described as “rapport”. It means establishing a relationship of confidence and understanding between the interviewer and the respondent. It is a skill which depends primarily on the interviewer’s commonsense, experience, sensitivity, and keen observation.

Start the conversation with a general topic of interest such as weather, current news, sports event, or the like perceiving the probable of the respondent from his context. Such initial conversation may create a friendly atmosphere and a warm interpersonal relationship and mutual understanding. However, the interviewer should “guard against the over rapport” as cautioned by Herbert Hyman. Too much identification and too much courtesy result in tailoring replied to the image of a “nice interviewer.” The interviewer should use his discretion in striking a happy medium.


Carrying the Interview Forward: After establishing rapport, the technical task of asking questions from the interview schedule starts. This task requires care, self-restraint, alertness and ability to listen with understanding, respect and curiosity. In carrying on this task of gathering information from the respondent by putting questions to him, the following guidelines may be followed:

1. Start the interview. Carry it on in an informal and natural conversational style.

2. Ask all the applicable questions in the same order as they appear on the schedule without any elucidation and change in the wording. Ask all the applicable questions listed in the schedule. Do not take answers for granted.

3. If interview guide is used, the interviewer may tailor his questions to each respondent, covering of course, the areas to be investigated.

4. Know the objectives of each question so as to make sure that the answers adequately satisfy the question objectives.

5. If a question is not understood, repeat it slowly with proper emphasis and appropriate explanation, when necessary.

6. Talk all answers naturally, never showing disapproval or surprise. When the respondent does not meet the interruptions, denial, contradiction and other harassment, he may feel free and may not try to withhold information. He will be motivated to communicate when the atmosphere is permissive and the listener’s attitude is non judgmental and is genuinely absorbed in the revelations.

7. Listen quietly with patience and humility. Give not only undivided attention, but also personal warmth. At the same time, be alert and analytic to incomplete, non specific and inconsistent answers, but avoid interrupting the flow of information. If necessary, jot down unobtrusively the points which need elaboration or verification for later and timelier probing. The appropriate technique for this probing is to ask for further clarification in such a polite manner as “I am not sure, I understood fully, is this….what you meant?”

8. Neither argue nor dispute.

Additional Sittings: In the case of qualitative interviews involving longer duration, one single sitting will not do, as it would cause interview weariness. Hence, it is desirable to have two or more sittings with the consent of the respondent.

Recording the Interview : It is essential to record responses as they take place. If the note taking is done after the interview, a good deal of relevant information may be lost. Nothing should be made in the schedule under respective question. It should be complete and verbatim. The responses should not be summarized or paraphrased. How can complete recording be made without interrupting the free flow of conversation? Electronic transcription through devices like tape recorder can achieve this. It has obvious advantages over note-taking during the interview. But it also has certain disadvantages. Some respondents may object to or fear “going on record”. Consequently the risk of lower response rate will rise especially for sensitive topics.

If the interviewer knows short-hand, he can use it with advantage. Otherwise, he can write rapidly by abbreviating word and using only key words and the like. However, even the fast writer may fail to record all that is said at conversational speed. At such times, it is useful to interrupt by some such comment as “that seems to be a very important point, would you mind repeating it, so that I can get your words exactly.” The respondent is usually flattered by this attention and the rapport is not disturbed.

The interviewer should also record all his probes and other comments on the schedule, in brackets to set them off from responses. With the pre-coded structured questions, the interviewer’s task is easy. He has to simply ring the appropriate code or tick the appropriate box, as the case may be. He should not make mistakes by carelessly ringing or ticketing a wrong item.

Closing the Interview: After the interview is over, take leave off the respondent thanking him with a friendly smile. In the case of a qualitative interview of longer duration, select the occasion for departure more carefully. Assembling the papers for putting them in the folder at the time of asking the final question sets the stage for a final handshake, a thank-you and a good-bye. If the respondent desires to know the result of the survey, note down his name and address so that a summary of the result could be posted to him when ready.

Q2b. What are the problems encountered in Interview?

Ans: There are many objective studies that prove that the hiring decision is made subconsciously within the first 4 to 20 seconds of meeting a candidate.  Consider that the majority of that decision is made based upon the visual impact of the candidate.  One headhunter used this factor very effectively by requiring that all of his clients wear a blue suit, white shirt and red tie to the interviews he set up and he had one of the highest placement rates in the industry!  I hope that you seriously consider what you have just read.  The implications are a real eye opener!  We are not talking about hiring the best actor, we are talking solely about the power of visual impact.

Research tells us that we will make most of our hiring assumptions before the candidate even opens his mouth!  We will even judge factors like intelligence based on appearance.  If the candidate is lean and wiry, wearing gold rim glasses, we will assume that he is intelligent and energetic.  If the candidate has a large frame (not necessarily fat) we will assume that he is lower in intelligence, a bit awkward and somewhat on the lazy side.

The real danger here is that these are subconscious determinations that have been made without any rational process.  Since we are not actually aware of this, we are at a great disadvantage in trying to remain objective.  All of the questions asked from this point onward will be asked in a manner that will only confirm our previously made subconscious decision.  The whole process is biased from the very beginning.  That is one of the main reasons that companies use personality assessments, to add objectivity to the selection process.  Personality assessments are not at all influenced by warm and fuzzy feelings nor are they bedazzled by visual sensory perception.

Q3a. What are the various steps in processing of data?

Ans: Data is an integral part of all business processes. It is the invisible backbone that supports all the operations and activities within a business. Without access to relevant data, businesses would get completely paralyzed. This is because quality data helps formulate effective business strategies and fruitful business decisions.

Here are the 5 steps that are included in data processing:

There is a big difference between data and useful data. While there are huge volumes of data available on the internet, useful data has to be extracted from the huge volumes of the same. Extracting relevant data is one of the core procedures of data processing. When data has been accumulated from various sources, it is edited in order to discard the inappropriate data and retain relevant data.

Even after the editing process, the available data is not in any specific order. To make it more sensible and usable for further use, it needs to be aligned into a particular system. The method of coding ensures just that and arranges data in a comprehendible format. The process is also known as netting or bucketing.

Data Entry
After the data has been properly arranged and coded, it is entered into the software that performs the eventual cross tabulation. Data entry professionals do the task efficiently.

After the cleansing phase, comes the validation process. Data validation refers to the process of thoroughly checking the collected data to ensure optimal quality levels. All the accumulated data is double checked in order to ensure that it contains no inconsistencies and is utterly relevant.

This is the final step in data processing. The final product i.e. the data is tabulated and arranged in a systematic format so that it can be further analyzed.


Q3b. How is data editing is done at the Time of Recording of Data?

Ans: Editing: Editing is a processing of checking to detect and correct errors and omissions. Data editing happens at two stages, one at time of recording  of the data and second at the time of analysis of data.

Data editing is done at the Time of Recording of Data :

Document editing  and testing of the data  at the time of recording of data is done considering the following questions in mind.

Do the filters agrees or are the inconsistent?

Have ‘missing values’ been set to values, which are the same for all research question?

Have variable descriptions been specified?

Have labels for variables names and value labels been defined and written?

All editing and cleaning steps are documented, so that, the redefinition of variables or later analytical modification requirements could be easily incorporated into the data sets.

Q4a.What are the fundamental of frequency Distribution?         

Ans: The fundamental frequency, often referred to simply as the fundamental and abbreviated f0 or F0, is defined as the lowest frequency of a periodic waveform. In terms of a superposition of sinusoids (e.g. Fourier series), the fundamental frequency is the lowest frequency sinusoidal in the sum.

All sinusoidal and many non-sinusoidal waveforms are periodic, which is to say they repeat exactly over time. A single period is thus the smallest repeating unit of a signal, and one period describes the signal completely. We can show a waveform is periodic by finding some period T for which the following equation is true:
x(t) = x(t + T) = x(t + 2T) = x(t + 3T) = …

Where x(t) is the function of the waveform.

This means that for multiples of some period T the value of the signal is always the same. The lowest value of T for which this is true is called the fundamental period (T0) and thus the fundamental frequency (F0) is given by the following equation:


Where F0 is the fundamental frequency and T0 is the fundamental period.

The fundamental frequency of a sound wave in a tube with a single CLOSED end can be found using the following equation:


L can be found using the following equation:


λ (lambda) can be found using the following equation:


The fundamental frequency of a sound wave in a tube with either both ends OPEN or both ends CLOSED can be found using the following equation:


L can be found using the following equation:


The wavelength, which is the distance in the medium between the beginning and end of a cycle, is found using the following equation:



F0 = fundamental Frequency
L = length of the tube
v = velocity of the sound wave
λ = wavelength

At 20 °C(68 °F) the speed of sound in air is 343 m/s (1129 ft/s). This speed is temperature dependent and does increase at a rate of 0.6 m/s for each degree Celsius increase in temperature (1.1 ft/s for every increase of1 °F).

The velocity of a sound wave at different temperatures:-

  • v = 343.2 m/s at20 °C
  • v = 331.3 m/s at0 °C

Q4b. What are the types and general rules for graphical representation of data?

Ans: Let us see about graphical representation of data tutoring. The data are specified to use the statistical data graphs. The data are using five types of graphs for the graphical representation. The graphical representation of data makes reading more interesting, less time-consuming and it is easily understandable. The business data, frequency data are mostly using graphical representation.

The graphical representation of data is categorized as basic five types.

Graphical representation 1: Bar graph.

Graphical representation 2: Pie graph.

Graphical representation 3: Line graph.

Graphical representation 4: Scatter plot.

Graphical representation 5: Histogram.

Examples of graphical representation of data:

Let us see some examples of graphical representation of data.

Example 1:

Represent the data by using bar graph.





Cricket 45 67
Volley ball 25 34
Basket ball 16 29
Throw ball 72 24
Hockey 34 64
Chess 49 28
Carom 55 37
Soft ball 61 46
Ring ball 46 12


The bar graph represents the matches in x-axis and the winners in y-axis.


This is the graphical representation of given data.

Example 2:

Represent the data by using pie graph.



Sleep 6
School 5
Job 4
Entertainment 4
Meals 2
Home work 1


The pie graph represents the activities and the spending hours.


This is the graphical representation of given data.

Example 3:

Represent the data by using line graph.


No. of patient

Jan 15%
Feb 28%
March 36%
April 12%
May 22%
June 48%
July 64%
Aug 76%
Sep 17%
Oct 58%
Nov 49%
Dec 27%


The line graph represents the months in x-axis and the number of patients in y-axis.


This is the graphical representation of given data.

Q5. Strictly speaking, would case studies be considered as scientific research? Why or why not?

Ans: Earlier (in the early to mid 20th century) research”with an n of one” (meaning one subject in the test) was common. Then social science got into numbers and percentages and such, and the case study fell away as not useful enough  to learn from.

However, especially in the “soft” sciences (psychology, sociology, anthropology, ethology, etc.) that have to do with people rather than formulas or numbers or the like, case studies can be helpful and important, especially if they are well-constructed, or longitudinal, or are in depth on their topic.

Q6a. Analyse the case study and descriptive approach to research.  

Ans: A case study is an intensive analysis of an individual unit (e.g., a person, group, or event) stressing developmental factors in relation to context.[1] The case study is common in social sciences and life sciences. Case studies may be descriptive or explanatory. The latter type is used to explore causation in order to find underlying principles.[2][3] They may be prospective, in which criteria are established and cases fitting the criteria are included as they become available, or retrospective, in which criteria are established for selecting cases from historical records for inclusion in the study.

Thomas[4] offers the following definition of case study: “Case studies are analyses of persons, events, decisions, periods, projects, policies, institutions, or other systems that are studied holistically by one or more methods. The case that is the subject of the inquiry will be an instance of a class of phenomena that provides an analytical frame — an object — within which the study is conducted and which the case illuminates and explicates.”

Descriptive research, also known as statistical research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how

Although the data description is factual, accurate and systematic, the research cannot describe what caused a situation. Thus, Descriptive research cannot be used to create a causal relationship, where one variable affects another. In other words, descriptive research can be said to have a low requirement for internal validity.

The description is used for frequencies, averages and other statistical calculations. Often the best approach, prior to writing descriptive research, is to conduct a survey investigation. Qualitative research often has the aim of description and researchers may follow-up with examinations of why the observations exist and what the implications of the findings are.

In short descriptive research deals with everything that can be counted and studied. But there are always restrictions to that. Your research must have an impact to the lives of the people around you. For example, finding the most frequent disease that affects the children of a town. The reader of the research will know what to do to prevent that disease thus, more people will live a healthy life.

Q6b. Distinguish between research methods & research Methodology

Ans: Method is a particular way of solving a specific problem. it is therefore unlikely that your research will just have ‘a method’ as the whole research will probably draw on different ways (methods) of proving/solving discrete aspects of the research.

Methodology, therefore, means the collection of methods you used in a particular piece of research.

However, N.B.! The term methodology is confusing, because it can often be used to refer to the underlying ‘methodology’ (or ideology/principles/set of beliefs) which led you to opt for one set of methods rather than another. E.g. if you believe that number crunching does not come up with worthwhile results, you will go for in depths interviews etc. that is part of your ‘methodology’ and it’s based on your assumptions/mindset.


MBA Semester III

MB0051 – Legal Aspects of Business

Assignment Set- 1


Q.1  Distinguish between fraud and misrepresentation.

Ans: Fraud Defined

1.Deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage.

2. Aparticular instance of such deceit or trickery: mail fraud; election frauds.

3. Any deception, trickery, or humbug: That diet book is a fraud and a waste of time.

4. Aperson who makes deceitful pretenses; sham; poseur.

Misinterpretation Defined
A misrepresentation or concealment with reference to some fact material to a transaction that is made with knowledge of its falsity or in reckless disregard of its truth or falsity and with the intent to deceive another and that is reasonably relied on by the other who is injured thereby.

Difference between fraud and Misinterpretation
1. Fraud is always done Intentionally, Misinterpretation can be preformed Intentionally or Negligently.
2. Fraud always have malicious intent, Misinterpretation may not have malicious intent to deceive if it happens negligently through a misstatement and/or omission of a material fact(s)

Q.2 What are the remedies for breach of contract?

Ans: Many states utilize a mix of statutory and common law to provide remedies for breach of contract. Depending on the contract and circumstances of the breach, you may have several basic choices of remedies. There are two general categories of relief for breach of contract: damages and performance. Damages involve seeking monetary compensation for a breach of contract. Performance involves forcing the other side to do what they originally promised in the contract agreement. An attorney that specializes in contract law can help you decide which direction is best for your breach of contract dispute.

Monetary Damages for Breach of Contract

Before you file a breach of contract lawsuit, you should know which type of remedy you are seeking. Many people simply want monetary compensation for the grief caused by the other party’s breach of contract. Types of damages for breach of contract include:

  • Compensatory Damages – money to reimburse you for costs to compensate for your loss
  • Consequential and Incidental Damages – money for losses caused by the breach that were foreseeable (foreseeable damages are when each side reasonably knew that–at the time of the contract–there would be potential losses if there was a breach
  • Attorney Fees and Costs – only recoverable if expressly provided for in the contract
  • Liquidated Damages – damages specified in the contract that would be payable if there is a fraud
  • Punitive Damages – money given to punish a person who acted in an offensive and egregious manner in an effort to deter that person and others from continuing to act in this way. You generally cannot collect punitive damages in contract cases.

The controlling law, the conduct of the violating party, and the extent of harm you suffered can influence which of these damages for breach of contract will be awarded in your situation. The more egregious and intentional the behavior, the greater the chance you have of being awarded larger, punitive damages. If the breach was unintended and arose from negligent behavior, you will probably receive compensatory or consequential damages.


Requesting Performance of the Contract

Sometimes money just cannot fix the problem. Instead of asking for damages, you can also seek actual performance or modification of performance of the original contract. Performance remedies for breach of contract include:

  • Specific Performance – a court order requiring performance exactly as specified in the contract; this remedy is rare, except in real estate transactions and other unique property, as the courts do not want to get involved with monitoring performance
  • Rescission – the contract is canceled and both sides are excused from further performance and any money advanced is returned
  • Reformation – the terms of the contract are changed to reflect what the parties actually intended

Pursuing Appropriate Remedies for Breach of Contract

Some of these remedies for breach of contract may be limited by the contract. Before you file a lawsuit, you should review your contract for any limitations or notice requirements contained within your contract so that you do not accidentally waive any contractual remedies. Enforcing a contract with a lawsuit can be expensive. Before you make a final decision on which remedy you want to pursue and how you intend to obtain it, you should consider the cost-effectiveness of full litigation. Instead of jumping into a lawsuit, it may make more sense for the parties to agree on a form of alternative dispute resolution such as direct negotiation, mediation, or arbitration. These avenues for obtaining a remedy may be more cost effective than simply filing a lawsuit and letting the court settle the dispute. Many communities now offer mediation and arbitration services for a nominal fee.

If the breach of contract dispute involves a significant amount of damages, a wise option would be to retain an experienced contract attorney to help you propose settlement terms and to review any proposed settlements in advance. They can also help you draft pleadings so that you do not omit requests for certain remedies which you are entitled to by law or by contract. Even if you do not use an attorney to file a lawsuit, you may want to consult with an attorney to help you draft and finalize settlement documents. If your settlement does not include the particular remedy for breach of contract that you were seeking, you can accidentally forfeit your right to those remedies or damages.

Q3. Distinguish between indemnity and guarantee

Ans: ndemnity vs Guarantee

Indemnity and guarantee are two important ways to safeguard ones interests when entering into a contract. There are many similarities between the two concepts though they differ a lot also. This article will highlight the differences between Indemnity and guarantee to enable readers to choose one of the two depending upon circumstances and requirements.


When you agree to an indemnity agreement, you agree to assume all responsibility and liability for any injuries or damages to someone else. Whenever there is an indemnity contract and one party suffers any losses, the other has the liability to indemnify for the consequences. The common phrases that are included in indemnity contracts say that the person agrees to indemnify and hold harmless or to defend, indemnify and hold harmless. If there is a clause or obligation to defend, you should also get a clause included requiring the person who is being indemnified to tender the defense to you. At least you should get the clause of right to control defense. In the absence of these provisions, the party that you are indemnifying can cost you dearly by raking up huge attorney fees and other sundry expenses. But if you are controlling the defense, you can have a say in the selection of attorney thereby minimizing litigation costs.

In general indemnity agreement covers damages, loss, costs, expenses and fees of attorneys. If there is no mention of attorney fees, the court may not require the person promising to indemnify to pay attorney fees.


In sharp contrast to an indemnity, a guarantee is a promise to answer for debt, default or other financial liability of another. You promise to pay for any damages or default in the event of the principal person refusing to do so or when he cannot do so. If you are a guarantor, once you have paid the principal obligation, your obligation is terminated. Guarantee clause is not the main agreement and is generally collateral to some other obligation or debt. You are held accountable or liable for this debt or obligation after you have fulfilled your obligation as a guarantor. It is therefore prudent to study all clauses or underlying contract before signing any guarantee contract.

Difference between Indemnity and Guarantee

• A guarantee is a promise to someone that a third party will meet its obligation to them. “If they do not pay you, I will pay you”.

• An indemnity is a promise to be responsible for another person’s loss and to agree to compensate them for any loss or damage on mutually agreed terms. For example, one agrees to pay the difference of repairs if they exceed a certain limit.

Q.4 What is the distinction between cheque and bill of exchange.

Ans: What is the difference between bill of exchange and cheque/check?


Bill of Exchange

  • It is drawn on a banker
  • It may be drawn on any party or individual.
  • It has three parties – the drawer, the drawee, and payee.
  • There are three parties – the drawer, the drawee, and the payee.
  • It is seldom drawn in sets
  • Foreign bills are drawn in sets
  • It does not require acceptance by the drawee.
  • It must be accepted by the drawee before he can be made liable to pay the bill.
  • Days of grace are not allowed to a banker
  • Three days of grace are always allowed to the drawee.
  • No stamp duty is payable on checks
  • Stamp duty has to be paid on bill of exchange.
  • It is usually drawn on the printed f
  • It may be drawn in any paper and need not necessarily be printed.

Q.5 Distinguish between companies limited by shares and companies limited by guarantee

Ans: A company limited by guarantee is a lesser known type of business entity which is generally formed by non-profit purposes and has members instead of shareholders.

There are both some similarities and differences between the two groups.

Members and shareholders enjoy limited liability, however in cases where a share based company is liquidated; the latter might be required to pay all amounts of unpaid monies relating to the shares they hold.

For example, if an individual shareholder holds 100 shares of £1 each, all of which remains unpaid at the time of dissolution, then they would be required to pay £100 to the company.

Most companies limited by guarantee have a constitution which states that each member is only required to pay £1 should it be dissolved.

Assuming that an average shareholder holds more than one share in a company, members in a business limited by guarantee do appear to have less risk attached to their positions.

Profit Making Status

Perhaps the most fundamental difference between the two types of limited companies is that those with shares generally exist for profit making purposes.

Companies limited by guarantee however, are non-profit making organisations and are usually registered to provide a specified service to the public or a particular segment of the population.

The memorandum and articles of association of each would also differ as companies limited by shares usually have very general objects clauses which allow them to pursue any legal trade or activity.

Objects of companies limited by guarantee

Companies limited by guarantee however, often have very specific objects and detailed rules pertaining to which areas they can engage in.

Charities, which are often of this type, might have restrictions imposed on them by their major donors who wish to ensure that their donations will be spent according to their wishes and not in a manner which they would not approve.

By having a defined set of objects, companies limited by guarantee which are seeking to raise funds might find it easier to do so because they would be able to demonstrate that sufficient restrictions exist to protect the donor’s intentions.

Removing the Word Limited

Companies limited by guarantee can have the word “limited” removed from their name under section 30 of the Companies Act.

Company directors, secretary and declarant

Both types of companies are bound by the same requirements to have at least one director, a secretary and a declarant at the time of incorporation and throughout any period of its existence.

When forming a company limited by guarantee, members are listed in the same manner in which shareholders would be, even though no allotments are made to them.

Q.6  What is the definition of cyber crime.

Ans: Cyber crime is criminal activity done using computers and the Internet. This includes anything from downloading illegal music files to stealing millions of dollars from online bank accounts. Cyber crime also includes non-monetary offenses, such as creating and distributing viruses on other computers or posting confidential business information on the Internet.

Perhaps the most prominent form of cyber crime is identity theft, in which criminals use the Internet to steal personal information from other users. Two of the most common ways this is done is through phishing and pharming. Both of these methods lure users to fake websites (that appear to be legitimate), where they are asked to enter personal information. This includes login information, such as usernames and passwords, phone numbers, addresses, credit card numbers, bank account numbers, and other information criminals can use to “steal” another person’s identity. For this reason, it is smart to always check the URL or Web address of a site to make sure it is legitimate before entering your personal information.

Because cyber crime covers such a broad scope of criminal activity, the examples above are only a few of the thousands of crimes that are considered cyber crimes. While computers and the Internet have made our lives easier in many ways, it is unfortunate that people also use these technologies to take advantage of others. Therefore, it is smart to protect yourself by using antivirus and spy ware blocking software and being careful where you enter your personal information.

MBA Semester III

MB0051 – Legal Aspects of Business

Assignment Set- 2

Q.1 What are the situations which cannot be referred to arbitration?

Ans. Arbitration law is a process that involves the assistance of one or more neutral parties known as arbitrators. Arbitrators are charged with hearing evidence from numerous involved parties in a dispute, and their main duty is to issue an award deciding who gets what in order to resolve the situation. In some instances of arbitration law, an arbitrator may also issue an opinion in conjunction with the award, which is designed to explain the award and the reasoning that led to it. Arbitration law and mediation law are two different processes and should not be confused.The award and the opinion are not capable of being reviewed by a court, and there is no availability for appeal. The purpose of arbitration law is to serve as a substitution to a trial and a review of the decision by a trial court.

Subject matter of arbitration:

Any commercial matter including an action in tort if it arises out of or relates to a contract can be referred to arbitration. However, public policy would not permit matrimonial matters, criminal proceedings, insolvency matters anti-competition matters or commercial court matters to be referred to arbitration. Employment contracts also cannot be referred to arbitration but director – company disputes are abatable (as there is no master servant relationship here)5.Generally, matters covered by statutory relief through statutory tribunals would be non-abatable. Arbitration is an Alternative Dispute Resolution process whereby a person chosen as an arbitrator settles disputes between parties. Arbitration is similar to a court trial, with several exceptions:

The arbitrator makes the decision called an “arbitration award”

The arbitration does not take place in a courtroom

The arbitration award is binding. With rare exceptions, there is no right to appeal

Arbitration is not a matter of public record. It is private and confidential

There is no court reporter or written transcripts

Lawyers generally prepare their cases in an extremely limited manner

The rules of evidence are relaxed so that the parties have a broader scope, more expanded opportunity to tell their stories to present their cases

With very few exceptions, it is much less expensive than legal litigation

An arbitration time frame is substantially less than that of litigation and going to trial

No jury. The Arbitrator(s) maintain neutrality and conflicts of interests

Generally, all paperwork and evidence presented are destroyed after the Arbitration

The arbitration and arbitration award does not have to adhere to Judicial Case precedent nor formality of traditional court proceedings

InIndia, Arbitration is one of the most effective and trusted proceedings in regard to private dispute settlement are guided by the Arbitration & Conciliation Act, 1996.

Kind of matters cannot be referred for arbitration:

As per general practice, matters involving moral questions or questions of public law cannot be resolved by arbitration. For instance, the following matters are not referred to arbitration:


Matrimonial matters

Guardianship of a minor or any other person under disability

Testamentary matters

Insolvency, proceedings

Criminal proceedings

Questions relating to charity or charitable trusts

Matters relating to anti-trust or competition law

Dissolution or winding up of a company

Indian Arbitration Act follows the guideline of:

The Geneva Convention on the Execution of Foreign Arbitral Awards, 1927

The New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards

The Geneva Protocol on Arbitration Clauses of 1923


Q2. What is the role of a Conciliator?

Ans: Conciliation:

Conciliation is a process in which the parties to a dispute, with the assistance of a neutral third party (the conciliator), identify the disputed issues, develop options, consider alternatives and endeavor to reach an agreement. The conciliator may have an advisory role on the content of the dispute or the outcome of its resolution, but not a determinative role. The conciliator may advise on or determine the process of conciliation whereby resolution is attempted, and may make suggestions for terms of settlement, give expert advice on likely settlement terms, and may actively encourage the participants to reach an agreement. In order to understand what Parliament meant by ‘Conciliation’, we have necessarily to refer to the functions of a ‘Conciliator’ as visualized by Part III of the 1996 Act. It is true, section 62 of the said Act deals with reference to ‘Conciliation’ by agreement of parties but sec. 89 permits the Court to refer a dispute for conciliation even where parties do not consent, provided the Court thinks that the case is one fit for conciliation. This makes no difference as to the meaning of ‘conciliation’ under sec. 89 because; it says that once a reference is made to a ‘conciliator’, the 1996 Act would apply. Thus the meaning of ‘conciliation’ as can be gathered from the 1996Act has to be read into sec. 89 of the Code of Civil Procedure. The 1996 Act is, it may be noted, based on the UNCITRAL Rules for conciliation.


Role of conciliator:

The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute.

The conciliator shall be guided by principles of objectivity, fairness and justice, giving consideration to, among other things, the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties.

The conciliator may conduct the conciliation proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, the wishes the parties may express, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute.

The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the masons therefore.

Conciliators do not:

Make decisions for disputing parties

Make judgments about who is right, who is wrong or what the outcome of the dispute should be.

Tell people what to do

Make rulings

Force parties to participate in the conciliation process.


Q3. What are the unfair trade practices under the MRTP Act.?


The Monopolies and Restrictive Trade Practices Commission has been constituted under Section5(1) of the MRTP Act, 1969. The Commission is empowered to enquire into Monopolistic or Restrictive Trade Practices upon a reference from the Central Government or upon its own knowledge or information. The MRTP Act also provides for appointment of a Director General of Investigation and Registration for making investigations for the purpose of enquiries by the MRTP Commission and for maintenance of register of agreements relating to restrictive trade practices. The MRTP Commission receives complaints both from registered consumer and trade associations and also from individuals. Complaints regarding Restrictive Trade Practices or Unfair Trade Practices from an association are required to be referred to the Director General of Investigation and Registration for conducting preliminary investigation. The Commission can also order a preliminary investigation by the Director General of Investigation and Registration when a reference on a restrictive trade practice is received from the Central/State Government, or when Commission’s own knowledge warrants a preliminary investigation. Enquiries are instituted by the Commission after the Director General of Investigation and Registration completes preliminary investigation and submits an application to the Commission for an enquiry.

An unfair trade practice means a trade practice, which, for the purpose of promoting any sale, use or supply of any goods or services, adopts unfair method, or unfair or deceptive practice.


1)False Representation:

The practice of making any oral or written statement or representation which:

Falsely suggests that the goods are of a particular standard quality, quantity, grade, composition, style or model;

Falsely suggests that the services are of a particular standard, quantity or grade;

Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as new goods;

Represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which they do not have;

Represents that the seller or the supplier has a sponsorship or approval or affiliation which he does not have;

Makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;

Gives any warranty or guarantee of the performance, efficacy or length of life of the goods, that is not based on an adequate or proper test;

Makes to the public a representation in the form that purports to be-

•warranty or guarantee of the goods or services,

•a promise to replace, maintain or repair the goods until it has achieved a specified result, If such representation is materially misleading or there is no reasonable prospect that such warranty, guarantee or promise will be fulfilled

Materially misleads about the prices at which such goods or services are available in the market; or

Gives false or misleading facts disparaging the goods, services or trade of another person.


2)False Offer Of Bargain Price

Where an advertisement is published in a newspaper or otherwise, whereby goods or services are offered at a bargain price when in fact there is no intention that the same maybe offered at that price, for a reasonable period or reasonable quantity, it shall amount to an unfair trade practice. The bargain price, for this purpose means:

the price stated in the advertisement in such manner as suggests that it is lesser than the ordinary price, or

The price which any person coming across the advertisement would believe to be better than the price at which such goods are ordinarily sold.


3)Free Gifts Offer And Prize Scheme

The unfair trade practices under this category are:

Offering any gifts, prizes or other items along with the goods when the real intention is different, or

Creating impression that something is being offered free along with the goods, when in fact the price is wholly or partly covered by the price of the article sold, or

Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill, with real intention to promote sales or business.


4)Non-Compliance Of Prescribed Standards

Any sale or supply of goods, for use by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by some competent authority, in relation to their performance, composition, contents, design, construction, finishing or packing, as are necessary to prevent or reduce the risk of injury to the person using such goods, shall amount to an unfair trade practice.


5)Hoarding, Destruction, Etc.:

Any practice that permits the hoarding or destruction of goods, or refusal to sell the goodsor provide any services, with an intention to raise the cost of those or other similar goodsor services, shall be an unfair trade practice.



6)Inquiry Into Unfair Trade Practices


The Commission may inquire into any unfair trade practice:

Upon receiving a complaint from any trade association, consumer or a registered consumer association, or

Upon reference made to it by the Central Government or State Government

Upon an application to it by the Director General or

Upon its own knowledge or information.

Relief Available

:After making an inquiry into the unfair trade practices if the Commission is of the opinion thatthe practice is prejudicial to the pubic interest, or to the interest of any consumer it may direct that?

The practice shall be discontinued or shall not be repeated;

The agreement relating thereto shall be void in respect of such unfair trade practice or shall stand modified.

Any information, statement or advertisement relating to such unfair trade practice shall be disclosed, issued or published as may be specified

The Commission may permit the party to carry on any trade practice to take steps to ensure that it is no longer prejudicial to the public interest or to the interest of the consumer. However no order shall be made in respect a trade practice which is expressly authorized by any law in force. The Commission is empowered to direct publication of corrective advertisement and disclosure of additional information while passing orders relating to unfair trade practices


Q4. What are essentials of a valid offer?

Ans Offer:

A proposal is an expression of will or intention to do or not to do something. It is also called an”offer”. It is one of the essential elements of an agreement. It is the very basis of the contract. It becomes a promise when it accepted. Section 2 (a) of the Contract Act defines the proposals “when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other, to such act or abstinence, he is saidto make a proposal”. The person making the proposal is called the proposer or offer or the promisor. The person to whom the proposal is made is called the offeree or promisee.For example; Sunil offers to sell his car to Padmaja for Rs. 50000. This is a proposal. Sunil is the offeror and Padmaja is the offeree. An offer may be express or implied. An offer which is expressed by words, written or spoken, iscalled an express offer. An offer which is expressed by conduct is called an implied offer. Anoffer may be positive or negative. It may be in the form of a statement or a question.for example; Sridhar says to Radhika that he will sell his scooter to her for Rs.20000. This is an express offer. The Karnataka State Road Transport Corporation runs omnibuses on various routes to carry passengers at the scheduled fares. This is an implied offer by KSRTC.The offer must be made in order to create legal relations otherwise there will be an agreement.If an offer does not give rise to legal obligations between the parties it is not a valid offer in theeye of law. In business transactions there is a presumption that the parties propose to makelegal relationships. For example a person invite to another person to diner if the other person accepts the invitation then it is not any legal agreement between the parties it is social agreement. An offer must be definite and clear. If the terms of an offer are not definite and clear it cannot be called a valid offer. If such offer is accepted it cannot create a binding contract. Anagreement to agree in future is not a contract because the terms of an agreement are notclear. A person has two motorbikes. He offers to another person to sell his one bike for a certain price then it is not a legal and valid offer because there is an ambiguity in the offer that which motorcycle the person wants to sell. There is a difference between the offer and invitation of offer. Sometime people offer the invitation for the sale.

Essentials of a valid offer:

A valid offer must intend to create legal relations. It must not be a casual statement. If theoffer is not intended to create legal relationship, it is not an offer in the eyes of law e.g.Sunil invites Sridhar to a dinner party and Sridhar accepts the invitation. Sridhar does notturn up at the dinner party. Sunil cannot sue Sridhar for breach of contract as there was no intention to create legal obligation. Hence, an offer to perform social, religious or moralacts without any intention of creating legal relations will not be a valid offer.

The terms of an offer must be definite, unambiguous and certain. They must not be looseand vague. A promise to pay an extra Rs. 500 if a particular house proves lucky is toovague to be enforceable. E.g. Sridhar says to Sunil “I will give you some money if youmarry my daughter”. This is not an offer which can be accepted because the amount of money to be paid is not certain.

An offer may be made to a definite person or to the general public. When offer is made toa definite person or to a special class of persons, it is called “specific offer”. When an offeris made to the world at large or public in general, it is called “general offer”. A specific offercan be accepted only by that person to whom it has been made and a general offer can beaccepted by any person. E.g. Sunil promises to give Rs.100 to Sridhar, if he brings back hismissing dog. This is a specific offer and can only be accepted by Sridhar. Sunil issues apublic advertisement to the effect that he would give Rs.100 to anyone who brings back hismissing dog. This is a general offer. Any member of the public can accept this offer bysearching for and bringing back Sunil’s missing dog.

An offer to do or not to do must be made with a view to obtaining the assent of the otherparty. Mere enquiry is not an offer.

An offer should may contain any term or condition. The offeror may prescribe any mode of acceptance. But he cannot prescribe the form or time of refusal so as to fix a contract onthe acceptor. He cannot say that if the acceptor does not communicate his acceptancewithin a specified time, he is deemed to have accepted the offer.

The offeror is free to lay down any terms any terms and conditions in his offer. If the otherparty accepts it, then he has to abide by all the terms and conditions of the offer. It isimmaterial whether the terms and conditions were harsh or ridiculous. The special terms orconditions in an offer must be brought to the notice of the offeree at the time of making aproposal.

An offer is effective only when it is communicated to the offeree. Communication isnecessary whether the offer is general or specific. The offeror may communicate the offerby choosing any available means such as a word of mouth, mail, telegram, messenger, awritten document, or even signs and gestures. Communication may also be implied by hisconduct. A person can accept the offer only when he knows about it. If he does not know,he cannot accept it. An acceptance of an offer, in ignorance of the offer, is no acceptanceat all.It should be noted that an invitation to offer is not an offer. The following are only invitations tooffer but not actual offers:

Invitations made by a trade for the sale of goods.

A price list of goods for sale.

Quotations of lowest prices.

An advertisement to sell goods by auction.

An advertisement inviting tenders.

Display of goods with price-tags attached.

Railway time-table.

Prospectus issued by a company.

Loud speaker announcements.


Q 5: Find out a case where a person appealed under the Consumer protectionAct and won.


The Consumer Protection Act was born in 1986. It is described as a unique legislation of its kind ever enacted inIndiato offer protection to the consumers. The Act is claimed to have been designed after an in-depth study of consumer protection laws and arrangements inUK,theUSA,AustraliaandNew Zealand. The main objective of this Act is to provide better protection to the consumers. Unlike other laws, which are punitive or preventive in nature theprovisions of this Act are compensatory in nature. The Act intends to provide simple, speedy and inexpensive re-dressal to the consumer’s grievances.


Q6: What does the Information Technology Act enable?


Answer :Information Technology Act:

In May 2000, at the height of the dot-com boom,Indiaenacted the IT Act and became part of a select group of countries to have put in place cyber laws. In all these years, despite the growing crime rate in the cyber world, only less than 25 cases have been registered under theIT Act 2000 and no final verdict has been passed in any of these cases as they are now pending with various courts in the country. Although the law came into operation onOctober 17, 2000, it still has an element of mystery around it. Not only from the perception of the common man, but also from the perception of lawyers, law enforcing agencies and even the judiciary. The prime reason for this is the fact that the IT Act is a set of technical laws. Another major hurdle is the reluctance on the part of companies to report the instances of cyber-crimes, as they don’t want to get negative publicity or worse get entangled in legal proceedings. A major hurdle in cracking down on the perpetrators of cyber-crimes such as hacking is the fact that most of them are not inIndia. The IT Act does give extra-territorial jurisdiction to law enforcement agencies, but such powers are largely inefficient. This is becauseIndiadoes not have reciprocity and extradition treaties with a large number of countries.The Indian IT Act also needs to evolve with the rapidly changing technology environment that breeds new forms of crimes and criminals. We are now beginning to see new categories and varieties of cyber-crimes, which have not been addressed in the IT Act. This includes cybers talking, cyber nuisance, cyber harassment, cyber defamation and the like. Though Section 67of the Information Technology Act, 2000 provides for punishment to whoever transmits or publishes or causes to be published or transmitted, any material which is obscene in electronicform with imprisonment for a term which may extend to two years and with fine which mayextend to twenty five thousand rupees on first convection and in the event of second mayextend to five years and also with fine which may extend to fifty thousand rupees, it does not expressly talk of cyber defamation. The above provision chiefly aim at curbing the increasingnumber of child pornography cases and does not encompass other crimes which could havebeen expressly brought within its ambit such as cyber defamation


Master of Business Administration-MBA Semester III

MU0010 – Manpower Planning and Resourcing

Assignment Set- 1


Q.1      Write a detailed note on competency mapping system and its components.

Ans: Competencies IS the collection of success factors necessary for achieving important results in a specific job or work role in a particular organization. Success factors are combinations of knowledge, skills, and attributes  that are described in terms of specific behaviors, and are demonstrated by superior performers in those jobs or work roles. Attributes include: personal characteristics, traits, motives, values or ways of thinking that impact an individual’s behavior.
Competencies in organizations tend to fall into two broad categories:

–   Personal Functioning Competencies. These competencies include broad success factors not tied to a specific work function or industry (often focusing on leadership or emotional intelligence behaviors).
–   Functional/Technical Competencies. These competencies include specific success factors within a given

work function or industry.


Three other definitions are needed:

Competency Map. A competency map is a list of an individual’s competencies that represent the factors most critical to success in given jobs, departments, organizations, or industries that are part of the individual’s current career plan.

Competency Mapping. Competency mapping is a process an individual uses to identify and describe competencies that are the most critical to success in a work situation or work role.
Top Competencies. Top competencies are the vital few competencies (four to seven, on average) that are the most important to an individual in their ongoing career management process. “Importance to the individual” is an intuitive decision based on a combination of three factors: past demonstrated excellence in using the competency, inner passion for using the competency, and the current or likely future demand for the competency in the individual’s current position or targeted career field.
Although the definition above for “competency mapping” refers to individual employees, organizations also “map” competencies, but from a different perspective. Organizations describe, or map, competencies using one or more of the following four strategies:

1.   Organization-Wide (often called “core competencies” or those required for organization success)
2.   Job Family or Business Unit Competency Sets

3.   Position-Specific Competency Sets

4.   Competency Sets Defined Relative to the Level of Employee Contribution (i.e. Individual Contributor, Manager, or Organizational Leader)





Q.2      Explain demand forecasting techniques.

Ans: Broadly speaking, there are two approaches to demand forecasting- one is to obtain information about the likely purchase behavior of the buyer through collecting expert’s opinion or by conducting interviews with consumers, the other is to use past experience as a guide through a set of statistical techniques. Both these methods rely on varying degrees of judgment. The first method is usually found suitable for short-term forecasting, the latter for long-term forecasting. There are specific techniques which fall under each of these broad methods.

Simple Survey Method:

For forecasting the demand for existing product, such survey methods are often employed. In this set of methods, we may undertake the following exercise.

1) Experts Opinion Poll: In this method, the experts on the particular product whose demand is under study are requested to give their ‘opinion’ or ‘feel’ about the product. These experts, dealing in the same or similar product, are able to predict the likely sales of a given product in future periods under different conditions based on their experience. If the number of such experts is large and their experience-based reactions are different, then an average-simple or weighted –is found to lead to unique forecasts. Sometimes this method is also called the ‘hunch method’ but it replaces analysis by opinions and it can thus turn out to be highly subjective in nature.

2) Reasoned Opinion-Delphi Technique: This is a variant of the opinion poll method. Here is an attempt to arrive at a consensus in an uncertain area by questioning a group of experts repeatedly until the responses appear to converge along a single line. The participants are supplied with responses to previous questions (including seasonings from others in the group by a coordinator or a leader or operator of some sort). Such feedback may result in an expert revising his earlier opinion. This may lead to a narrowing down of the divergent views (of the experts) expressed earlier. The Delphi Techniques, followed by the Greeks earlier, thus generates “reasoned opinion” in place of “unstructured opinion”; but this is still a poor proxy for market behavior of economic variables.

3) Consumers Survey- Complete Enumeration Method: Under this, the forecaster undertakes a complete survey of all consumers whose demand he intends to forecast, Once this information is collected, the sales forecasts are obtained by simply adding the probable demands of all consumers. The principle merit of this method is that the forecaster does not introduce any bias or value judgment of his own. He simply records the data and aggregates. But it is a very tedious and cumbersome process; it is not feasible where a large number of consumers are involved. Moreover if the data are wrongly recorded, this method will be totally useless.

4) Consumer Survey-Sample Survey Method: Under this method, the forecaster selects a few consuming units out of the relevant population and then collects data on their probable demands for the product during the forecast period. The total demand of sample units is finally blown up to generate the total demand forecast. Compared to the former survey, this method is less tedious and less costly, and subject to less data error; but the choice of sample is very critical. If the sample is properly chosen, then it will yield dependable results; otherwise there may be sampling error. The sampling error can decrease with every increase in sample size

5) End-user Method of Consumers Survey: Under this method, the sales of a product are projected through a survey of its end-users. A product is used for final consumption or as an intermediate product in the production of other goods in the domestic market, or it may be exported as well as imported. The demands for final consumption and exports net of imports are estimated through some other forecasting method, and its demand for intermediate use is estimated through a survey of its user industries.

Complex Statistical Methods:

We shall now move from simple to complex set of methods of demand forecasting. Such methods are taken usually from statistics. As such, you may be quite familiar with some the statistical tools and techniques, as a part of quantitative methods for business decisions.

(1) Time series analysis or trend method: Under this method, the time series data on the under forecast are used to fit a trend line or curve either graphically or through statistical method of Least Squares. The trend line is worked out by fitting a trend equation to time series data with the aid of an estimation method. The trend equation could take either a linear or any kind of non-linear form. The trend method outlined above often yields a dependable forecast. The advantage in this method is that it does not require the formal knowledge of economic theory and the market, it only needs the time series data. The only limitation in this method is that it assumes that the past is repeated in future. Also, it is an appropriate method for long-run forecasts, but inappropriate for short-run forecasts. Sometimes the time series analysis may not reveal a significant trend of any kind. In that case, the moving average method or exponentially weighted moving average method is used to smoothen the series.

(2) Barometric Techniques or Lead-Lag indicators method: This consists in discovering a set of series of some variables which exhibit a close association in their movement over a period or time.

For example, it shows the movement of agricultural income (AY series) and the sale of tractors (ST series). The movement of AY is similar to that of ST, but the movement in ST takes place after a year’s time lag compared to the movement in AY. Thus if one knows the direction of the movement in agriculture income (AY), one can predict the direction of movement of tractors’ sale (ST) for the next year. Thus agricultural income (AY) may be used as a barometer (a leading indicator) to help the short-term forecast for the sale of tractors.

Generally, this barometric method has been used in some of the developed countries for predicting business cycles situation. For this purpose, some countries construct what are known as ‘diffusion indices’ by combining the movement of a number of leading series in the economy so that turning points in business activity could be discovered well in advance. Some of the limitations of this method may be noted however. The leading indicator method does not tell you anything about the magnitude of the change that can be expected in the lagging series, but only the direction of change. Also, the lead period itself may change overtime. Through our estimation we may find out the best-fitted lag period on the past data, but the same may not be true for the future. Finally, it may not be always possible to find out the leading, lagging or coincident indicators of the variable for which a demand forecast is being attempted.

3) Correlation and Regression: These involve the use of econometric methods to determine the nature and degree of association between/among a set of variables. Econometrics, you may recall, is the use of economic theory, statistical analysis and mathematical functions to determine the relationship between a dependent variable (say, sales) and one or more independent variables (like price, income, advertisement etc.). The relationship may be expressed in the form of a demand function, as we have seen earlier. Such relationships, based on past data can be used for forecasting. The analysis can be carried with varying degrees of complexity. Here we shall not get into the methods of finding out ‘correlation coefficient’ or ‘regression equation’; you must have covered those statistical techniques as a part of quantitative methods. Similarly, we shall not go into the question of economic theory. We shall concentrate simply on the use of these econometric techniques in forecasting.

We are on the realm of multiple regression and multiple correlation. The form of the equation may be:

DX = a + b1 A + b2PX + b3Py

You know that the regression coefficients b1, b2, b3 and b4 are the components of relevant elasticity of demand. For example, b1 is a component of price elasticity of demand. The reflect the direction as well as proportion of change in demand for x as a result of a change in any of its explanatory variables. For example, b2< 0 suggest that DX and PX are inversely related; b4 > 0 suggest that x and y are substitutes; b3 > 0 suggest that x is a normal commodity with commodity with positive income-effect.

Given the estimated value of and bi, you may forecast the expected sales (DX), if you know the future values of explanatory variables like own price (PX), related price (Py), income (B) and advertisement (A). Lastly, you may also recall that the statistics R2 (Co-efficient of determination) gives the measure of goodness of fit. The closer it is to unity, the better is the fit, and that way you get a more reliable forecast.

The principle advantage of this method is that it is prescriptive as well descriptive. That is, besides generating demand forecast, it explains why the demand is what it is. In other words, this technique has got both explanatory and predictive value. The regression method is neither mechanistic like the trend method nor subjective like the opinion poll method. In this method of forecasting, you may use not only time-series data but also cross section data. The only precaution you need to take is that data analysis should be based on the logic of economic theory.

(4) Simultaneous Equations Method: Here is a very sophisticated method of forecasting. It is also known as the ‘complete system approach’ or ‘econometric model building’. In your earlier units, we have made reference to such econometric models. Presently we do not intend to get into the details of this method because it is a subject by itself. Moreover, this method is normally used in macro-level forecasting for the economy as a whole; in this course, our focus is limited to micro elements only. Of course, you, as corporate managers, should know the basic elements in such an approach.

The method is indeed very complicated. However, in the days of computer, when package programmes are available, this method can be used easily to derive meaningful forecasts. The principle advantage in this method is that the forecaster needs to estimate the future values of only the exogenous variables unlike the regression method where he has to predict the future values of all, endogenous and exogenous variables affecting the variable under forecast. The values of exogenous variables are easier to predict than those of the endogenous variables. However, such econometric models have limitations, similar to that of regression method.


Q.3 What are the inputs provided by HR for Manpower planning?

Ans: Manpower function is one of the never areas to be brought under the mantle of systematic planning. Manpower planning helps in better allocation and control over the organization’s manpower resource. A concept closely tied to manpower planning is that of manpower forecasting. What follows is an attempt to briefly describe the meaning and purpose of manpower planning, its basic requirements, the factors that influence manpower planning, and various aspects related to the allied activity of manpower forecasting.
It is to be noted that manpower planning and forecasting are seen as distinct from the wider concept of Human Resources Planning, and the complementary concept of career planning. It is not the aim here to elaborate on these areas.

What is Manpower Planning?
Manpower planning is a process by which an organization prepares an inventory of skills and potential available in the organization. It involves the use of the concept of planning to visualize how the organization can go through the allocation and control of its manpower resources in better fashion. In other words, it is a tool in the hands of higher management to equip themselves with the necessary data on human resources available immediately within the organization and from outside.

Purpose of Manpower Planning
Manpower planning serves two interrelated purposes.
(1) It prepares the organization for the future in terms of planning its manpower requirement and utilizing them properly in order to meet the impact of rapid technical and economic changes and maintain its competitive position. It gives a picture of manpower available within the organization to undertake any future expansion, or set up a new branch or a new plant or develop a new line of production.

(2) It allows for forward planning to fill anticipated skill requirements as well as allows for needed flexibility in day-to-day utilization of manpower. It allows for adapting to abrupt changes in such factory as technological advances, new markets, political and economic pressures and heightened competition. In other words, manpower planning provides the background information which is necessary to deal with such forces.


Manpower planning Inputs

Three important inputs in manpower planning may be identified as,
(1)   Sufficiently accurate information about the level of present manpower resources, namely, the types of skills on the present payroll and current capabilities of the organization.

(2)   Information about the manpower environment, namely labor markets, current and forecast manpower supply and demand, past and anticipated manpower trends, present training levels in the organization, development potential of untrained employees, and expenses that will be incurred in copy riding and development of skills.
(3)   Information about overall organizational objectives in terms of sales, markets and growth in the future is necessary. This also becomes the objectives against which manpower plans and forecasts are structured.


Q.4  What are the obstacles in Manpower Planning.

Ans: Following are the main obstacles that organizations face in the process of manpower planning:

  1. Under Utilization of Manpower: The biggest obstacle in case of manpower planning is the fact that the industries in general are not making optimum use of their manpower and once manpower planning begins, it encounters heavy odds in stepping up the utilization.
  2. Degree of Absenteeism: Absenteeism is quite high and has been increasing since last few years.
  3. Lack of Education and Skilled Labour: The extent of illiteracy and the slow pace of development of the skilled categories account for low productivity in employees. Low productivity has implications for manpower planning.
  4. Manpower Control and Review:
    1. Any increase in manpower is considered at the top level of management
    2. On the basis of manpower plans, personnel budgets are prepared. These act as control mechanisms to keep the manpower under certain broadly defined limits.
    3. The productivity of any organization is usually calculated using the formula:

Productivity = Output / Input

. But a rough index of employee productivity is calculated as follows:

Employee Productivity = Total Production / Total no. of employees

    1. Exit Interviews, the rate of turnover and rate of absenteeism are source of vital information on the satisfaction level of manpower. For conservation of Human Resources and better utilization of men studying these condition, manpower control would have to take into account the data to make meaningful analysis.
    2. Extent of Overtime: The amount of overtime paid may be due to real shortage of men, ineffective management or improper utilization of manpower. Manpower control would require a careful study of overtime statistics.

Few Organizations do not have sufficient records and information on manpower. Several of those who have them do not have a proper retrieval system. There are complications in resolving the issues in design, definition and creation of computerized personnel information system for effective manpower planning and utilization. Even the existing technologies in this respect is not optimally used. This is a strategic disadvantage.


Q5. Discuss External sourcing in detail

Ans: Sourcing is a process of identifying labor pools which can be attracted to your organization by either push or pull recruitment techniques. Post the recruitment effort, prospective candidates from the labor pool apply for the job of interest and then the selection process begins.

Sourcing for candidates refers to proactively identifying people who are either a) not actively looking for job opportunities (passive candidates) or
b) candidates who are actively searching for job opportunities (active candidates). The possible third category is ‘active candidate sourcing’ using candidate databases, job boards and the like.


It has been hard to accurately define an “active candidate” versus a “passive candidate”. A person may turn from a passive candidate to active candidate if he/she on hearing the job opening and the associated likely compensation changes their mind in favor of the new job opportunity. The status of being an “active” or “passive” candidate is fluid and changing depending on the circumstances and position being offered.

Sourcing requires the identification of labor pools. Labor pools are the source of trained people from which workers can be hired.

External Sourcing

When you hire staff or contract staff who has never worked with your organization earlier, then it is called as external recruitment. Examples are:

Advertisements in Media

Advertisements of the job openings in newspaper and journals magazines are generally used as a source of external recruitment.

Campus Selections in Institutions

Various colleges and institutions are a good source of recruiting well qualified executives, engineers, medical staff etc.

Employee Referrals

Organizations encourage internal employees by providing benefits for referring friends and relatives for some position in their organization.


They identify candidates matching the job profile and charge a fee for providing candidates till you find the right candidate who accepts the offer.

Data Banks

Organizations collect CVs of candidates from different sources like employment exchange, training institutes etc. and screen and shortlist the candidates.

When the business grows and if the business is manpower intensive, then additional resources are required. Therefore external recruitment is done. This is the only way to scale up the business. Also it brings in a freshness of thought and perspective. Capable people from the world’s best organizations bring best practices with them. They bring the culture of performance and meritocracy. External recruitment has many advantages. If the job role requires tremendous experience (e.g. 15 years), it is better to hire someone externally than to wait for people in your own organization with 4 years experience to gain 11 more years of experience.

Q.6 List the strategies for managing redundancy

Redundancy is never a circumstance that anyone wishes to manage. However, when its unwelcome face first peers over the horizon it is time to take action and start working on damage limitation for the people who could be affected, the company, and the remaining staff. The first phase of good redundancy management begins when those initial warning signs of potential redundancies surface. Such early attention can sometimes fend off threatened redundancies altogether.

Phase 1 – Change Management

The reasons for threatened redundancies are many and varied: market downturn; company merger; falling profits; funding or cash flow crisis; outsourcing; loss of a major contract, etc. What each of these situations has in common is that it will require swift attention and lead to some form of change management before redundancies are decided. All the procedures and principals of good change management will apply. Strategies need to be revisited, trends need to be carefully monitored, new plans need to be drawn up, and above all people need to be kept informed. Where a collective redundancy situation (20 or more) is feared, staff representatives must be consulted within the statutory time frame. However, explaining the situation to staff members early is good practice regardless of the numbers affected, and has a variety of benefits:

  • It gives you control over what, when and, most importantly, how information is put across.
  • It avoids damaging rumour and innuendo.
  • It rallies support for change and unites staff and senior management in a common fight for survival.
  • It provides an opportunity for the ‘grass-roots’ staff to offer efficiency and cost cutting suggestions.
  • It makes any subsequent efficiency and/or cost cutting measures more palatable.
  • It lessens the shock and the reaction, if and when redundancies do have to be made.
  • It fosters an environment of honesty, trust and respect.

Clearly, dissemination of information to staff needs to be carefully managed and controlled to avoid any additional damage to the company or panic amongst the staff. However, there are many success stories from companies who have involved their staff members, including voluntary pay cuts initiated by staff members. Peer pressure is far more compelling and effective than management ultimatums, however couched.

Phase 2 – Minimising Redundancies

Having developed an outline plan in consultation with all the pertinent managers and operatives, if redundancies are required, the next phase is to carefully examine all avenues for minimising redundancies and the damaging effects of redundancies. Of all changes in the work environment, redundancy engenders the most negative response. Minimising the job cuts and being seen to be making every effort to avoid redundancies is crucial. The avenues open to you will of course vary according to the size, situation, and nature of the business. The following have all been used successfully by a variety of companies.

  • Re-evaluating working hours – leading to greater flexibility, weekly, monthly or annually.
  • Re-training – leading to redeployment in other areas of the business.
  • Job sharing schemes.
  • Moves to part-time working (temporary or permanent). Cost savings here received a boost in the recent budget.
  • Temporary sabbaticals or agreed leave of absence (paid or unpaid).
  • Early retirement, natural wastage and voluntary redundancies.
  • Recruitment freeze (this needs careful management to ensure key positions are covered).
  • Voluntary pay cuts.

Once again an approach which is honest, and as open as possible, not only reduces the sometimes devastating effect on the staff, but also pays dividends to the management and the success of the plans for recovery, streamlining or downsizing. Key members of staff are far more likely to stay and weather the storm if an environment of trust and openness is nurtured. Those in business critical positions should be reassured, as early as possible in the process, that their positions are not, and will not be, in jeopardy.

Phase 3 – Selecting the Jobs to be Cut & Notifying the Individuals

Having ascertained that some redundancies are inevitable, informing the workforce first is paramount. The worst thing that can happen is for your staff to hear that they may face redundancy through outsiders, rumour, or the media, even when all the redundancies are expected to be voluntary.

Having worked through phases 1 & 2 above, a lot of care and attention needs to be given to selecting the positions and people. Check the current legislation on your consultation and notification obligations. Regardless of legal obligations however, each position deserves to be given individual consideration. A conscientious approach to this will reap rewards for the Company as well as the individuals concerned. Consider whether this position will be needed again in the near future, how the work will be dispersed, what the impact will be on others in a similar position. If you are reducing the number of people in the same or similar roles, draw up a check sheet with set criteria to determine equitably which positions should be selected.

On notifying the individuals at risk, care and empathy is essential. Even when generous redundancy packages are involved this can still be a devastating blow and poses a real threat to the recipient’s livelihood. Look into each individual’s personal situation beforehand so that you have some understanding of the problems they may face. Try to get a good feel for all the pertinent problems and issues so that you can aim to provide appropriate support, either via an outplacement service or directly. Explain the process and procedure carefully and follow this up in a letter.

It is advisable to have a short consultation period to allow the individuals at risk to put forward their case. However, this should not be included for cosmetic purposes only. Consultation periods can and do work. We recently worked with a company that successfully implemented a consultation period for the second time, saving one job as a direct result (having saved 2 previously). Fanny Bradbury, Personnel Manager with SEOS Ltd. said “I also invited all the non-affected members of staff to comment”. This wider consultation was not a legal obligation as less than 20 staff were affected. However, this voluntary good practice paid dividends all round. “This proves that the consultation period does work”, she added, “communication is the key; for everybody”.

Phase 4 – Managing the People Out

Redundancy can be one of the most stressful life experiences. The affected individuals are likely to be ill equipped for positioning themselves in the job market and often feel confused, isolated, angry and afraid. Finding another position is a full time occupation, the complexity of which is rarely fully appreciated. A good company will endeavor to provide support and assistance to cushion the blow and help their people to make the transition.

An appropriate outplacement service is a big advantage. Studies show that an external outplacement service is better received and far more effective than in-house measures. In addition, it provides the ‘spoonful of sugar’ to help take away the bad taste, and makes the task of imparting bad news less odious for the managers. A good Outplacement Consultant will work with the Company, through all the phases above if required, providing suggestions, alternatives and pulling together a programme appropriate to the needs of the individuals. In selecting an outplacement service consider the following:

  • Location: Some companies require the delegates to attend their premises, others will bring the service to you. The latter can also be housed at a nearby conference centre if desired.
  • Price: An outplacement service is generally most needed when the Company feels it can least afford it. However, price need not be prohibitive. There are wide variations and many companies have a flexible approach and will suggest viable solutions to fit your budget, but watch for hidden costs.
  • Timing: The service needs to be provided at the right time for you and your people. If you have left it a little late, don’t be fobbed off with bogus reasons why it would be in your advantage to delay (to a time which suits them). Try elsewhere.
  • Quality: The service needs to be ‘fit for purpose’. When contacting a prospective company ask to speak with one of the consultants not just the sales staff. He/she should try to understand your situation and needs rather than push to sell you the service. If possible (and appropriate) ask to see the manual. This is a valuable tool for the delegates and a good indicator of the content and quality of the programme. Support normally continues for sometime after your contact has ceased – check this out too.
  • People: Most outplacement consultants are empathetic and experienced, but like everything else there are good and bad. Try to speak with the consultant(s) who will be assigned to your Company, by telephone or in person. Prepare a few questions and informally ‘interview’ them.
  • If you cannot provide an outplacement service you may be able to provide some local support through appropriate agencies and companies such as the local job centre, careers advisers, CAB, Financial Consultants, and so on. It is also worth contacting local companies in the same business to see if they have any unadvertised opportunities.

Phase 5 – Managing the People Left

Having provided support and assistance to those directly affected, you need to turn your attention to those indirectly affected. In varying degrees this includes all members of the workforce. By implementing redundancies you will have inadvertently sown the seeds of doubt about the security of their position. Once again, good communication is essential. You need to ensure that your rising stars and major players do not lose face and change their focus of attention to the job market rather than the task in hand. Those remaining need to feel confident that the crisis is over and the company is doing all it can to avoid any further redundancies.

As the redundant staff move off the scene, gaping holes are often left. Where a friendly colleague sat, there is now and empty desk and chair; tasks will be left ownerless; the old manager may be replaced by an unknown and more distant new one. The empty void and confusion is exacerbated when senior management are hidden away in meetings at a time when their visibility is most critical.

In your initial planning, make absolutely sure that you have included measures to cover this period. Managers should spend time at the ‘coal-face’ to ensure that:

  • Remaining staff are not overloaded with work.
  • They understand the need for the staff cuts made, and feel that the situation has been managed fairly.
  • The implementation of any time/cost saving measures is going smoothly.
  • The most talented &/or critical staff do not feel insecure and leave.
  • Any grievances or concerns can be aired and dealt with.
  • Your remaining staff feel visible and valued.

Once your head is very clearly above the water again you may wish to think about how you can show your appreciation to the loyal staff who helped to carry the company through. There are a number of ways this can be achieved but one which provides benefits all round is Executive or Career Coaching. Offered to nominated individuals, or the top 10 performers, this also provides a useful incentive scheme.

Managing redundancy is never easy. Managing to avoid redundancy can be even harder. However the adverse effects can be substantially reduced through: good communication; timely intervention; careful analysis and planning; effective consultation with your people; sensitivity in approach; appropriate support and assistance, and good after care. Over a third of the companies voted into last year’s Times ‘100 Best Companies To Work For’ had needed to effect redundancies during the year. For both companies and individuals, good redundancy management can turn a crisis into an opportunity.




























Master of Business Administration-MBA Semester III

MU0010 – Manpower Planning and Resourcing

Assignment Set- 2


Q.1      Write a detailed note on induction program.

Ans:  An induction programme is the process used within many businesses to welcome new employees to the company and prepare them for their new role.

Induction training should, according to TPI-theory, include development of theoretical and practical skills, but also meet interaction needs that exist among the new employees

An Induction Programme can also include the safety training delivered to contractors before they are permitted to enter a site or begin their work. It is usually focused on the particular safety issues of an organisation but will often include much of the general company information delivered to employees.

Benefits of an induction programme

An induction programme is an important process for bringing staff into an organisation. It provides an introduction to the working environment and the set-up of the employee within the organisation. The process will cover the employer and employee rights and the terms and conditions of employment. As a priority the induction programme must cover any legal and compliance requirements for working at the company and pay attention to the health and safety of the new employee.

An induction programme is part of an organisations knowledge management process and is intended to enable the new starter to become a useful, integrated member of the team, rather than being “thrown in at the deep end” without understanding how to do their job, or how their role fits in with the rest of the company.

Good induction programmes can increase productivity and reduce short-term turnover of staff. These programs can also play a critical role under the socialization to the organization in terms of performance, attitudes and organizational commitment[2].


[edit] A typical induction programme

A typical induction programme will include at least some of the following:

  • any legal requirements (for example in the UK, some Health and Safety training is obligatory)
  • any regulatory requirements (for example in the UK banking sector certain forms need to be completed)
  • introduction to terms and conditions (for example, holiday entitlement, how to make expense claims, etc)
  • a basic introduction to the company, and how the particular department fits in
  • a guided tour of the building
  • completion of government requirements (for example in UK submission of a P45 or P60)
  • set-up of payroll details
  • introductions to key members of staff
  • specific job-role training
  • 1111





Q.2      Explain different types of scores used to interpret test results.

Ans:    Interpreting Test Scores

This page describes which scores to use to accomplish each of several purposes and tells what the different types of scores mean.

Three of the fundamental purposes for testing are (1) to describe each student’s developmental level within a test area, (2) to identify a student’s areas of relative strength and weakness in subject areas, and (3) to monitor year-to-year growth in the basic skills. To accomplish any one of these purposes, it is important to select the type of score from among those reported that will permit the proper interpretation. Scores such as percentile ranks, grade equivalents, and standard scores differ from one another in the purposes they can serve, the precision with which they describe achievement, and the kind of information they provide. A closer look at these types of scores will help differentiate the functions they can serve and the meanings they can convey. Additional detail can be found in the Interpretive Guide for Teachers and Counselors.

InIowa, school districts can obtain scores that are reported using national norms orIowanorms. On some reports, both kinds of scores are reported. The difference is simply in the group with which comparisons are made to obtain score meaning. A student’sIowapercentile rank (IPR) compares the student’s score with those of others in his/her grade inIowa. The student’s national percentile rank (NPR) compares that same score with those of others in his/her grade in the nation. For other types of scores described below, there are bothIowaand national scores available toIowaschools.

Types of Scores

Raw Score (RS)

The number of questions a student gets right on a test is the student’s raw score (assuming each question is worth one point). By itself, a raw score has little or no meaning. The meaning depends on how many questions are on the test and how hard or easy the questions are. For example, if Kati got 10 right on both a math test and a science test, it would not be reasonable to conclude that her level of achievement in the two areas is the same. This illustrates why raw scores are usually converted to other types of scores for interpretation purposes.

Percent Correct (PC)

When the raw score is divided by the total number of questions and the result is multiplied by 100, the percent-correct score is obtained. Like raw scores, percent-correct scores have little meaning by themselves. They tell what percent of the questions a student got right on a test, but unless we know something about the overall difficulty of the test, this information is not very helpful. Percent-correct scores are sometimes incorrectly interpreted as percentile ranks, which are described below. The two are quite different.

Grade Equivalent (GE)

The grade equivalent is a number that describes a student’s location on an achievement continuum. The continuum is a number line that describes the lowest level of knowledge or skill on one end (lowest numbers) and the highest level of development on the other end (highest numbers). The GE is a decimal number that describes performance in terms of grade level and months. For example, if a sixth-grade student obtains a GE of 8.4 on the Vocabulary test, his score is like the one a typical student finishing the fourth month of eighth grade would likely get on the Vocabulary test. The GE of a given raw score on any test indicates the grade level at which the typical student makes this raw score. The digits to the left of the decimal point represent the grade and those to the right represent the month within that grade.

Grade equivalents are particularly useful and convenient for measuring individual growth from one year to the next and for estimating a student’s developmental status in terms of grade level. But GEs have been criticized because they are sometimes misused or are thought to be easily misinterpreted. One point of confusion involves the issue of whether the GE indicates the grade level in which a student should be placed. For example, if a fourth-grade student earns a GE of 6.2 on a fourth-grade reading test, should she be moved to the sixth grade? Obviously the student’s developmental level in reading is high relative to her fourth-grade peers, but the test results supply no information about how she would handle the material normally read by students in the early months of sixth grade. Thus, the GE only estimates a student’s developmental level; it does not provide a prescription for grade placement. A GE that is much higher or lower than the student’s grade level is mainly a sign of exceptional performance.

In sum, all test scores, no matter which type they are or which test they are from, are subject to misinterpretation and misuse. All have limitations or weaknesses that are exaggerated through improper score use. The key is to choose the type of score that will most appropriately allow you to accomplish your purposes for testing. Grade equivalents are particularly suited to estimating a student’s developmental status or year-to-year growth. They are particularly ill-suited to identifying a student’s standing within a group or to diagnosing areas of relative strength and weakness.

Developmental Standard Score (SS)

Like the grade equivalent (GE), the developmental standard score is also a number that describes a student’s location on an achievement continuum. The scale used with the ITBS and ITED was established by assigning a score of 200 to the median performance of students in the spring of grade 4 and 250 to the median performance of students in the spring of grade 8.

The main drawback to interpreting developmental standard scores is that they have no built-in meaning. Unlike grade equivalents, for example, which build grade level into the score, developmental standard scores are unfamiliar to most educators, parents, and students. To interpret the SS, the values associated with typical performance in each grade must be used as reference points.

The main advantage of the developmental standard score scale is that it mirrors reality better than the grade-equivalent scale. That is, it shows that year-to-year growth is usually not as great at the upper grades as it is at the lower grades. (Recall that the grade-equivalent scale shows equal average annual growth — 10 months — between any pair of grades.) Despite this advantage, the developmental standard scores are much more difficult to interpret than grade equivalents. Consequently, when teachers and counselors wish to estimate a student’s annual growth or current developmental level, grade equivalents are the scores of choice.

The potentials for confusion and misinterpretation that were described in the previous subsection for the GE are applicable to the SS as well. Relative to the GE, the SS is not as easy to use in describing growth, but it is equally inappropriate for identifying relative strengths and weaknesses of students or for describing a student’s standing in a group.

Percentile Rank (PR)

A student’s percentile rank is a score that tells the percent of students in a particular group that got lower raw scores on a test than the student did. It shows the student’s relative position or rank in a group of students who are in the same grade and who were tested at the same time of year (fall, midyear, or spring) as the student. Thus, for example, if Toni earned a percentile rank of 72 on the Language test, it means that she scored higher than 72 percent of the students in the group with which she is being compared. Of course, it also means that 28 percent of the group scored higher than Toni. Percentile ranks range from 1 to 99.

A student’s percentile rank can vary depending on which group is used to determine the ranking. A student is simultaneously a member of many different groups: all students in her classroom, her building, her school district, her state, and the nation. Different sets of percentile ranks are available with the Iowa Tests of Basic Skills to permit schools to make the most relevant comparisons involving their students.

Types of Score Interpretation

An achievement test is built to help determine how much skill or knowledge students have in a certain area. We use such tests to find out whether students know as much as we expect they should, or whether they know particular things we regard as important. By itself, the raw score from an achievement test does not indicate how much a student knows or how much skill she or he has. More information is needed to decide “how much.” The test score must be compared or referenced to something in order to bring meaning to it. That “something” typically is (a) the scores other students have obtained on the test or (b) a series of detailed descriptions that tell what students at each score point know or which skills they have successfully demonstrated. These two ways of referencing a score to obtain meaning are commonly called norm-referenced and criterion-referenced score interpretations.

Norm-Referenced Interpretation

Standardized achievement batteries like the ITBS and ITED are designed mainly to provide for norm-referenced interpretations of the scores obtained from them. For this reason they are commonly called norm-referenced tests. However, the scores also permit criterion-referenced interpretations, as do the scores from most other tests. Thus, norm-referenced tests are devised to enhance norm-referenced interpretations, but they also permit criterion-referenced interpretation.

A norm-referenced interpretation involves comparing a student’s score with the scores other students obtained on the same test. How much a student knows is determined by the student’s standing or rank within the reference group. High standing is interpreted to mean the student knows a lot or is highly skilled, and low standing means the opposite. Obviously, the overall competence of the norm group affects the interpretation significantly. Ranking high in an unskilled group may represent lower absolute achievement than ranking low in an exceptional high performing group.

Most of the scores on ITBS and ITED score reports are based on norm-referencing, i.e., comparing with a norm group. In the case of percentile ranks, stanines, and normal curve equivalents, the comparison is with a single group of students in a certain grade who tested at a certain time of year. These are called status scores because they show a student’s position or rank within a specified group. However, in the case of grade equivalents and developmental standard scores, the comparison is with a series of reference groups. For example, the performances of students from third grade, fourth grade, fifth grade, and sixth grade are linked together to form a developmental continuum. (In reality, the scale is formed with grade groups from kindergarten up through the end of high school.) These are called developmental scores because they show the students’ positions on a developmental scale. Thus, status scores depend on a single group for making comparisons and developmental scores depend on multiple groups that can be linked to form a growth scale.

An achievement battery like the ITBS or ITED is a collection of tests in several subject areas, all of which have been standardized with the same group of students. That is, the norms for all tests have been obtained from a single group of students at each grade level. This unique aspect of the achievement battery makes it possible to use the scores to determine skill areas of relative strength and weakness for individual students or class groups, and to estimate year-to-year growth. The use of a battery of tests having a common norm group enables educators to make statements such as “Suzette is better in mathematics than in reading” or “Danan has shown less growth in language skills than the typical student in his grade.” If norms were not available, there would be no basis for statements like these.

Norms also allow students to be compared with other students and schools to be compared with other schools. If making these comparisons were the sole reason for using a standardized achievement battery, then the time, effort, and cost associated with testing would have to be questioned. However, such comparisons do give educators the opportunity to look at the achievement levels of students in relation to a nationally representative student group. Thus, teachers and administrators get an “external” look at the performance of their students, one that is independent of the school’s own assessments of student learning. As long as our population continues to be highly mobile and students compete nationally rather than locally for educational and economic opportunities, student and school comparisons with a national norm group should be of interest to students, parents, and educators.

A common misunderstanding about the use of norms has to do with the effect of testing at different times of the year. For example, it is widely believed that students who are tested in the spring of fourth grade will score higher than those who are tested in the fall of fourth grade with the same test. In terms of grade-equivalent scores, this is true because students should have moved higher on the developmental continuum from fall to spring. But in terms of percentile ranks, this belief is false. If students have made typical progress from fall to spring of grade 4, their standing among fourth-grade students should be the same at both times of the year. (The student whose percentile rank in reading is60 inthe fall is likely to have the same percentile rank when given the same test in the spring.) The reason for this, of course, is that separate norms for fourth grade are available for the fall and the spring. Obviously, the percentile ranks would be as different as the grade equivalents if the norms for fourth grade were for the entire year, regardless of the time of testing. Those who believe students should be tested only in the spring because their scores will “look better” are misinformed about the nature of norms and their role in score interpretation.

Scores from a norm-referenced test do not tell what students know and what they do not know. They tell only how a given student’s knowledge or skill compares with that of others in the norm group. Only after reviewing a detailed content outline of the test or inspecting the actual items is it possible to make interpretations about what a student knows. This caveat is not unique to norm-referenced interpretations, however. In order to use a test score to determine what a student knows, we must examine the test tasks presented to the student and then infer or generalize about what he or she knows.

Criterion-Referenced Interpretation

A criterion-referenced interpretation involves comparing a student’s score with a subjective standard of performance rather than with the performance of a norm group. Deciding whether a student has mastered a skill or demonstrated minimum acceptable performance involves a criterion-referenced interpretation. Usually percent-correct scores are used and the teacher determines the score needed for mastery or for passing.

Even though the tests in the ITBS and ITED batteries were not developed primarily for criterion-referenced purposes, it is still appropriate to use the scores in those ways. Before doing so, however, the user must establish some performance standards (criterion levels) against which comparisons can be made. For example, how many math estimation questions does a student need to answer correctly before we regard his/her performance as acceptable or “proficient?” This can be decided by examining the test questions on estimation and making a judgment about how many the minimally prepared student should be able to get right. The percent of estimation questions identified in this way becomes the criterion score to which each student’s percent-correct score should be compared.

When making a criterion-referenced interpretation, it is critical that the content area covered by the test — the domain — be described in detail. It is also important that the test questions for that domain cover the important areas of the domain. In addition, there should be enough questions on the topic to provide the students ample opportunity to show what they know and to minimize the influence of errors in their scores.

Most of the tests in batteries like the ITBS or ITED cover such a wide range of content or skills that good criterion-referenced interpretations are difficult to make with the test scores. However, in most tests the separate skills are defined carefully, and there are enough questions measuring them to make good criterion-referenced interpretations of the skill scores possible. For example, the Reference Materials test covers too many discrete topics to permit useful criterion-referenced interpretations with scores from the whole test. But such skills as alphabetizing, using a dictionary, or using a table of contents are defined thoroughly enough so that criterion-referenced interpretations of scores from them are quite appropriate. However, in an area like Mathematics Concepts at Level 12, some of the skill scores may not be suitable for making good criterion-referenced interpretations. Each of the six skills in that test is a broad content area which is further defined by two to four subskills. Furthermore, some skills, such as measurement, each have only three questions to cover a broad topic. That is generally too few for making sound judgments about mastery.

The percent-correct score is the type used most widely for making criterion-referenced interpretations. Criterion scores that define various levels of performance on the tests are generally percent-correct scores arrived at through teacher analysis and judgment. Several score reports available from Iowa Testing Programs include percent-correct skill scores that can be used to make criterion-referenced interpretations: Primary Reading Profile, Class Item Response Record, Group Item Analysis, Individual Performance Profile, and Group Performance Profile.

Interpreting Scores from Special Test Administrations

A testing accommodation is a change in the procedures for administering the test that is intended to neutralize, as much as possible, the effect of the student’s disability on the assessment process. The intent is to remove the effect of the disability(ies), to the extent possible, so that the student is assessed on equal footing with all other students. In other words, the score reflects what the student knows, not merely what the student’s disabilities allow him/her to show.

The expectation is that the accommodation will cancel the disadvantage associated with the student’s disability. This is the basis for choosing the type and amount of accommodation to be given to a student. Sometimes the accommodation won’t help quite enough, sometimes it might help a little too much, and sometimes it will be just right. We never can be sure, but we operate as though we have made a good judgment about how extensive a student’s disability is and how much it will interfere with obtaining a good measure of what the student knows. Therefore, the use of an accommodation should help the student experience the same conditions as those in the norm group. Thus, the norms still offer a useful comparison; the scores can be interpreted in the same way as the scores of a student who needs no accommodations.

A test modification involves changing the assessment itself so that the tasks or questions presented are different from those used in the regular assessment. A Braille version of a test modifies the questions just like a translation to another language might. Helping students with word meanings, translating words to a native language, or eliminating parts of a test from scoring are further examples of modifications. In such cases, the published test norms are not appropriate to use. These are not accommodations. With modifications, the percentile ranks or grade equivalents should not be interpreted in the same way as they would be had no modifications been made.

Certain other kinds of changes in the tests or their presentation may result in measuring a different trait than was originally intended. For example, when a reading test is read to the student, we obtain a measure of how well the student listens rather than how well he/she reads. Or if the student is allowed to use a calculator on a math estimation test, you obtain a measure of computation ability with a calculator rather than a measure of the student’s ability to do mental arithmetic. Obviously in these situations, there are no norms available and the scores are quite limited in value. Consequently, these particular changes should not be made.




Q.3   What are the benefits of setting up an academy for the organizations?

  • Ans: Business units are individual sections of a large organization which make some of their own operational decisions. A company may also allow business units to make decisions on what to make and sell and keep certain functions at the central level for efficiency reasons. According toColumbiaBusinessSchool, the firm Procter & Gamble centralizes accounting, finance and product development and allows business units to make their own decisions in other areas such as sales, manufacturing and procurement.
  • Business units are helpful when a company needs to rapidly design and release new products. Since the individual unit managers may not need to receive authorization from headquarters before starting work, they can respond quickly to smaller competitors. According toDartmouthUniversity, Cisco authorizes its business unit managers to make the decision to spend money in areas such as sales, marketing and product development. Projects which are not performing well can also be shut down quickly.
  • Regional specialization is an advantage of a business unit. The business unit can be designed to operate according to the workplace conditions and local regulations of a specific market, such asChina. The business unit designs a strategy to sell products to Chinese customers and hires specialized staff who have the flexibility to make marketing decisions. According to the school INSEAD, Siemens allows its business units to act like entrepreneurs when they start up inChinaand other new locations, as the business units have better information about which products local customers want to buy.
  • Managers receive greater motivation when they have control over a business unit. The manager may receive a bonus when the business unit performs well. Inefficiencies in other departments have less of an effect on how the manager’s performance is judged. According toDartmouthUniversity, this decentralized arrangement provides the manager with an incentive to take risks and innovate, as well as to make decisions quickly. A central department has an incentive to standardize every process for the entire company to reduce overall costs, which may not be the most competitive business decision.
  • Business units are easier to monitor as individual units. A company can assign specific tasks to the units, such as attempting to gain as much profit from a mature market as possible or rapid growth to capture market share in a new industry. The company can easily measure which units are not performing well. The unit structure allows the company to use separate criteria to determine whether managers of different business units are effective leaders.

Decision Speed

Regional Operations

Manager Motivation

Performance Monitoring

Q.4      Discuss entrepreneurship in detail.

Ans: An entrepreneur is an individual who accepts financial risks and undertakes new financial ventures. The word derives from the French “entre” (to enter) and “prendre” (to take), and in a general sense applies to any person starting a new project or trying a new opportunity.

Many societies place great value on the entrepreneur. To encourage their activity, they may be offered access to inexpensive capital, tax exemptions and management advice. An entrepreneur has the greatest chance of success by focusing on a market niche either too small or too new to have been noticed by established businesses. To help new technologies come to market, many universities establish business incubators for entrepreneurs hoping to turn leading edge research into marketable products.

Characteristics of an entrepreneur include spontaneous creativity, the ability and willingness to make decisions in the absence of solid data, and a generally risk-taking personality. An entrepreneur may be driven by a need to create something new or build something tangible. In the Austrian schoolof Economics, entrepreneurs are described as being


engaged in the creative destruction of existing products and services. As new enterprises have low success rates, an entrepreneur must also have considerable persistence.

Entrepreneurs are generally highly independent, which can cause problems when their ventures succeed. In a small company the entrepreneur is able to personally manage most aspects of the business, but this is not possible once the company has grown beyond a certain size. Management conflicts often arise when the entrepreneur does not recognize that running a large stable company is different from running a small growing company. The problem is often resolved by the entrepreneur either leaving to start a new venture, or being forced out by shareholders. At Apple Computer, for example, one founder, Steve Wozniak, left to pursue other interests, while the other, Steve Jobs was ultimately fired and replaced with a CEO from a much larger company. Note that many years later, Jobs returned to the helm.

An entrepreneur is an individual who acts like an entrepreneur but from inside the confines of a large organization or corporation..

Q.5     List the tips for successful career planning.

Ans: Career planning is not an activity that should be done once — in high school or college — and then left behind as we move forward in our jobs and careers. Rather, career planning is an activity that is best done on a regular basis — especially given the data that the average worker will change careers (not jobs) multiple times over his or her lifetime. And it’s never too soon or too late to start your career planning.

Career planning is not a hard activity, not something to be dreaded or put off, but rather an activity that should be liberating and fulfilling, providing goals to achieve in your current career or plans for beginning a  transition to a new career. Career planning should be a rewarding and positive experience.

Here, then, are 10 tips to help you achieve successful career planning. 

1. Make Career Planning an Annual Event: Many of us have physicals, visit the eye doctor and dentist, and do a myriad of other things on an annual basis, so why not career planning? Find a day or weekend once a year — more often if you feel the need or if you’re planning a major career change — and schedule a retreat for yourself. Try to block out all distractions so that you have the time to truly focus on your career — what you really want out of your career, out of your life.

By making career planning an annual event, you will feel more secure in your career choice and direction — and you’ll be better prepared for the many uncertainties and difficulties that lie ahead in all of our jobs and career.

2. Map Your Path Since Last Career Planning: One of your first activities whenever you take on career planning is spending time mapping out your job and career path since the last time you did any sort of career planning. While you should not dwell on your past, taking the time to review and reflect on the path — whether straight and narrow or one filled with any curves and dead-ends — will help you plan for the future.

Once you’ve mapped your past, take the time to reflect on your course — and note why it looks the way it does. Are you happy with your path? Could you have done things better? What might you have done differently? What can you do differently in the future?

3. Reflect on Your Likes and Dislikes, Needs and Wants: Change is a factor of life; everybody changes, as do our likes and dislikes. Something we loved doing two years ago may now give us displeasure. So always take time to reflect on the things in your life — not just in your job — that you feel most strongly about.

Make a two-column list of your major likes and dislikes. Then use this list to examine your current job and career path. If your job and career still fall mostly in the like column, then you know you are still on the right path; however, if your job activities fall mostly in the dislike column, now is the time to begin examining new jobs and new careers.

Finally, take the time to really think about what it is you want or need from your work, from your career. Are you looking to make a difference in the world? To be famous? To become financially independent? To effect change? Take the time to understand the motives that drive your sense of success and happiness.

4. Examine Your Pastimes and Hobbies:Career planning provides a great time to also examine the activities you like doing when you’re not working. It may sound a bit odd, to examine non-work activities when doing career planning, but it’s not. Many times your hobbies and leisurely pursuits can give you great insight into future career paths.

Think you can’t make a hobby into a career? People do it all the time. The great painter Paul Gauguin was a successful business person who painted on the side. It actually wasn’t until he was encouraged by an artist he admired to continue painting that he finally took a serious look at his hobby and decided he should change careers. He was good at business, but his love was painting.

5. Make Note of Your Past Accomplishments: Most people don’t keep a very good record of work accomplishments and then struggle with creating a powerful resume when it’s time to search for a new job. Making note of your past accomplishments — keeping a record of them — is not only useful for building your resume, it’s also useful for career planning.

Sometimes reviewing your past accomplishments will reveal forgotten successes, one or more which may trigger researching and planning a career shift so that you can be in a job that allows you to accomplish the types of things that make you most happy and proud.

6. Look Beyond Your Current Job for Transferable Skills: Some workers get so wrapped up in their job titles that they don’t see any other career possibilities for themselves. Every job requires a certain set of skills, and it’s much better to categorize yourself in terms of these skill sets than be so myopic as to focus just on job titles.

For example, one job-seeker who was trying to accomplish career planning found herself stuck because she identified herself as a reporter. But once she looked beyond her job title, she could see that she had this strong collection of transferable skills — such as writing, editing, researching, investigating, interviewing, juggling multiple tasks, meeting goals and deadlines, and managing time and information — skills that could easily be applied to a wide variety of jobs in many different careers.

7. Review Career and Job Trends: Everyone makes his or her own job and career opportunities, so that even if your career is shrinking, if you have excellent skills and know how to market yourself, you should be able to find a new job. However, having information about career trends is vital to long-term career planning success.

A career path that is expanding today could easily shrink tomorrow — or next year. It’s important to see where job growth is expected, especially in the career fields that most interest you. Besides knowledge of these trends, the other advantage of conducting this research is the power it gives you to adjust and strengthen your position, your unique selling proposition. One of the keys to job and career success is having a unique set of accomplishments, skills, and education that make you better than all others in your career.

8. Set Career and Job Goals: Develop a roadmap for your job and career success. Can you be successful in your career without setting goals? Of course. Can you be even more successful through goal-setting? Most research says yes.

A major component of career planning is setting short-term (in the coming year) and long-term (beyond a year) career and job goals. Once you initiate this process, another component of career planning becomes reviewing and adjusting those goals as your career plans progress or change – and developing new goals once you accomplish your previous goals.

9. Explore New Education/Training Opportunities: It’s somewhat of a cliché, but information really does lead to power and success. Never pass up chances to learn and grow more as a person and as a worker; part of career planning is going beyond passive acceptance of training opportunities to finding new ones that will help enhance or further your career.

Take the time to contemplate what types of educational experiences will help you achieve your career goals. Look within your company, your professional association, your local universities and community colleges, as well as online distance learning programs, to find potential career-enhancing opportunities — and then find a way achieve them.

10. Research Further Career/Job Advancement Opportunities:One of the really fun outcomes of career planning is picturing yourself in the future. Where will you be in a year? In five years? A key component to developing multiple scenarios of that future is researching career paths.


Q.6 Write a detailed note on E- manpower planning.

Ans:  E-Manpower Planning in Business:

Manpower planning is certainly a very important part of an organization. Effective manpower planning provides adequate lead-time for the procurement and training of employees, thus, saving time and money. Important company projects and expansion programmes may be delayed if adequate manpower planning and management is not available. Thus, careful manpower planning is extremely important. The benefits of manpower planning are as follows:

Benefits of Manpower Planning:

a. It helps senior management forecast the upcoming surplus and/or shortage of the workforce, hence, results in reduced labor costs.

b. It helps in planning employee development that fosters best use of workers’ skills within the organization.

c. Training programmes become more effective as gaps in the existing manpower surface.

d. Business planning process is improved.

e. Managerial succession plans can be formulated as part of replacement planning processes, which is required with formulating job change plans with managers. Furthermore, this exercise provides lead-time for identifying and developing managers to climb the corporate ladder.

f. Manpower management becomes an important part throughout the organization.

g. Alternate manpower actions and policies can be evaluated.


Master of Business Administration-MBA Semester III

Subject Code – MU0011

Subject Name –Management and Organizational Development

Assignment Set- 1


Q.1)What are the different levels of Management? Elaborate.

Ans: The term “Levels of Management” differentiates different managerial positions in an organization. When the organization grows in size and when the employees also increase in number, it leads to increase in the number of levels of the organization and vice versa. There are three levels of management basically :

1. Top Management – The General Manager, Managing Director, Chief Executive, Board of Directors all belong to this category. Authority mainly lies with this level of management. The top level management generally performs planning and co- ordination function. It lays down the broad policies and goals of the organization. It is also answerable to the shareholders for functioning of the organization. The middle level managers are also appointed by the top level management. It also maintains links with society at large.

2. Middle level Management – The departmental heads and the branch heads belong to this category of management. The Middle level management is answerable to the top level management for functioning of their departments. The middle level management generally performs organizing and directing functions. It implements the organizational goals and plans according to the directions of the top management. They act as mediator between top and lower level management by clarifying and explaining policies from top to lower level. Also the middle level has to communicate significant data and reports from lower level to the top level management. It also boosts the lower level managers for better performance. It even has to train the low level managers.

3. Lower level Management – The foremen, supervisors ,superintendents ,etc. all belong to this category of management. They generally have to personally oversee and direct the lower level employees. This level of management generally performs directing and controlling functions. They train and boost up the workers. They look after the problems and grievances of the workers and try to solve them.

Q.2) Write a note on genesis of Organizational Development

Ans:  Organization development (OD) is a new term which means a conceptual, organization-wide effort to increase an organization’s effectiveness and viability. Warren Bennis has referred to OD as a response to change, a complex educational strategy intended to change the beliefs, attitudes, values, and structure of an organization so that it can better adapt to new technologies, markets, challenges, and the dizzying rate of change itself. OD is neither “anything done to better an organization” nor is it “the training function of the organization”; it is a particular kind of change process designed to bring about a particular kind of end result. OD can involve interventions in the organization’s “processes,” using behavioral science knowledge organizational reflection, system improvement, planning and self-analysis.

Kurt Lewin (1898–1947) is widely recognized as the founding father of OD, although he died before the concept became current in the mid-1950s. From Lewin came the ideas of group dynamics and action research which underpin the basic OD process as well as providing its collaborative consultant/client ethos. Institutionally, Lewin founded the “Research Center for Group Dynamics” (RCGD) at MIT, which moved to Michigan after his death. RCGD colleagues were among those who founded the National Training Laboratories (NTL), from which the T-group and group-based OD emerged. In the UK, the Tavistock Institute of Human Relations was important in developing systems theories. The joint TIHR journal Human Relations was an early journal in the field. The Journal of Applied Behavioral Sciences is now the leading journal in the field.

Organization development is a “contractual relationship between a change agent and a sponsoring organization entered into for the purpose of using applied behavioral science and or other organizational change perspectives in a systems context to improve organizational performance and the capacity of the organization to improve itself“.

Organization development is an ongoing, systematic process to implement effective change in an organization. Organization development is known as both a field of applied behavioral science focused on understanding and managing organizational change and as a field of scientific study and inquiry. It is interdisciplinary in nature and draws on sociology, psychology, and theories of motivation, learning, and personality. Organization development is a growing field that is responsive to many new approaches including Positive Adult Development.

Contractual relationship

Although neither the sponsoring organization nor the change agent can be sure at the outset of the exact nature of the problem or problems to be dealt with or how long the change agents’ help will be needed, it is essential that some tentative agreement on these matters be reached. The sponsoring organization needs to know generally what the change agent’s preliminary plan is, what its own commitments are in relation to personal commitments and responsibility for the program, and what the change agent’s fee will be. The change agent must assure himself that the organization’s, and particularly the top executives’, commitment to change is strong enough to support the kind of self-analysis and personal involvement requisite to success of the program. Recognizing the uncertainties lying ahead on both sides, a termination agreement permitting either side to withdraw at any time is usually included.[2]

Change agent

A change agent in the sense used here is not a technical expert skilled in such functional areas as accounting, production, or finance. S/he is a behavioral scientist who knows how to get people in an organization involved in solving their own problems. His/her main strength is a comprehensive knowledge of human behavior, supported by a number of intervention techniques (to be discussed later). The change agent can be either external or internal to the organization. An internal change agent is usually a staff person who has expertise in the behavioral sciences and in the intervention technology of OD. Beckhard reports several cases in which line people have been trained in OD and have returned to their organizations to engage in successful change assignments.[3] In the natural evolution of change mechanisms in organizations, this would seem to approach the ideal arrangement. Qualified change agents can be found on some university faculties, or they may be private consultants associated with such organizations as the National Training Laboratories Institute for Applied Behavioral Science (Washington, D.C.) University Associates (San Diego, California), the Human Systems Intervention graduate program in the Department of Applied Human Sciences (Concordia University, Montreal, Canada), Navitus (Pvt) Ltd (Pakistan), and similar organizations.

The change agent may be a staff or line member of the organization who is schooled in OD theory and technique. In such a case, the “contractual relationship” is an in-house agreement that should probably be explicit with respect to all of the conditions involved except the fee.

Sponsoring organization

The initiative for OD programs comes from an organization that has a problem. This means that top management or someone authorized by top management is aware that a problem exists and has decided to seek help in solving it. There is a direct analogy here to the practice of psychotherapy: The client or patient must actively seek help in finding a solution to his problems. This indicates a willingness on the part of the client organization to accept help and assures the organization that management is actively concerned.[2]

Applied behavioral science

One of the outstanding characteristics of OD that distinguishes it from most other improvement programs is that it is based on a “helping relationship.” Some believe that the change agent is not a physician to the organization’s ills; that s/he does not examine the “patient,” make a diagnosis, and write a prescription. Nor does s/he try to teach organizational members a new inventory of knowledge which they then transfer to the job situation. Using theory and methods drawn from such behavioral sciences as (industrial/organizational psychology, industrial sociology, communication, cultural anthropology, administrative theory, organizational behavior, economics, and political science, the change agent’s main function is to help the organization define and solve its own problems. The basic method used is known as action research. This approach, which is described in detail later, consists of a preliminary diagnosis, collecting data, feedback of the data to the client, data exploration by the client group, action planning based on the data, and taking action.[4]

Systems context

OD deals with a total system — the organization as a whole, including its relevant environment — or with a subsystem or systems — departments or work groups — in the context of the total system. Parts of systems, for example, individuals, cliques, structures, norms, values, and products are not considered in isolation; the principle of interdependency, that is, that change in one part of a system affects the other parts, is fully recognized. Thus, OD interventions focus on the total culture and cultural processes of organizations. The focus is also on groups, since the relevant behavior of individuals in organizations and groups is generally a product of group influences rather than personality.

Q.3) Explain techno-structural interventions.

Ans: Structural Interventions
May be called as techno structural interventions

This class of interventions include changes in how the overall work of an organisation is divided into units, who reports to whom, methods of control, the arrangement of equipment and people, work flow arrangements and changes in communications and authority.

1.Sociotechnical System: is largely associated with experiments attempted to create better fit among the technology, structure and social interactions of a particular production unit.

Premises of Sociotechnical System
(1) Effective work system must jointly optimize the relationship between their social and technical parts.
(2) Such system must effectively manage the boundary separating and relating them to the environment.

This system tend to feature the formation of autonomous work group, the grouping of core tasks so that a team has major unit of total work to be accomplished, the training of group members in multiple skills, delegation to the work group of many aspects of how the work gets done, and the availability of great deal of information and feedback to work groups for self-regulation of productivity and quality.

2.Self managed teams
What is a self-managed team?
A self-managed team has total responsibility for its defined remit.
That remit might be a specific project. A self-managed team thrives on interacting skill sets, on shared motivation and shared leadership.
The team is autonomous and its members are responsible to no one but each other. The team’s accountability is based on team’s result and not on the performance of its members. Individual performance is an internal team issue.
A self-managed team is not just a group of people working together but also a genuine collaboration. It is measured by its results, not the performance of its individual member.
Self-managed teams:
• Are more independent than other types of team.
• Help to flatten organizational structure.
• Eliminate intermediate levels of responsibility and removes the requirement for middle management.
• Favor natural leaders.

Self –managed teams:
• Should set their targets.
• Should be fully empowered.
• Must monitor performance and maintain quality.
• Should be able to request assistance from outside the team but never have it imposed.
• Must maintain contact with the organization.

3.Work redesign

(Richard Hackman & Greg Oldham)
OD approach to work redesign based on a theoretical model of what job characteristics lead to the psychological states that produce what they call “higher internal work motivation.”

According Hackman and Oldham organisation analyses jobs using the five core job characteristics – i.e. skill variety, task identity, task significance, autonomy and feedback from the job.

Skill variety Related to experienced
Task identity meaningfulness of the work
Task significance

Job autonomy – Related to experienced
responsibility for the outcome
of the work

Feedback – related to psychological state
of knowledge of the result of the
work activities.

The outcome of these job characteristics is:
High work motivation
High satisfaction
High work effectiveness.

4.Quality of work life (QWL)

An attempt to restructure multiple dimensions of the organisation and to institute a mechanism, which introduces and sustains changes over time.

QWL Features
– Voluntary involvement on the part of employees
– Union agreement with process and participation.
– Assurance of no loss of job
– Training for team problem solving
– Use of quality circles
– Participation in forecasting, work planning
– Regular plant and team meetings.
– Encouragement for skill development.
– Job rotations.

These features include union involvement – a focus on work teams, problem solving session by the work teams in which the agenda may include productivity, quality and safety problems, autonomy in planning work the availability of skill training and increased responsiveness to employees by supervision.

Q4)Write a note on future trends in OD.

Ans: Future Trends in Organization Development –

Organization Development

Both a profession and area of scientific inquiryIt is – “A system-wide application and transfer of behavioral science knowledge to the planneddevelopment, improvement, and reinforcement of strategies, structures, and processes that lead toorganization effectiveness.”

It’s a New World

Greater turbulence

More competitive environment


Acceleration rate of change


Greater emphasis on leadership

Greater emphasis on work/life balance

The economy

The workforce

More diverse




More networking/alliances

More knowledge based



· OD is more relevant than ever· A push for the return of traditional OD values – led primarily by NTL· That OD do what is ‘right’ · An emphasis on human process interventions – outcomes are secondary



·Emphasis on relevance and planned change

A push toward professionalism – credentials

Emphasis on change technologies

Performance based interventions

Process interventions is not an end solution – it’s a means for implementing change



Increasing research contributions

Organization theory


Links between change and performance

Focus on understanding, predicting, and controlling change in organizations· Concerned with creating valid knowledge· Less values based – a detached perspective



OD will have more conflicts in the short term

In the long term, it there will be a more integrated approach

More embedded in the organization’s operations

Shorter OD cycle times

More technologically driven

OD will become more interdisciplinary

It will become more diverse and cross-cultural

More concerned with ecological sustainability and other social change effort


Q5) List the different types of Organization culture.

Ans:-When we walk into an organisation and get a certain ‘feel’ for it, whether it is fast moving and responsive, or whether it feels old and backward looking, this ‘feeling’ is referred to ‘organisational culture’. Culture is about how the organisation organizes itself, it’s rules, procedures and beliefs makeup the culture of the company. In this section we are going to briefly look at six types of organizational cultures.


Power Culture

Within a power culture, control is the key element. Power cultures are usually found within a small ormedium size organisation. Decisions in an organisation that display a power culture are centralisedaround one key individual. That person likes control and the power behind it. As group work is notevident in a power culture, the organisation can react quickly to dangers around it as no consultation isinvolved. However this culture has its problems, lack of consultation can lead to staff feelingundervalued and de-motivated, which can also lead to high staff turnover.

Role Culture

Common in most organisation today is a role culture. In a role culture, organisation are split intovarious functions and each individual within the function is assigned a particular role. The role culturehas the benefit of specialisation. Employees focus on their particular role as assigned to them by their job description and this should increase productivity for the company. This culture is quite logical toorganise in a large organisation.


Task Culture

A task culture refers to a team based approach to complete a particular task. They are popular intoday’s modern business society where the organisation will establish particular ‘project teams’ tocomplete a task to date. A task culture clearly offer some benefits. Staff feel motivated because theyare empowered to make decisions within their team, they will also feel valued because they may havebeen selected within that team and given the responsibility to bring the task to a successful end. NASAorganise part of their culture around this concept ie putting together teams to oversee a mission.


Person culture

Person cultures are commonly found in charities or non profit organisations. The focus of theorganisation is the individual or a particular aim


Forward & backward looking culture.

Organisations that have an entrepreneurial spirit, always embrace change and listen to staff and customers are said to be forward looking. Forward looking organisations are risk takers and do well because of it. We can argue that Dyson the vacuum cleaner manufacturer embraces this culture. A backward looking culture does not embrace change and is led by systems and procedures. They do nottake risk and because of it are usually left with a business not doing so well UK store Marks and Spencers is said to be ‘backward looking’ ie slow to change.



Q6) Write a note on designing interventions.

Ans:-Choosing interventions that are well-matched to local needs and capabilities, and then carefully implementing those interventions, are vital steps for increasing healthy eating and active living. Designing effective interventions requires that you use all that has been accomplished and learned about the community throughout the planning process in terms of needs, resources, and interests.


Includes the use of multiple strategies, such as educational, policy, and environmental strategies, within various settings, such as the community, health care delivery system, schools and worksites.

Targets the community-at-large as well as subgroups within the community.

Includes various activities to meet the community’s levels of readiness. When considering intervention components and strategies, lessons learned from what has worked inthe past can provide a valuable foundation for future work. Those strategies, activities, and approaches that research and evaluation have found to be effective in promoting public health are called “bestpractices”. Reviewing these best practices and model programs saves communities from “reinventingthe wheel” and gives immediate direction to program planning. Information about best practices and model programs can help the community determine how to proceed with the specifics of developing its interventions (e.g., whom to involve, which levels should be targeted first, sequence of events and activities). Provided as support material to illustrate current examples and recommended healthy eating active living interventions is:

Intervention strategies:

To be effective, intervention plans should use educational, policy, and environmental strategies. Together the three intervention strategies can be helpful in changing knowledge, attitudes, skills,behavior, policies and environmental factors to improve the health and well-being of the community.


Examples of activities that might be included under each strategy are as follows:

Educational Strategies:

Communication and skill-building.


Communication methods: media advocacy, lecture-discussion, print materials, audiovisual aids, educational television, and programmed learning.


Training methods: classes to develop skills, simulations and games, small-group discussions.


Policy Strategies:

Policies, regulations, laws as well as informal rules and understandings of government and local organizations.


Policies designed to restrict or limit unhealthy actions.


Policies designed to encourage healthy eating and active living: flex time at worksites for employees to engage in physical activity or extended hours to use community recreational facilities.


Environmental Strategies:

Physical or social environmental changes.


Adding more street lights to discourage crime and encourage physical activity.


Converting railroad beds into walking trails


Constructing shower facilities at worksites for employees who exercise


Program Settings:

The intervention strategies in a community health promotion program are most effective when done in as many of the following settings as appropriate. These settings serve as channels through which you can reach your target group as well as sites for using educational, policy, and environmental strategies.



Schools can be viewed as the most important setting for ultimately educating the entire population and more immediately for educating children and youth. A comprehensive school health

Master of Business Administration-MBA Semester III

Subject Code – MU0011

Subject Name –Management and Organizational Development

Assignment Set- 2


Q.1)     What is role negotiation technique? Explain

Ans: When people begin to build new work relationships, the first thing they do is exchange information about their various roles. This is necessary so that each knows what to expect of the other. Once enough information is exchanged, uncertainty about performance disappears and what each person will do becomes more or less predictable. The strength of their relationship depends on how important each is to the other and how sure each can be that the other can and will do what he or she says. What each believes about the other in relation to their performance in a particular role is called role expectation. A trapeze artist, for example, who lets go of the bar at50 metres without a safety net must have relatively high expectations about a partner’s role performance on the swing.

From time to time, there is a violation of expectations – that is, one of the parties to a relationship does not perform in the role as expected. Such disruptions are inevitable. They can be caused by changes imposed from outside the relationship that affect the way the role is performed – a new person is employed, new tasks are assigned, budgets are cut or the work unit is reorganized. Disruption also can be the result of internal changes in either or both of the parties to a relationship – training, new work experiences or personal problems. The disruption can be minor and temporary such as when someone misses a luncheon appointment; or they can be major and permanent such as when the trapeze artist lets go of the bar only to find the partner is a second late in leaving the platform.

An amusing story about four characters points up some common problems with performance owing to role confusion. The four characters in the story are named: Everybody, Somebody, Anybody and Nobody.

There was an important job to be done and Everybody was asked to do it. Anybody could have done it, but Nobody did it. Somebody got angry about that because it was Everybody’s job. Everybody thought Anybody could do it, but Nobody realized that Everybody wouldn’t do it. It ended up that Everybody blamed Somebody when actually Nobody asked Anybody.

When a disruption or change in expectations takes place, it can be dealt with in one of several ways. It can be ignored, an action likely to lead to heightened anxiety, hostility and possible conflict. It also can be handled by actions intended to return things to the way they used to be with promises like “I’m sorry; it wont happen again” or “Don’t worry; everything is all right now.” Although quick and sure, nothing really changes. In other words, this approach is a guarantee that the same problem will arise soon again in the future. Finally, the disruption can be treated in a problem-solving way by sharing any new information about the role disruption and renegotiating expectations. This approach has the advantages of bringing role expectations in line with the way things really are and stabilizing the relationship.


A well-known and effective method for clarifying and changing expectations about the roles and relationships of individuals, teams and other work groups is called the role negotiation technique (Harrison, 1972). With the help of a trainer/facilitator, individuals in a work relationship or members of a team or work group make lists simultaneously of their role expectations for each other, each focusing on what they feel the other(s) can or should be doing, not doing or doing better than they are doing it. These lists are exchanged, discussed and individuals or team members negotiate with each other (I will, if you will….) until there is agreement on changes in role performance on both sides. A master list of agreements is later distributed to all those taking part in the negotiation. The trainer/facilitator:

1. Explains the process,
2. Establishes the ground rules,
3. Makes lists of expectations and agreements on newsprint,
4. Fairly and impartially guides the give-and-take process,
5. Keeps participants talking, listening, and working toward an agreement, and
6. Follows up later, if possible, to be sure agreements made are being kept.

A design for conducting a meeting using the role negotiation technique is presented at the end of this section.


The successful performance of organization work requires integration and coordination of people in the performance of their assigned roles. But, people are not machines. What people expect and what they get in role performance may not be the same. Role negotiation is a technique for bringing the role performance of team or other group members into line with the expectations of their peers, subordinates or superiors. The use of a trained facilitator can help to bring group process experience and objectivity into the interaction.

Q.2) Write a note on Johari Window model.

Ans: The Johari Window is a communication model that can be used to improve understanding between individuals within a team or in a group setting. Based on disclosure, self-disclosure and feedback, the Johari Window can also be used to improve a group’s relationship with other groups.

Developed by Joseph Luft and Harry Ingham (the word “Johari” comes from Joseph Luft and Harry Ingham), there are two key ideas behind the tool:

  1. That individuals can build trust with others by disclosing information about themselves.
  2. That they can learn about themselves and come to terms with personal issues with the help of feedback from others.

By explaining the idea of the Johari Window to your team, you can help team members understand the value of self-disclosure, and gently encourage people to give and accept feedback. Done sensitively, this can help people build more-trusting relationships with one another, solve issues and work more effectively as a team.

Explaining the Johari Window:

The Johari Window model consists of a foursquare grid (think of taking a piece of paper and dividing it into four parts by drawing one line down the middle of the paper from top to bottom, and another line through the middle of the paper from side-to-side). This is shown in the diagram below:

Using the Johari model, each person is represented by their own four-quadrant, or four-pane, window. Each of these contains and represents personal information – feelings, motivation, etc. – about the person, and shows whether the information is known or not known by themselves or other people.



The four quadrants are:

Quadrant 1: Open Area
What is known by the person about him/herself and is also known by others.

Quadrant 2: Blind Area, or “Blind Spot”
What is unknown by the person about him/herself but which others know. This can be simple information, or can involve deep issues (for example, feelings of inadequacy, incompetence, unworthiness, rejection) which are difficult for individuals to face directly, and yet can be seen by others.

Quadrant 3: Hidden or Avoided Area
What the person knows about him/herself that others do not.

Quadrant 4: Unknown Area
What is unknown by the person about him/herself and is also unknown by others.

The process of enlarging the open quadrant vertically is called self-disclosure, a give and take process between the person and the people he/she interacts with.

As information is shared, the boundary with the hidden quadrant moves downwards. And as other people reciprocate, trust tends to build between them.

Q.3)Discuss quality circles.

Ans: Quality Circles are (informal) groups of employees who voluntarily meet together on a regular basis to identify, define, analyze and solve work related problems.
Usually the members of a particular team (quality circle) should be from the same work area or who do similar work so that the problems they select will be familiar to all of them. In addition, interdepartmental or cross functional quality circles may also be formed.
An ideal size of quality circle is seven to eight members. But the number of members in a quality circle can vary.

Other Names of Quality Circles

  • Small Groups
  • Action Circles
  • Excellence Circles
  • Human Resources Circles
  • Productivity Circles

Objectives of Quality Circles

  • Promote job involvement
  • Create problem solving capability
  • Improve communication
  • Promote leadership qualities
  • Promote personal development
  • Develop a greater awareness for cleanliness
  • Develop greater awareness for safety
  • Improve morale through closer identity of employee objectives with organization’s objectives
  • Reduce errors.
  • Enhance quality
  • Inspire more effective team work
  • Build an attitude of problem prevention
  • Promote cost reduction
  • Develop harmonious manager, supervisor and worker relationship
  • Improve productivity
  • Reduce downtime of machines and equipment
  • Increase employee motivation

Quality Circle Meetings

  • Meetings are important part of quality circle’s working.
  • Meetings are attended by all the members of the quality circle.
  • In general, meetings take place once a week or once in a fortnight.
  • Each meeting lasts for approximately one hour, though variations are possible.
  • Apart from the frequency of the meetings, what is important is the regularity of the meetings.

What Takes Place During Quality Circle Meetings?

Any of the several activities may occur during a meeting such as:

  • Identifying a theme or a problem to work on.
  • Getting training as required to enable members to analyze problems.
  • Analyzing problem(s).
  • Preparing recommendations for implementing solution(s).
  • Follow up of implementation of suggestions.
  • Prepare for a presentation to the management.

What Quality Circles are Not? (Misconcepts)

  • Quality Circles do not tackle just quality problems.
  • Quality Circle is not a substitute or replacement for task forces, product committees, joint plant councils or works committees, quality assurance department, suggestion schemes.
  • Quality Circles do not change the existing organizational structure or the chain of command.
  • Quality Circles are not a forum for grievances or a spring board for demands.
  • Quality Circles are not a means for the management to unload all their problems.
  • Quality Circles are not just another technique.
  • Quality Circles are not a panacea for all ills.

Pitfalls and Problems

  • Lack of faith in and support to Quality Circle activities among management personnel
  • Lack of interest or incompetence of leaders/facilitator
  • Apathy, fear and misunderstanding among middle level executives
  • Delay or non-implementation of Circle recommendations
  • Irregularity of Quality Circle activities
  • Non-application of simple techniques for problem solving
  • Lack of or non-participation by some members in the Circle activities
  • Circles running out of problems
  • Antagonism of non-members towards Quality Circle operations
  • Inadequate visibility of management support
  • Complexity of problems taken up
  • Non-maintenance of Quality Circle records
  • Too much facilitation or too little
  • Language difficulty in communication
  • Communication gap between Circles and departmental head
  • Change of management
  • Confusing Quality Circle for another technique
  • Resistance from trade unions

Structure of Quality Circles Program

Six Basic Elements

  • Circle participants or members.
  • Circle leaders/deputy leaders.
  • Program facilitator.
  • Steering/advisory committee.
  • Top management.
  • Non-participating management/members.

How Do Quality Circles Operate?

  • Appointment of a steering committee, facilitator and QC team leaders.
  • Formation of QCs by nomination/voluntary enrolment of QC members.
  • Training of all QC members (by an expert consultant).
  • Training of non-participating employees (by an expert consultant).
  • Problem data bank and identification of problems for QC work.
  • QC problem resolution by QCs through standardized techniques.
  • Presentation of QC solutions to management.
  • Evaluation of award/recognition.

Code of Conduct for QCs

  • Attend all meetings and be on time.
  • Listen to and show respect for the views of other members.
  • Make others feel a part of the group.
  • Criticize ideas, not persons.
  • Help other members to participate more fully.
  • Be open to and encourage the ideas of others.
  • Every member is responsible for the team’s progress.
  • Maintain a friendly attitude.
  • Strive for enthusiasm.
  • The only stupid question is the one that is not asked.
  • Look for merit in the ideas of others.
  • Pay attention- avoid disruptive behavior.
  • Avoid actions that delay progress.
  • Carry out assignments on schedule.
  • Give credit to those whom it is due.
  • Thank those who give assistance.
  • Do not suppress ideas- do express.
  • Objectives and causes first, solutions next.
  • Give praise and honest appreciation when due.
  • Ideas generated by the group should not be used as individual suggestions to suggestion scheme.

Problem Solving Tools and Techniques Used by Quality Circles

Given below are the most commonly used tools and techniques. These are called the old QC tools:

  • Brainstorming.
  • Pareto analysis.
  • Cause and effect diagram (or fish bone diagram or Ishikawa diagram).
  • Histogram.
  • Scatter diagram
  • Stratification
  • Check sheet
  • Control charts and graphs

New QC Tools

Quality circles started using additional seven tools as they started maturing. These are:

  1. Relations diagram.
  2. Affinity diagram.
  3. Systematic diagram or Tree diagram.
  4. Matrix diagram.
  5. Matrix data analysis diagram.
  6. PDPC (Process Decision Program Chart).
  7. Arrow diagram.

Benefits of QC

  • Self development.
  • Promotes leadership qualities among participants.
  • Recognition.
  • Achievement satisfaction.
  • Promotes group/team working.
  • Serves as cementing force between management/non-management groups.
  • Promotes continuous improvement in products and services.
  • Brings about a change in environment of more productivity, better quality, reduced costs, safety and corresponding rewards.

Q.4)What is the role of organizational politics? Explain

Ans: Organizational politics is an inescapable and intrinsic reality. Organizational politics is so intricately woven with management system that relationships, norms, processes, performance and outcomes are hugely influenced and affected by it.

Organizational politics defined

Organizational politics can be described as self serving and manipulative behaviour of individuals and groups to promote their self interests at the expense of others, and some times even organizational goals as well. Organizational politics in a company manifests itself through struggle for resources, personal conflicts, competition for power and leadership and tactical influence executed by individuals and groups to attain power, building personal stature, controlling access to information, not revealing real intents, building coalitions etc.

Interplay between leadership, authority, influence and followers

How organizational politics is related to leadership can be better understood from the fact that organizational leadership occurs in the context of groups, where followers are influenced by the leader to ensure their commitment and voluntary involvement towards predetermined outcomes.

Political climate of an organization is impacted by a leader through treatment and use of authority under different settings which is clearly visible during the acts of decision making, setting agenda and interaction with others to mobilize support, inspire teams and individuals and recognize people.

This interplay between leaders and their authority & influence over the followers set the tone for political climate in an organization.

Understanding of organizations’ political systems – key to success

Understanding of organizations’ political systems is absolutely essential for leadership to maneuver the company towards the goals. Internally grown leaders will have an advantage of knowledge of general political conditions prevailing in the company (different coalitions and centers of influence which can create buy in or create road blocks). Leaders from outside must put efforts to learn and understand the existing organizational politics through keen observation and focused interaction with different groups of people. Some of the indicators available for leaders to assess political climate is general job satisfaction levels, responsiveness to innovative ideas, efficacy of decision making machinery and speed of implementation of decisions. Understanding is the key for leaders to exploit and smother organizational politics and also to enhance their own leadership credibility.

Leveraging political understanding for advantage

Leaders use political leverage available to them under different situations in order to promote the organizational interests.

Once the understanding of organizational politics is gained leaders may use political leverage available to them under different situations in order to promote the organizational interests. Leaders exploit organizational politics even to graduate to leadership positions as potential leaders with proper political orientation may:

  • Time the opportunity to highlight their contribution
  • Ensure top management support for difficult decisions or initiatives
  • Make use of suitable persons (experts, consultants, experienced persons with right image etc.) to put their point across
  • Show respect for hierarchy in spite of the hurdles that it may create

Also political acumen of leaders is put to test when dealing with aspects such as change management and crisis management. In such situations leaders need to quickly identify the group which is going to support them and build a strong coalition with counter strategies backed by overwhelming facts and reasons before the war begins thereby preempting a war. Also crucial at these times is the choice of the persons made responsible to fight the war (change agents or crisis management team) and how critical support is made available to them through subtle changes in organization structure and resource allocation.

Promoting progressive culture not politics

Indisputably, leaders are source of power, influence and hence politics in an organization. Since people have needs and leaders have the authority to fulfill these needs, those who fulfill the needs hold potential power. Leaders can to a great extent smother political climate having negative impact on the people attitudes and organization outcomes by aligning individual needs with organizational goals, in such a way that fulfillment of collective goals results in automatic fulfillment of individual needs also. Leaders must realize that organizational politics is a function of culture of trust in the organization, which is built through values of fairness and transparency. Fair play, justice and transparency in procedures and processes is key in creating an environment where organizational politics take back seat and a progressive culture is established which gives prominence to organizational goals through voluntary involvement of individuals. In other words, leaders must inspire people into action by creating clarity and unity of purpose and build synergies through organizational values.

It is extremely important for leaders to understand, exploit and smother the political climate in the company to maximize the organizational outcome and satisfaction levels of the people.


Q.5) Discuss OD applications for merged and acquired organizations.

Ans: One of the main problems is that mergers and acquisitions are often planned and executed based on perceived cost savings or market synergies; rarely are the “people” and cultural issues considered. Yet, it is the people who decide whether an acquisition or merger works. Customer and employee reactions determine whether the newly combined organization will sink or swim.

Before the merger

Before the merger takes place, the leaders of both organizations – at least, of the dominant one – should have a strategy mapped out, including communications to employees and customers, where layoffs will take place (if any do), and how the cultures should be merged.

A SWOT (strengths, weaknesses, opportunities, and threats) analysis should be done for the combined company. If possible, a brief culture survey (preferably done via interviews as well as paper or Web/e-mail) should be undertaken in both companies to discover what the cultural differences are. Sometimes this will be obvious in some aspects -e.g. one culture values teams and bottom-up innovation, the other favors command-and-control tactics – but not in others, such as how and whether individuals and teams are rewarded for innovations, how failure is dealt with, whether conflict is addressed openly, etc. This will prevent disconcerting delays between the announcement and the implementation of the merger/takeover.

If the real purpose of the merger is to acquire another company’s assets, in terms of a particular product or brand, its factories or patents, etc., that should be acknowledged and dealt with up front. If employees are fooled at first by pleasant words, they will react more strongly when those words become taunts.

Finally, before the merger or acquisition takes place, the leadership teams should consider the non-financial issues. Will people in the two companies be able to work together? Will acquiring a company, or merging with it, destroy the properties or drive away the talent that made it worth having? Can a simple partnership, alliance, or even stock ownership without integration provide more benefits than combining the two companies? These issues may be overlooked by the leadership teams — just as they are often ignored or downplayed by investment bankers who want to do the deal.

Power relationships

In many ways, it makes sense to consider mergers in the same light as acquisitions. It has become a truism that there is no such thing as a merger — one side will come out dominant in each function, even in the friendliest of “mergers.”

There can, in the end, only be one CEO, one head of each function, one head of each department. Therefore, we will generally consider mergers and acquisitions to be interchangeable.

Power issues should be confronted directly to avoid drawn-out conflicts and confusion for employees. Conflicts must be controlled but addressed, to avoid protracted turf wars, lasting bitterness, and employee withdrawal and retention. (Withdrawal can be psychological as well as physical – employees can simply not go that extra mile, and do the absolute minimum required of them. They can also sabotage change efforts and new initiatives. This can last for many years, long after outsiders have forgotten about the merger.)

Personal issues

In most takeovers, both companies’ staff lose some productivity (and people) as employees divert their attention to their own place in the future, merged company. Will they still have a job? Will they have advancement prospects? What will be their role? Will the company gain or lose? This is the time when the best employees may jump ship, because they will find it easiest to get jobs elsewhere — which strengthens the competition even as it weakens the integrated company.

Mergers can be a profoundly demoralizing time, especially if communications from the leaders are sparse or misleading. Many agree that the best way to handle this is to constantly communicate to everyone in the company, using a variety of methods – face to face included – so that people understand the reasons for the acquisition, the combined companies’ strategy, and how the two companies will combine. If layoffs need to be made, they should be announced quickly and directly, again with the reasons and rationale clearly expressed.

As people devote more time to exchanging rumors, trying to find out their status, and dwelling on the change, productivity tends to drop. In the absence of credible, continued information, the grapevine will spread inaccurate rumors with amazing ease. For that reason, the transition should be as short as possible. If there are layoffs, the role and situation of the survivors should be addressed. There is a separate line of research on this, which we will not delve into.

As the integration of the companies proceeds, many may feel that their past ways of working and their contributions are not valued.

In addition to celebrating success, the company must show in word and in deed that it value the best of the old ways, the tradition and heritage of the company being taken over. If the new organization shows total disregard for the heritage of groups being taken over, people will take longer to get over the shock of transition, and may sabotage change or simply “vote with their feet.”

Cultural issues

Culture – the shared values, beliefs, and preferred ways to behave – is hard to control, and in most mergers, it seems that nobody tries very hard to do it. The end result is that the culture usually is not as productive as it should be in the combined organization, moulded primarily by the leaders actions and politically adept or powerful people in each organization. The goal in a merger is for the best of two companies to be preserved, resulting in synergy and continued profit. This applies to culture as well as to operational processes and technologies. The cultures of each company should be carefully examined, and care taken to guide the combined organization’s culture so it incorporates the best of each.

One interesting note on cultural change is that it often seems to come about only when an organization feels that its very survival is threatened. A merger or acquisition provides a fine opportunity for change!

The role of organizational development

When an OD consultant is brought into the merger/acquisition process, there are a number of roles they can play:

Helping the leaders to agree on a clear and specific set of goals for the merger. Setting up measures helps the leadership team to focus on tangible, measurable results, which brings misunderstandings and con- fiict into the open. Measurement is also an excellent communication tool, since it is an action — which gives the words more credibility.

Measuring the results at a number of milestones can also point to potential problems before they become crises, helping to make the merger/acquisition smoother and increasing the likelihood of success. It also helps to keep leaders focused on a balanced set of issues.

Scenario planning – will the merger work if there is a market decline? What are the likely responses of customers and regulators? We wonder if, in the Daimler-Benz takeover of Chrysler, anyone considered reactions to Chrysler no longer being an American company, including a loss of sales (since most of its customers are in theUnited States) and the de-listing from many indexed mutual funds. The 2001 power crises inCalifornia was also seen as a result of lack of scenario planning – in this case, testing the assumption that natural gas prices would stay fiat.

The OD consultant should not usually lead the scenario planning, but they should be there as a process consultant to ensure that every team member’s contribution is heard, and that people are honest with each other and with themselves. (If that sounds too “touchy-feely,” just think about the plight of theCalifornia utilities).

Exploring options – are there other ways to accomplish the same goals without a merger? Again, going back to Chrysler, the company was seeking international expansion and financial security. A partnership with Daimler-Benz, or acquiring an Asian or European automaker, would probably have served the company more than becoming a division of a culturally very different conglomerate. Once more, the OD consultant may be most effective as a process consultant rather than as a leader.

Investigating assumptions – while usually not a separate exercise, the OD consultant, as an outsider, is in a unique position to bring out hidden assumptions. This should be done continuously throughout the process, though scenario planning and exploring options are expressly designed to explore and test assumptions. Sometimes, brief tactical surveys can be taken to test assumptions; sometimes, questions are enough.

Communication – ensuring that a steady stream of information is released by the organization’s leaders; keeping that information balanced, direct, clear, and accurate; and preventing undesirable subtexts from being communicated. The OD consultant should also probe leaders when their words and actions contradict each other, to clarify one or change the other.

Rewards – compensation systems are one thing; intangible rewards are another. Research shows that most people are generally not motivated by money, though they may take a job (or keep a job) for financial reasons. Even where bonuses or profitsharing help to increase motivation, the money itself is often symbolic, a measuring stick for achievement. The OD professional should help the organization to set up milestones and celebrate small and large successes along the route to integration, so that people not only feel progress, but also feel that their achievements are being rewarded. Otherwise, integration may seem like a long, long road.

Cultural assessment – clarifying each organization’s culture to make the task of integration easier, and to ensure that communications and actions do not accidentally cause more harm than good.

Cultural change – working with both organizations to clarify their shared vision of what the culture should be, and then working to make it that way. Johnson & Johnson maintains a shared culture among a large number of companies, some acquired, some home-grown; they do it by having a clear, shared vision and values, and by working with newly acquired firms to ensure that their culture is brought to the J&J way.

Leader coaching to integrate the leadership team, address confiicts, and assure mutual involvement and dedication to the merging process. OD professionals should work at every level of the organization where the merger is taking effect. The goal is to build the ability of the leaders to communicate their intentions accurately, build trust, and manage confiict and tension. Strong leader credibility is key to successful integration.

Working with process teams to identify the best practices in each organization and assure that they are not overtaken by less effective standard procedures from the dominant company, but become the standard procedures for both. This includes operational and service processes, but can also be applied to aspects of the culture.

Integrating initiatives – one problem that is not unique to mergers and acquisitions is initiative overload, where managers are overwhelmed with not just the merging of two organizations, but also quality initiatives, customer projects, SAP implementation, etc. One of the more challenging projects for an OD professional is integrating initiatives and helping leaders to make tough judgment calls on which ones should be suspended, eliminated, or combined.

Watch key processes – often forgotten in the integration are key processes such as new hire orientation, training, and even compensation systems. These processes all support or sabotage both the present and desired culture. OD professionals understand the role of each organizational system plays in the culture; they must keep an eye on all important systems and processes. By remembering what makes mergers succeed and fail, keeping an eye on the human issues as well as the financials, and using the most appropriate organizational development tools, companies can avoid “bad” mergers — and make the good ones work.

Q6. Write a note on training for consultation skills

Ans: Consultancy is the art of acting as an adviser on certain matters that you are well conversant with. It is very common to find people needing the professional opinions of qualified professional in certain field of expertise. Besides having the expert knowledge in the particular area, it is important to know how to handle the consultancy needs of the person needing the help of the said consultant. Engineers, doctors, lecturers, lawyers and other various professional always charge some consultation fees for their services. This shows the importance attached to their opinions and that is why the need of consulting skills training arises.

There are institutions that specialize in the training of consultants with the sole objective of making the consultants more professional and focused in the course of their duties. Perhaps the other burning question at this point would be about who is eligible to attend consulting skills training. Any body who offers consultation services is eligible to attend the training on consulting skills. The list is as endless as the list of professionals. Any other person who has some interests in consultancy is equally welcome to join. The training methods available are also variable and the choice of any of the methods will depend on the individual preference of the aspiring consultant.

Among the available methods of training include the online option or in campus training option. Others are the on sight training method where the trainers come to your place of work or office to conduct the training. Although the on sight training is always preferable in cases where the trainees are many and consolidated in one place in an effort to reduce the training company’s expenses, it is a very good system since it enable the trainee to go about his/her daily chores and only spare a few minutes for the trainer at the agreed time.

It is however important to note that the costs of consulting skills training also vary according to the institution from where you decide to take your training, the method of training that you choose among other logistical challenges involved in the preparation. As such, it is advisable to take sometime and weigh the available options and look at your work schedule to know which program will suite your needs best. If you choose to go for the online training option, you can browse through the various programs available to find one that includes all the important features that you are interested in.


Master of Business Administration-MBA Semester III

Subject Code – MU0012

Subject Name –Employee Relations Management

Assignment Set- 1


Q1. Explain the trait theory of leadership.

Ans: The trait theory of leadership is the view that people are born with inherited traits – and that some traits are particularly suited to leadership.

Early research on leadership – which was a development of the Great man theory of leadership – was based on the psychological focus of the day, which was of people having inherited characteristics or traits.

Attention was thus put on identifying these traits, often by studying successful leaders. The focus was not [as it today] on finding way of teaching these “skills” to people to “develop” leaders, but was on finding other people with these traits who could also become great leaders.

Trait theory of leadership identifies the following traits and skills as critical to leaders [Stogdill 1974]:


  • Adaptable to situations
  • Alert to social environment
  • Ambitious
  • Assertive
  • Cooperative
  • Decisive
  • Dependable
  • Dominant (desire to influence others)
  • Energetic (high activity level)
  • Persistent
  • Self-confident
  • Tolerant of stress
  • Willing to assume responsibility


  • Clever (intelligent)
  • Conceptually skilled
  • Creative
  • Diplomatic and tactful
  • Fluent in speaking
  • Knowledgeable about group task
  • Organised (administrative ability)
  • Persuasive
  • Socially skilled

Four primary traits by which leaders could succeed or fail were identified by McCall and Lombardo [1983]:

  • Emotional stability – centered, confident, predictable – especially under stress
  • Admitting mistakes – rather than wasting energy evading discovery
  • Good interpersonal skills – ability to persuade others
  • Intellectual ability – to understand the wider holistic perspective



Q2.  What is Employee participation? Give examples?

Ans: Employee involvement is creating an environment in which people have an impact on decisions and actions that affect their jobs.

Employee involvement is not the goal nor is it a tool, as practiced in many organizations. Rather, it is a management and leadership philosophy about how people are most enabled to contribute to continuous improvement and the ongoing success of their work organization.

My bias, from working with people for 40+ years, is to involve people as much as possible in all aspects of work decisions and planning. This involvement increases ownership and commitment, retains your best employees, and fosters an environment in which people choose to be motivated and contributing.

How to involve employees in decisionmaking and continuous improvement activities is the strategic aspect of involvement and can include such methods as suggestion systems, manufacturing cells, work teams, continuous improvement meetings, Kaizen (continuous improvement) events, corrective action processes, and periodic discussions with the supervisor.

Intrinsic to most employee involvement processes is training in team effectiveness, communication, and problem solving; the development of reward and recognition systems; and frequently, the sharing of gains made through employee involvement efforts.

Employee Involvement Model

For people and organizations who desire a model to apply, the best I have discovered was developed from work by Tannenbaum and Schmidt (1958) and Sadler (1970). They provide a continuum for leadership and involvement that includes an increasing role for employees and a decreasing role for supervisors in the decision process. The continuum includes this progression.

  • Tell: the supervisor makes the decision and announces it to staff. The supervisor provides complete direction.
  • Sell: the supervisor makes the decision and then attempts to gain commitment from staff by “selling” the positive aspects of the decision.
  • Consult: the supervisor invites input into a decision while retaining authority to make the final decision herself.
  • Join: the supervisor invites employees to make the decision with the supervisor. The supervisor considers her voice equal in the decision process.

To round out the model, I add the following.

  • Delegate: the supervisor turns the decision over to another party.
Example: I work for a company that allows employees to contribute up to 20% of our base salary to buy shares and the employer matches that at 100% so we are basically buying our shares at half price. currently over 87% of eligible employees ( those who have completed 3 months of service)participate with the average employee contributing 14% of their wage.

Q3.Write note on organizational justice.
Ans: The term organizational justice was coined by Greenberg (1987) and is defined as an individual’s perception of and reactions to fairness in an organization. Justice or fairness refers to the idea that an action or decision is morally right, which may be defined according to ethics, religion, fairness, equity, or law. People are naturally attentive to the justice of events and situations in their everyday lives, across a variety of contexts (Tabibnia, Satpute, & Lieberman, 2008). Individuals react to actions and decisions made by organizations every day. An individual’s perceptions of these decisions as fair or unfair can influence the individual’s subsequent attitudes and behaviors. Fairness is often of central interest to organizations because the implications of perceptions of injustice can impact job attitudes and behaviors at work. Justice in organizations can include issues related to perceptions of fair pay, equal opportunities for promotion, and personnel selection procedures.

Types of Organizational Justice

Three main proposed components of organizational justice are distributive, procedural, and interactional justice (which includes informational and interpersonal justice).

Distributive justice is conceptualized as the fairness associated with decision outcomes and distribution of resources. The outcomes or resources distributed may be tangible (e.g., pay) or intangible (e.g., praise). Perceptions of distributive justice can be fostered when outcomes are perceived to be equally applied (Adams, 1965).

Procedural justice is defined as the fairness of the processes that lead to outcomes. When individuals feel that they have a voice in the process or that the process involves characteristics such as consistency, accuracy, ethicality, and lack of bias then procedural justice is enhanced (Leventhal, 1980).

Interactional justice refers to the treatment that an individual receives as decisions are made and can be promoted by providing explanations for decisions and delivering the news with sensitivity and respect (Bies & Moag, 1986). A construct validation study by Colquitt (2001) suggests that interactional justice should be broken into two components: interpersonal and informational justice. Interpersonal justice refers to perceptions of respect and propriety in one’s treatment while informational justice related to the adequacy of the explanations given in terms of their timeliness, specificity, and truthfulness.

Q5.List the advantages of collective bargaining

Ans: collective bargaining has been around since world war 2 and has developed rapidly, some collective bargaining agreements are registered with the labour court and are binding by law, however others are only mutually accepted agreements.

The advantages of collective bargaining include:
· Its an open means of airing grievances in an orderly negotiating factor. employees which has issues regarding certain aspects of their work can address them in a calm collective environment.
· Redresses the imbalance of power. employers have major power within society the use of collective bargaining restores a balance between employees and employers
· Flexible.
· Involves workers.
· Manages conflict. conflict between the social partners can be managed through negation which in turn creates industrial peace and a harmonized society.
· Requires consent of all representatives involved.
collective bargaining encourages industrial peace and less strikes which is a major factor which encourages FDI ( foreign direct investment)

Q6.Write a note on common applications of Human Resource Information System

Ans: A human resource information system (HRIS) is a system used to acquire, store, manipulate, analyze, retrieve, and distribute pertinent information about an organization’s human resources (Tannenbaum, 1990). The HRIS system is usually a part of the organization’s larger management information system (MIS) which would include accounting, production, and marketing functions, to name just a few. Human resource and line managers require good human resource information to facilitate decision-making. An extensive study by Towers Perrin study revealed the following benefits of

Application of HRIS

HRIS can be applied in the following areas of HRM

  • HR planning
  • Succession planning
  • Work force planning
  • Work force dynamics analysis
  • Staffing
  • Applicant recruitment and tracking
  • Employee data base development
  • Performance management
  • Learning and development
  • Compensation and benefits
  • Pay roll
  • Job evaluation
  • Salary survey
  • Salary planning
  • International compensation
  • Benefits management
  • Develop innovative Org. Structure
  • Develop IT

HRIS Benefits:

HRIS has showed many benefits to the HR operations. A few of them can be detailed as;

    • Faster information process,
    • Greater information accuracy,
    • Improved planning and program development, and
    • Enhanced employee communications (Overman, 1992).

Barriers to the success of an HRIS:

    • Lack of management commitment
    • Satisfaction with the status quo
    • No or poorly done needs analysis
    • Failure to include key people
    • Failure to keep project team intact
    • Politics / hidden agendas
    • Failure to involve / consult significant groups
    • Lack of communication
    • Bad timing (time of year and duration

HRIS software:

      • Abra Suite: for human resources and payroll management
      • ABS (Atlas Business Solutions): General Information, Wages information, emergency information, Reminders, Evaluators, Notes customer information, Documents and photos, Separation information.






Master of Business Administration-MBA Semester III

Subject Code – MU0012

Subject Name –Employee Relations Management

Assignment Set-2


Q1. Explain the approaches for management of overseas branches.

Ans:-There are four major approaches to manage overseas branches.


A:. Ethnocentric         B:. Polycentric                        C:. Regiocentric         D:. Geocentric


A: Ethnocentric

It is often seen that the decisions relating to value, culture and strategies are determined by the parent company. Very little power is vested in the subsidiaries. The subsidiaries of a company are managed by an expatriate or a former staff of the parent company. The locals have very little to do with the way things are carried out in a company. Lines of communication  are usually uni-directional as commands are issued by the headquarters. The host-country branch has a diplomatic role to play but is dominated by the customs of the parent company. It is believed that this is during the first stage of development of companies intending to go international and the management at the headquarters takes an alternative step only after a specific period of time (when the company has made progress or established itself internationally).Many American and Japanese companies have been charged of trying to introduce employee relations policies and strategies which are suitable to their home culture but incompatible with the host-country tradition. This strategy is followed in organizations as they believe that their strategies are not only the best but also the only way to proceed. The organization runs the risk of not taking notice of the tradition and culture of the host-country thereby offending the local employees. The local employees in the subsidiary may not believe in the same values and thoughts and hence do not adapt to the parent company regime. McDonalds follows the ethnocentric approach.


B: Polycentric:

Here the local conditions, values and system are taken into consideration in a company. The subsidiary is governed by a home-country (the country in which the headquarters is located) staff and considered as a self-governing business unit. Major decisions, strategy planning and financial investments are decided at the headquarters. However, in this approach the manager of the subsidiary is a local staff and manager-employee relationship is better. This approach helps in maintaining the policies in employee relations as it is compatible with the culture and regime of host-country. Companies like Lever Brothers and Unilever follow the polycentric approach.


C:.Regiocentric and Geocentric

Here the subsidiaries are not limited to boundaries such as home country or the region where an organization has presence. It is organized on a regional basis or geographic basis such as worldwide or global. Control of staff and decision making responsibility is based on regional or geographic constraints. In case of regiocentric, the managers are appointed from the host-country and in case of geocentric, the managers are from any part of the world, that is, the most suited person is appointed for the job. Colgate and Palmolive are examples of companies that follow geocentric approach. It is seen that the companies which follow


Polycentric:, Regiocentric and Geocentric

are truly globalize. In such companies we can expect development of aregion or worldwide approach to employee relations policies and practices.


Q.2 List the core issues of employee relations management?

Ans. Employee participation is the process by which workers take part in the decision making processes, and do not just blindly follow the instructions of their supervisors. Employee participation is essential for empowerment of employees in an organization. Empowerment implies decentralizing authority in an organization. Team participation is very essential for empowerment. Team members are motivated to make decisions by themselves according to the guiding principles and structures that are set up for self management. Quality initiatives within an organization require employee participation. Each and every employee is encouraged to take incorporate quality measures in all activities in order to satisfy the needs of the customers. Employee participation is also essential for the efficient management of human resources in organizations. Employees feel motivated when organizations empower employees to take decisions. Employee participation is also known as Employee Involvement (EI).





Examples of schemes which encourage employee participation include the following: Project Management Teams or Quality Teams:



Workers perform tasks that assign significant responsibilities to the team.


Suggestion Schemes


Workers are provided with channels through which they can convey new ideas to their supervisors. Frequently, deserving suggestions are suitably rewarded.
Consultation Exercises and Meetings:

Workers share their ideas and experiences which help to achieve the ommon tasks and goals.


Delegation of Responsibilities within the Organization

Employees who deal with customers often have to be empowered to make their own decisions and assigned more responsibilities.


Multi-Channel Decision Making Techniques:

Decisions are not only taken in descending flow, they also result from communications upwards, sideways, and in various other ways within the organization. By now you must be familiar with Collective Bargaining. It is also a form of employee participation. Collective bargaining represents a process of negotiation about working conditions and terms of employment hereby two or more parties (employers’ and employees’ associations)come together and negotiate with a view of reaching an agreement. Thus collective bargaining enables employees to take part in the decision-making process through the employee representatives of the trade unions. Adoption of the Employee Stock Ownership Plan (ESOP) makes employees stakeholders in the company and hence increases employee participation and feelings of ownership. For example, United Airlines of theU.S.A.gave 55%of its equity stake to its employees in exchange of pay cuts and was able to secure employee participation. The Occupational Health and Safety Management Systems of U.S.A. also recommend employee participation at all levels in decisions that affect the health and safety of employees. It suggests the use of safety representatives, joint labour-management committees, work groups and teams to support employee participation in implementing health and safety schemes. Employees can conduct workplace inspections, analyse safety hazards, develop and revise safety rules, and train new employees.


Q.3 What is organization culture? What are the elements of organization culture?

Ans: Organizational Culture Definition:

What is organizational culture? There are many possible definitions of organizational culture.  Below is one organizational culture definition:

Organizational culture reflects the values, beliefs, and norms that characterize an organization as a whole.

This definition suggests that organizational culture reflects what is common, typical, and general for the organization.   Values, beliefs, and behaviors that are uncommon in the organization, or specific to a particular subgroup within an organization, would not be considered to be part of the culture of the organization.

Elements of Organizational Culture:

There are many possible elements of organizational culture.  The above definition includes three of the elements of organizational culture.

Organizational Values.  Values reflect what we feel is important.  Organizations may have core values that reflect what is important in the organization.  These values may be guiding principles of behavior for all members in the organization.  The core values may be stated on the organization’s website.  For example, an organization could state that their core values are creativity, humor, integrity, dedication, mutual respect, kindness, and contribution to society.

Organizational Beliefs.  Beliefs that are part of an organization’s culture may include beliefs about the best ways to achieve certain goals such as increasing productivity and job motivation.  For example, an organization may convey the belief that the expression of humor in the workplace is an effective way to increase productivity and job motivation.
Organizational Norms.  Norms reflect the typical and accepted behaviors in an organization.  They may reflect the values and beliefs of the organization.  They may reflect how certain tasks are generally expected to be acomplished, the attributes of the work environment, the typical ways that people communicate in the organization, and the typical leadership styles in the organization.  For example, the work environment of a company may be described as relaxed, cheerful, and pleasant.  Moreover, the organization may have a participative decision making process in which many people in the organization are able to express their views concerning important decisions.  Also, an organization may have many meetings to discuss ideas.
The Importance of the Organizational Culture Concept

Organizational culture may be an important concept for a few reasons.  First, understanding the culture of an organization may be helpful for applicants.  They may have a better idea about whether they would like to work for a company.  Second, understanding the culture of an organization may help in training new employees.  Third, understanding organizational culture may help leaders to identify possible sources of problems in the organization.
Organizational Culture and Leadership

There may be at least three ways in which leadership is important with respect to organizational culture.  First, a leader of an organization may play an important role in identifying the elements of the organization’s culture.  The leader could make a list of the organization’s current values, beliefs, and norms.  Second, after identifying the current elements of the organization’s culture, the leader can make evaluations of the elements of organizational culture that may be negative.  The leader could make a list of the specific values, beliefs, and norms that may contribute to major problems in the organization (e.g., a lack of job motivation).  Third, after identifying the possible negative elements, the leader could develop strategies to foster a positive organizational culture change.  The leader could make a list of the elements of a more ideal culture, develop specific ways to communicate the changes, and develop techniques to motivate people to adopt the new culture.
Organizational Culture Change

There may be many reasons why the culture of an organization needs to be changed.  These reasons may include lack of  morale, lack of job motivation, lack of job meaning, and changes in the business (e.g., the development of a new product) that would require a change in the way things are done in the organization.
For example, there may be too much micro management in a company.  It may be better if employees had more autonomy.  This may increase morale.  Sherman (1989) found that unit morale was positively correlated with autonomy.  Because this finding is correlation, we cannot make causal conclusions.
This process of culture change should involve all members of the organization.  This process of culture change could involve surveys in which members describe specific elements of the organizational culture that members view as negative.
Culture vs. Organizational Culture

Although the concept of organizational culture is similar to the concept of culture, it is important to make a distinction between the two concepts.  There may be a few ways in which these concepts may be different.  First, organizational culture may be more formal than culture. Some organizations may have a significant part of their culture in written form.  For example, they may have the core values stated on the website, and the values, beliefs, and norms of the organization may be indicated in employee manuals.  In contrast, much of the values, beliefs, and norms that are a reflection of a culture may be unwritten.  Second, there may be less consistency between elements of organizational culture than elements of culture.  Some of the elements of organizational culture that are in written form may be inconsistent with certain norms observed in the organization.  In contrast, many of the norms of a culture may simply reflect the values of the culture.



Q4. Describe the main actors involved in industrial relations.

The following are the main actors, who are directly involved in Industrial Relations:


Are those who engage a worker and pay the worker a fixed salary on return for services rendered? Employers have the right to employ and fire employees. Their decisions like relocation, introduction of new technologies, mergers and acquisitions affects their employees.



Is an individual who is hired by a person or a business and is remunerated for the services rendered? Employees need a good working environment.


They have aright to voice their opinions and convey their grievances. Employees generally form anion in order to obtain their rights from the management. Employees expect the union to support them on all issues.



They influence employee relations by means of laws, rules, regulations, and policies. The government establishes the legal framework for management-trade union interaction. The government also helps in settlement of industrial disputes. They also regulate incomes and establish minimum wages. For example, inAustralia, the Commonwealth has enabled employers under their jurisdiction, to bypass unions and negotiate directly with individual employees. But the individual states have reaffirmed the collective bargaining process and the role of unions.


Trade Unions

They promote and protect employee interests. Trade unions help unmaking decisions by following the process of collective bargaining and negotiations, with the management. Good trade unions improve communication between the management and the employees. Trade unions also help in settling of industrial disputes. For example, theUnited Stateshas low levels of unions compared to the European Union. Hence, the companies in theUnited Stateshire and fire employees at will, while their European counterparts have to consult the trade unions.


Employer Associations

They help in enhancing the performance of enterprises. Employer Associations represent employers in collective bargaining, depose before tribunals and courts, and engage in public and media relations. They also provide a forum for discussions and debates on specialized subjects. Employer Associations advise, educate, and assist members in industrial disputes. They also lobby with the government for industrial reforms.


Courts and Tribunals

These help in resolving industrial disputes. Labour courts examine the legality of orders passed by the employers, the discharge of employees, withdrawal of concessions or privileges, matters relating to lock-outs and strikes. Industrial tribunals deal with matters related to wages, compensations and other allowances, bonuses, rules of discipline, retrenchment, and closure of organizations. For example, the Australian Industrial Relations gives great importance to courts. The courts give quick  binding decisions thus, minimizes economic losses. The influence of


each actor varies in different industrial systems. In some systems, the government dominates the relationships and in some others, it only plays a minor role. Some industrial systems emphasize employee interests while others emphasize employer interests. Employees usually interact with their employers through representative unions. Some countries facilitate these trade unions, whereas some countries discourage them. Hence, the goals and actions of the trade unions vary from country to country


each actor varies in different industrial systems. In some systems, the government dominates the relationships and in some others, it only plays a minor role. Some industrial systems emphasize employee interests while others emphasize employer interests. Employees usually interact with their employers through representative unions. Some countries facilitate these trade unions, whereas some countries discourage them. Hence, the goals and actions of the trade unions vary from country to country.







Q5. Explain the steps in formal grievance redressal procedure


Ans: There are three formal stages to redress any grievance. Each stage hasa form which is numbered according to the stage it belongs. First, it has to be noted that the grievances have to fall under one of the following categories to be considered as one: Amenities


Conditions of work

Continuity of service

Disciplinary action


Stage 1 of grievance redressal procedure

An employee who has a grievance meets the shift-in-charge and discusses it. If necessary, the employee obtains a copy of grievance form 1. It is done within a week of occurrence of the aggrieving incident or when the employee became aware of the situation. In case of promotion, a time limit


of six weeks from the date of the promotion is permitted. The employee fills up the particulars and hands it over to the shift-in-charge and obtains an acknowledgement receipt in return. The shift-in-charge makes the necessary enquiries and returns the form to the employee with remarks filled in the form within two working days from the date of receipt of the form. In cases where reference to higher authorities or to another department is necessary, more time is provided.


Stage 2 of grievance redressal procedure

If the matter is not resolved at Stage 1, the employee obtains grievance form2 and submits it to the next senior manager. The senior manager arranges a meeting within three working days. The department head discusses the issue with the concerned supervisor and the employee and returns the grievance form to the employee with remarks. A unionized member may assist the employee at this stage of grievance redressal.


Stage 3 of grievance redressal procedure

If the employee is not satisfied with the reply of the departmental head, the employee appeals to the Chairman of his Unit Grievance Redress Committee within seven working days of the receipt of reply at Stage II. The employee obtains a copy of grievance form 3from the shift-in-charge. There commendations of the Unit Grievance Redress Committee are considered unanimous and binding on the employee, if no objections are raised by either the management or the union. If objections are raised, the matter is sent for further consideration to the resident director who discusses it over with the president or the deputy president before arriving at a definite conclusion. Figure depicts the formal flow of grievance procedure.



Grievance Handling Procedure within an Organization





Q6)What are the different types of disciplinary problems?

Ans:The main types of disciplinary problems are explained as follows:


Excessive Absenteeism: Absenteeism occurs when an employee does not report to work due to time off, illness or any other reason. Excessive absenteeism results in loss of productivity. Absenteeism is corrected by employing progressive discipline. Employees need to be aware of the absenteeism policy of the company. They also have to be aware of the fact that the company monitors employee absence. Employees need to take responsibility for their absenteeism and substantiate their absenteeism with valid records like medical certificates in case of health related absences.


Poor Timekeeping: Reporting late to work, leaving early, indulging in extended tea or lunch breaks, doing personal work during office hours, and other time-wasting practices reduce the time spent doing productive work. Poor timekeeping disrupts business and creates a bad atmosphere. These habits


have to be curbed and employees need to know that it is mandatory for them to spend certain fixed hours at their workstations or premises doing productive tasks.


Improper Personal Appearance: Dress codes are enforced in organizations to project a professional appearance or for safety reasons. Employees are to be made aware of the consequences of their inappropriate attire. For example, synthetic clothe scan catch fire easily. Company policy also needs to describe situations where the employee has to dress formally.


Substance Abuse: Alcohol and drug abuse can lower employee concentration and decrease performance. Substance abuse also results in absenteeism, accidents at workplace and inappropriate behavior. Organizational policies on substance abuse need to be communicated with the staff. Employees who are addicted to alcohol or drugs have to be counseled or helped in other ways like therapy and detoxification programmes.


Defective Performance: Defective Performance results when a task is not completed on time, or is of sub-standard quality, or the task is not done according to requirements. An employee may perform poorly either due to lack of interest or due to lack of capability. Managers need to assess poor performances individually, determine the constraints and take corrective actions.


Poor Attitude: Sleeping on the job, being careless while working, fighting with co-workers, gambling in the work place, insulting supervisors, being rude to customers and colleagues, and such practices reflect poor attitudes. These actions can adversely affect other employees. Thus, these attitudes have to be corrected to maintain a good and productive work atmosphere.


Insubordination: Insubordination can take the form of refusing to perform legitimate task that has been assigned, ignoring the instructions of managers, criticizing challenging the orders of a superior, using abusive language or making disrespectful gestures like rolling the eyes. Insubordination can affect the morale of the entire team. Organizations need to spell out their policies on in subordination. Managers have to be equipped with proper procedures to deal with insubordination.


Workplace Violence: Companies need to have training programmes to its security personnel so that they recognize warning signs and know how to deal with violent behavior of employees. Employee handbooks need to clearly state that violent behavior will not be tolerated and will result in termination.


Harassment: This behavior causes discomfort to the co-workers and reduces employee morale. Making crude and sexual remarks or forcing another co-worker to do certain non-legitimate tasks constitutes harassment. For example, a manager may repeatedly ask an unwilling subordinate for a date. Companies need to have in place a clear sexual harassment policy and employees have to be trained on what constitutes harassment.


Theft & Sabotage: Sometimes employees steal money, equipment, supplies or confidential information belonging to the company. Some aggressive employees may damage or destroy organizational equipment and facilities. Some employees may falsify records and accept bribes and indulge in actions that are detrimental to the organization. Organizations have to strictly deal with such



Master of Business Administration-MBA Semester III

MU0013 – Human Resource Audit

Assignment Set- 1


Q.1 Discuss the approaches to  HR Audit.

Ans: As the term audit has evolved, It is becoming increasingly specific, until the term functional audit has emerged. The objective of a functional audit is to diagnose, analyze, control, and advise within the boundaries of each functional area of the company.

The HR audit is also a functional audit which emphasize on the well being of HR functions in the organisation. Thus, as a first approach, one could say that HR auditing consists of diagnosing, analyzing, evaluating, and assessing future lines of action within the framework of HRM.

HR auditing is one of the basic tools for the management of a company. It not only attempts to control and quantifying of results, but also the adoption of a wider perspective that will aid in defining future lines of action in the HRM field.

HR auditing must perform two basic functions [Cantera, 1995].

  • it must be a management information system whose feedback provides information about the situation in order to facilitate the development of managing processes or the development of HR.
  • it must be a way of controlling and evaluating the policies that are being applied, as well as the established processes.

In the above sections, you have already realizes that in order to secure the operative efficiency and user or client satisfaction, an appraisal of the results of the HR function is necessary. The results can be valued through their cost (a measurement internal to the function) [Walker, 1998]. This would lead the company to consider some basic points:

  • There are adequate HR policies being developed in the organisation or not.
  • There are the desired results being obtained from HR policies being followed.
  • The extent to which HR policies add value to company

The main objective of this work is to offer a few guidelines for the appraisal of the HR function, which is in itself the basis for the auditing process. The purpose is to set conceptual limits for its content and to present the different approaches with which the HR audit can be presented.


Q.2   What are the goals of HR Audit.

Ans: Ans: The goal of HR Audit is to assess the effectiveness of HR aspect in question or various HR aspects and verify whether they are properly co-ordinating with the goals of organization, diagnose any problem thereby and taking timely corrective actions.

The other goals may be:

1. To examine and pinpoint strength and weaknesses related to HR areas and Skills and Competencies to enable an organization to achieve its long-term and short-term goals.

2. To increase the effectiveness of the design and implementation of human resource policies, planning and programs.

3. To help human resource planners develop and update employment and program plans







Q.3 What are the different types of interview?

Ans: Ans: Telephonic Interview: Telephonic interviews give the company a chance to get a feel for your skill-set, interests, desired compensation etc., and see if there is a match between their needs and your strengths. If there is enough common ground, then the phone interviews are almost always followed-up by an in-person interview.

Phone interviews are generally conducted in two steps.

  • The first step is with a recruiter in Human Resources.
  • The second step is a technical interview, usually with one of the people you would be working with.

Technical phone interviews are usually only conducted for people living outside the geographical region. This is done because the company wants to have some level of confidence in your technical abilities before they decided to spend the money to fly you in for an in-person interview.

1. Direct interview: It is brief but straightforward, face-to-face question-answer session between the interviewer and the interviewee. No in-depth analysis of the candidate ability skills is done. Characteristics or attitudes can be possible find out in such interviews. But if carefully planned, some of these limitations can be avoided.

2. Indirect interview: In this type of interview, no direct questions are asked to the candidate, he is encouraged to express his views about any topics. And how he rates the enterprise and the job applied for him. The interviewer in such cases will be a patient listener either disrupting the thoughts of the candidate.

3. Patterned interview: In this type of interview, a set of standard questions will be framed in advance. Ideal answer will also be framed before itself. Then the answers given by the candidate will be analyzed with the prepared pattern.

4. Stress interview: In this interview, the candidate is analyzed how he reacts to the situation under considerable stress and strain. The candidate should not get irritated or get angry; he should be cool and confident in his answers.

5. Board or Panel interview: In such an interview, there will be many interviewers each would be focusing on certain areas. The candidate is selected or rejected by the combined performance rating of the interviewer.

6. Group interview: In this type of interview, many candidates are interviewed at the same time. A situation will be given to them and all the candidates are asked to participate in the discussions.

Q.4   Explain compensation system.

Ans: Employee compensation system along with the benefits programs, are one of the most complex HR systems. A reward system should help support the organization’s strategic mission, motivate employees, and reward performance.

Compensation systems should be both externally competitive and internally equitable. Auditors may want to work with a compensation expert when reviewing this area. A review of the organization’s salary administration process is also important to determine how employees are paid throughout their careers, including merit increases, variable performance pay, promotions, bonuses, stock options, and deferred compensation, to name a few.

Base salary

During the audit, auditors should ensure that: a compensation philosophy has been developed that defines how the organization wants to pay people with respect to its position in the labor market; there are current job descriptions for each position; an effective market analysis has been conducted; a salary structure has been developed to help manage pay, and an appropriate job evaluation system is being used to slot jobs into the salary structure.


Sales incentives

Sometimes past incentive programme may be a reason for disappointment to both you and your salespeople. At the time of HR audit, sales incentive programme should be crosschecked because a payment less than the worth may lead the sales team to under perform or fail as a result.

Corporations use incentive programs to drive behavior and it is a well known fact that what gets rewarded gets done. To ensure that the incentive programme at your organisation work, you may use

The 80-20 principle: Twenty percent of the salespeople make eighty percent of the sales and profits. Too often, sales incentives are geared to the entire sales force. This may seem to be a fair strategy, but a strategist should remember that these 20% people are already motivated. That means that the sales incentives should be good enough to

1.    Keep these motivated sales personnel going and

2.    Light a fire under the next twenty percent the next logical group

The results have shown that this doubles the business in a more cost efficient manner.

Keep it simple: Good salespeople look to simplicity to make things happen. Thus the organisation must keep the incentive program sweet, simple and attainable. There can be no ambiguity. Anything less will result in a lack of interest, as well as a waste of time and money that can sometimes spill over into other departments whose task it is to administer and account.

Productivity incentives

HR audit should employ meaningful methodologies of productivity measurement to evaluate and monitor the performance of a business operation. Productivity measurements must show a linkage with profitability and should clearly demonstrate how efficiently (or inefficiently) a company is using its resources to produce quality goods and services.

Executive bonus programs

In most of the companies, title and seniority mean more when it comes to bonus pay. By granting bonuses according to title and seniority, companies turn them into entitlements, not incentives. Due to this, executives, who do the field work and put in more labour do not get that much of the bonus.

HR auditor should ensure that the organization links incentives to performance as the only fair and rationale way to reward employees. Bonus plans by design, should be geared to reward employees for short-term performance.

 Team based incentives

Since in most of the big organisations, a project is assigned to a whole team together and the performance on the project depends on the collective performance of the team, the HR auditor should check if the due reward is being paid to the collective performance of the employees.

There are primarily two ways to offer team based incentives, viz.

1.    Team based

2.    Gain sharing

Exempt and non-exempt status determination

This concept is more prominent inUSAwhere the HR auditor should analyse if the finance department has correctly determined whether a salaried associate should be exempt or non-exempt? Exempt status is regulated by the Fair Labor Standards Act (FLSA).  When determining exemptions, employers must first consider the way in which the employee is paid (hourly vs. salaried), then they must review the duties and responsibilities of the job.  Although, there are a number of unique position that provide for exempt status.

Overtime computation

According to the labour laws in India, when a worker works in an employment for more than nine hours on any day or for more than forty-eight hours in any week, he shall, in respect of such overtime work, be entitled to wages at double the ordinary rates of wages.

Q.5 a Write note on Audit of HR Function.

Ans: Audit of Human Resource Function

Good starting point of audit process is to take some time and reflect on HR functions which need to be audited. Simply listing them is a good first step. For achieving organizational goals, it is very important to carry out various HR functions smoothly. In this step of audit process, we define the various functions which need to be audited.s

In this step consider your areas of responsibility and traditional HR practices covered by the functions, you need to audit. In starting out, it is better to make more general statements and improve from year to year in those areas that you choose to raise the level of performance. For example as an audit manager, you may decide to audit any of following:

  • All human resource functions.
  • Any specific function like recruitment process of your company.
  • Any part of the specific function you have selected for audit like generating applicant pool function of recruitment process,

The main purpose is to study and analyze each one of the specific areas of HRM. The analysis should focus on the planned measures, the method of implementation, and the results obtained. In order to carry this out, the areas that need to be audited must be identified. A list of the indicators corresponding to the different areas of the HR function could contain some of the following:

Description of the staff of the company

The complete staff can be described by:

  • hierarchic levels
  • years of service
  • qualification
  • sex
  • nationality
  • the number of permanent and temporary employees, interns and physically or mentally challenged employees
  • indexes of personnel rotation and absenteeism

Job analysis

  • The various indicators of Job analysis are as follows:
  • The number of described posts
  • Occupants per post
  • Degree to which the job description cards have been updated
  • The degree of detail in the job description cards
  • The methods used to analyze and describe the jobs.



HR planning

HR planning, as you have studied in unit 7, is an important area of preplanning includes the methods employed to plan personnel needs, the measures adopted to cover future personnel needs, and the temporary planning horizon.

Recruiting and personnel selection

  • Main indicators of this are as follows:
  • the number of days required to a vacant post
  • the number of applications received by work place categories
  • the average amount of days between the reception of the application
  • the average cost of recruitment
  • cost of selection per job post
  • the degree to which internal and external sources of recruitment are used
  • the average number of candidates that do not pass the selective tests
  • the study of the reliability and validity of the selection tests

Training and development

  • The training indicators are as follows:
  • the procedures followed
  • frequency to which personnel training needs are analyzed
  • the criteria followed in the training programs
  • the evaluation criteria of the efficiency of the training programs
  • the percentage of the HR budget dedicated to training
  • the average number of hours of training per employee
  • The percentage of employees that participate in training programmes by work place categories.

Development of professional careers

These indicators focus on the vacancies covered internally.

These indicators include:

  • the percentage of people promoted per number of employees;
  • the percentage of vacancies covered internally and externally and the average time per employee it takes to receive a promotion.


Q.6 Write a note on design and implementation of competencies model.

Ans: During an HR audit, due attention must be paid to find out if the competencies model has been adequately designed and developed or not. There are three ways in which competencies models may be developed:

1. Behavioral Indicators: Behavioral indicators describe the behaviors, thought patterns, abilities and traits that contribute to superior performance.

2. Evaluative Competency Levels: Exceptional competencies of high performers are set as standards for evaluating competency levels of employees.

3. Competencies Describing Job Requirements: This approach is useful for organizations having multiple competency models. Competencies required in a particular job are described. Job specific competency models help in structuring focused appraisal and compensation decisions.

To identify role-specific competencies required industry specific, functional and behavioral competencies, which need to be developed for enhanced performance. The approach for developing a competency framework for a particular role is as proposed below:

Understand strategic business context of the organizations in term of its structure and environmental variables.

Detail role description for positions. Defining and scaling (relative importance and mastery level) of specific behaviors for each identified competency as a measure of performance.

Develop competency framework taking into consideration the core values and the culture of the organizations in addition to specific functional and level requirements. This should gel with the vision and mission of the company.

Validate the competency framework through a workshop, which should include functional experts and top management personnel in order to define critical and desirable competencies. And also to substantiate the extent to which the competencies differentiate between high and average performers by validating the content and criteria.

The auditor should establish the link between people and roles through effective measuring tools that evaluate the performance of the person in the role. On-the-job performance of the individual is evaluated on the basis of a performance management system.

The assessment centre is a powerful tool in the hands of the management for selection and development. As a selection tool it can be used for management promotions, fast tracks schemes, high potential list and change of functional role. As a development tool, it is helpful in succession planning, identifying training needs and career development.

Designing and conducting a potential assessment centre should follow basic principles in term of accuracy, fairness, reliability, legality, efficiency, multiple assessors, multiple tests and optimal stress to increase performance. It would involve two types of exercises, i.e., group exercises and individual exercises.

Group Exercises

For potential assessment, the following group exercises are conducted:

  • Assigned Role Exercises: Used to assess negotiating skills, decision making skills, and risk taking skills;
  • Unassigned Role Exercises: Used to assess ability to handle uncertainty, change orientation, ethical behavior and global orientation; and
  • Team Exercises: Used to assess ability to work in a team and solve problems efficiently.

Individual Exercises

For potential assessment, the following individual exercises are conducted:

  • In-Basket Exercises: Used to assess ability to plan, organize, decide, manage and delegate;
  • Learning skill Inventory/Psychometric Inventories: Used to assess ability to learn, leverage knowledge and indicate behavioral patterns; and
  • Interpersonal Effectiveness Module: Used to assess interpersonal effectiveness, excommunication skills, patience and interpersonal skills.


Master of Business Administration-MBA Semester III

MU0013 – Human Resource Audit

Assignment Set- 2

Q.1 Write a detailed note on staffing.

Ans: Staffing is the process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organization’s effectiveness.

Figure will help you to understand the staffing process.

Staffing Process

Now study the various steps in the staffing process which are explained below:

1. Planning work force requirements is the first step in staffing process which involves forecasting and determining the future manpower needs of the organization and thus planning about the number of employees required in any organization.

2. Inrecruitment organizations invites and solicits applications made to the desirable candidates.

3. Inselection, screening of applications is done and suitable candidates are appointed as per the requirements.

4. Orientation and Placement: Orientation involves induction of employees so that they come to know the working culture of the organization.

5. Training and Development: Employees recruited may have many skills but which is required out of them in the concerned organization is important.

6. Remuneration: It is a kind of compensation provided monetarily to the employees for the job they performed. This is given according to the nature of job-skilled or unskilled, physical or mental, etc. Remuneration forms an important monetary incentive for the employees.

7. Performance Evaluation: In this expected results are compared with actual results

8. Promotion and Transfer: Based on the previous step, the decision of promotion and evaluation of the employee is taken up.


Q.2 Discuss approaches to HR Audit.

Ans: HR auditing in recent years is not only considered mere instrument of control an but also has become a necessary decision making tool in personnel related matters according to the global objectives of the company. As a result, all of the functions and competencies of HR auditing are being progressively expanded.

1 Approaches to Human Resource Audit by Walker

Walker[1998] differentiates between two approaches relative to HR auditing i.e. those centered in the functions internal aspect, and those centered on the external aspect.

Internal perspective: From an internal perspective, as in any staff function, there is a trend of valuing its actions as a result of the activities undertaken and its costs. The way of judging departments capability would be on its ability to supply certain services to the organization at the lowest possible cost. According to this approach, the operational measurements traditionally used are those which refer to quantity, quality and reliability, or cost and speed, therefore placing the focus on activities, costs, or productivity ratios.

External perspective: From an external perspective, if it is understood that the ultimate appraisal of the effectiveness of HR is based on their impact on the companys results, then the measurements.

Should include results obtained outside the function.

2 Common approaches to Human Resource Audits

There are five common approaches for the purpose of evaluation of HR in any organization:

Comparative approach: In this approach, another division or company that has better practices or results is chosen as the model. The audit team audits and compares the audited firms results with the best practices of the model organization. This approach is commonly used to compare the results of specific activities or programs. The approach is often used with turnover, absence, salary data and staffing levels. It helps detect areas where improvement is needed. It also makes sense to compare where a procedure is being used for the first time.

Outside authority: In this approach, standards set by a consultant or taken from published research findings serve as the benchmark for the audit team. The consultant or research findings may help diagnose the cause of problems.

Statistical: This approach relies on performance measures drawn from the companys existing information system. From existing records, the audit team generates statistical standards against which activities and programs are evaluated. With the mathematical standards as a base, the team may uncover errors while they are still minor. Often this approach is supplemented with comparative data from external sources such as other firms, or industry association surveys. The information is usually expressed in ratios or formulas that are easy to compute and use.

Compliance approach: This approach reviews past practices, to determine if actions taken followed legal requirements and company policies and procedures.

The audit team here often examines a sample of employment, compensation, discipline and employee appraisal forms. The purpose of the review is to ensure that the field offices and the operating managers have complied with internal rules and legal regulations, such as minimum wages and equal employment opportunity laws. By sampling elements of the human resources information system, the audit team looks for deviations from laws and company policies and procedures. The team can then determine the degree of compliance achieved.

Management by Objectives (MBO): In this management by objectives approach, managers and specialists set objectives in their area of responsibility. Then they create specific goals against which this performance can be measured. The audit team researches actual performance and compares it with the previously set objectives. They can then evaluate the trends in this area.



Q.3 Describe How to approach a HR Scorecard.

Ans: This mode of scorecard is based on the assumption that competent and committed employees are needed to provide quality products and services at competitive rates emphasizing on the ways to enhance customer satisfaction.

The Seven Steps in the HR Scorecard approach to formulating HR policies activities and strategies are as follows:

  • The first step is to formulate business strategies i.e. define the business strategy of the organization so as to be very clear about the way to exploit the human resource towards the achievement of the organizational goal.
  • The next step is to outline the companys value chain activities and identify the strategically required organizational outcomes.
  • Now after the outcomes have been decided clearly, identify the workforce requirements and behaviors expected so as to achieve the desired outcomes.
  • The next step is to formulate HR policies and practices which are strategically relevant such as new training and grievance systems.
  • After ensuring that all above steps are correctly conducted then develop detailed scorecard.
  • Then design the HR Scorecard measurement system.
  • In order to ensure the productivity, periodically re-evaluate the measurement system.

Q.4 Explain A the process of workplace behaviors that support legal compliance.

Ans: safe, dignified, and respectful work environment is not only mandated by the law, but also increases motivation and productivity of the employees. An example of review of business practices used to deal with allegations of harassment safe working environments should be considered especially for the females in the offices so as to make them feel confident and concentrate on work is shown as under:

Tailored Reviews can be added to the General Audit

By Joan Curtice: Read the following example at the end to observe how in practical world organisations pursue safe working environment for their employees.

1. Ethical trading initiative: promoting conflict resolution in union negotiations Cambodia(Source:

In November 2005 the Ethical Trading Initiative (ETI) was alerted to allegations of serious interference in union rights in a Cambodian factory. In response, the organisation brought member companies sourcing from the Fortune Garments factory to meet with workers, intermediary suppliers, factory management and International Textile, Garment and Leather Workers Federation (ITGLWF) representatives, in order to seek a solution to the conflict. After negotiations, in May 2006 an agreement was reached by all parties resulting in: payment of compensation to unfairly dismissed workers; entry of the Coalition of Cambodian Democratic Apparel Workers Union into the factory; and acceptance of trade union demands over pay and conditions.

2. Nike, Adidas, Umbro and more: working group with trade unions to promote trade unionism Global

The International Trade Union Confederation reported in the lead up to the 2008 Beijing Olympics that sporting apparel companies including Nike, Adidas, New Balance, Umbro and Speedo had formed a joint working group with trade unions and NGOs to explore, amongst other issues, how to promote trade unionism and collective bargaining across the sector.

3. Agreement with UNI property services to ensure rights of workers Global

In 2008, G4S, one of the worlds largest international security firms, signed a global agreement with UNI Property Services, a global union, to ensure that all of G4Ss 570,000 employees (spread across more than 110 countries) have the right to organise in a free and fair atmosphere. This is in addition to complying with international standards and national law in its relations with workers.

4. Training internal monitors on freedom of association Global

In 2006 Gap Inc. partnered with the International Textile, Garment and Leather Workers Federation (ITGLWF), the global union federation for the apparel and textiles sector, to train its internal monitoring team on freedom of association and collective bargaining issues. In the same year, the ITGLWF provided Gap Inc. with a detailed briefing. Gap Inc. supplemented this training by holding workshops on the Indian subcontinent and in south east Asia with the ITGLWF and local trade union representatives.

These workshops aimed to strengthen engagement between Gap Inc.s Vendor Compliance Officers (responsible for inspecting factories and documenting violations) and key worker rights representatives at regional and local levels.

5. General Electric: expanding supplier due diligence to include freedom of association

In 2008, General Electric (GE) expanded its supplier due diligence programme to cover freedom of association, discrimination and harassment/retaliation. To do this it engaged in benchmarking activities with other companies to determine how they monitored and audited their suppliers in relation to the ILO principles. In addition, it reviewed its on-site assessment tools and guidance materials and developed new training materials. As a result, over 150 suppliers were asked to change their policies with respect to freedom of association. In addition, around 400 suppliers were asked to adopt an employee dispute resolution process.

6. Mod-Style: offering worker empowerment and training to suppliersChina

Mod-Style, a business sourcing optical frames fromAsia, has the majority of its factories inChina, where the only government-affiliated All-China Federation of Trade Unions is recognised and trade union rights are severely restricted. In 2000, Mod-Style joined with the Brotherhood of St. Laurence (BSL), an Australian based charity, to implement business standards based on the conventions of the ILO and the OECD Guidelines for Multinational Enterprises. In the absence of independent trade unions, BSL and Mod-Style have offered worker empowerment training and capacity building in supplier factories to ensure that workers rights can still be adequately voiced and heard. Nonetheless, to date no factories have agreed to this training, with BSL and Mod-Style instead focusing on developing long-term, direct and stable relationships with factory owners and managers.



Q.5 What are the issues in Human Capital Measurement and reporting .Explain

Ans: The human capital can be defined as “the knowledge that individuals acquire during their life and use to produce goods services or ideas in market or non-market circumstances.”

Organisations know that that measurement is a prerequisite for good management. As the popular saying goes, what gets measured gets managed. But in most of the organisations today, the most basic source of wealth creation human capital is not managed properly. This is primarily because most organizations systems of measurement, shaped in part by accounting and reporting requirements, are still overly influenced by measurement concepts that date back to the industrial era when physical capital was the primary source of wealth creation.

Expenditures incurred on the development of the employees education and training being perhaps the most prominent are treated as costs although, these expenditures possess the traits of an investment (expenditure at one point in time that is made with the intention of generating an increase in capacity at some future point in time). But this outright focus on costs and cost cutting is not baseless. Often the known costs associated with people and their development, because measurement and accounting practices associated with human capital are remains of the industrial era, the measured costs are only a portion of the total costs. Moreover, because benefits are both uncertain and unknown, a conservative strategy has its merits. And finally, because human capital cannot be owned, spending on the development of people does not meet the traditional accounting concept of an investment, since employers cannot control the asset, i.e., the people in whom an investment is being made. There are genuine arguments in favor of the status quo with regard to measurement, accounting and reporting of human capital development and management. There are, however, also powerful arguments to be made that change is necessary.

Human capital represents a huge operating cost that must be managed efficiently because of its absolute scale. At the same time because human capital is also the only asset that cannot be owned it must be managed wisely, but also with humanity. As a result, a strategy that focuses exclusively on efficiency and cost containment can, at best, only be successful in the short-run. This creates a fundamental paradox.

Exceptional management in the knowledge era is defined by the ability to resolve this paradox through a both/and, rather than an either/or strategy. The both/and strategy requires a relentless focus on finding ways to cut costs and improve productivity, while simultaneously evoking the passion, creativity, loyalty and best efforts of the people on whom an organization relies.

Q.6 Discuss the auditing for HR professionals.

Ans: Competence for HR function is demonstrated by an extensive audit of all its aspects. An audit of HR professionals is essentially an assessment of the extent to which the professionals demonstrate competence for HR function. Such an assessment requires a 360 degree feedback, and, according to Ulrich, usually employs the following five steps:

1. Developing a model of competencies: Before embarking on an assessment of competence, it is necessary to first determine what are the competencies that make a successful HR professional. These competencies usually stem from knowledge of business, knowledge of HR, knowledge of change and finally personal credibility. In addition to determining the competencies that account for a successful HR professional, it is also important to determine the behavioral attributes that reflect these competencies. A model that reflects both these aspects may be said to be a comprehensive model for auditing of HR professionals.

2. Collect data using the model: Several techniques may be employed to collect data about the extent to which an HR professional exhibits the modeled competencies. These include interviews, questionnaires and focused groups.

3. Summarized data and give feedback to the HR professionals: The quantitative and qualitative data collected in the above mentioned ways, need to be synthesized and codified so that specific themes emerge. These themes are then used as aids to help the HR professionals identify his/her strengths and weaknesses.

One of the key activities of an HR audit is to give feedback. This needs to be done in a way that protects the confidentiality of the participants. The manner of the feedback should take into account the sensitivities of the receiver. The tenor of the feedback should neither be accusatory nor defensive. In addition, the individual data that is collected may be integrated into an audit for the overall HR function.

4. Create action plans: The HR audit goes beyond defining the competencies and inadequacies of the HR function. It also identifies the measures to develop the competencies at both, the individual and the departmental level. At the institutional level, this may involve doing an HR for HR. At the individual level, the action plan will concentrate on developing a tailored set of trainings, readings, assignments and training opportunities.

5. Continuous improvement: Auditing of HR professionals is not a one time activity but an ongoing continuous process through which HR professionals are able to constantly build on their HR competencies and strengthen the HR functions in the organisation.







PGDBA Semester II

MB0044 – Production & Operations Management

Q1. Explain in brief the origins of Just In Time. Explain the different types of wastes that can be eliminated using JIT

Ans. Just in Time (JIT) is a management philosophy aimed at eliminating waste and continuously improving quality. Credit for developing JIT as a management strategy goes to Toyota. Toyota JIT manufacturing started in the aftermath of World War II.

Although the history of JIT traces back to Henry Ford who applied Just in Time principles to manage inventory in the Ford Automobile Company during the early part of the 20th Century, the origins of the JIT as a management strategy traces to Taiichi Onho of the Toyota Manufacturing Company. He developed Just in Time strategy as a means of competitive advantage during the post World War II period in Japan.

The post-World War II Japanese automobile industry faced a crisis of existence, and companies such as Toyota looked to benchmark their thriving American counterparts. The productivity of an American car worker was nine times that of a Japanese car worker at that time, and Taiichi Onho sought ways to reach such levels.

Two pressing challenges however prevented Toyota from adopting the American way:

  1. American car manufacturers made “lots” or a “batch” of a model or a component before switching over to a new model or component. This system was not suited to the Japanese conditions where a small market required manufacturing in small quantities.
  2. The car pricing policy of US manufacturers was to charge a mark-up on the cost price. The low demand in Japan led to price resistance. The need of the hour was thus to reduce manufacturing costs to increase profits.

To overcome these two challenges, Taiichi Onho identified waste as the primary evil. The categories of waste identified included

  • overproduction
  • inventory or waste associated with keeping dead stock
  • time spent by workers waiting for materials to appear in the assembly line
  • time spend on transportation or movement
  • workers spending more time than necessary processing an item
  • waste associated with defective items

Taiichi Onho then sought to eliminate waste through the just-in-time philosophy, where items moved through the production system only as and when needed.

Q2. What is Value Engineering or Value Analysis? Elucidate five companies which have incorporated VE with brief explanation.
Ans. Value Engineering(VE), also known as Value Analysis, is a systematic and function-based approach to improving the value of products, projects, or processes.VE involves a team of people following a structured process. The process helps team members communicate across boundaries, understand different perspectives, innovate, and analyze.When to use it

Use Value Analysis to analyze and understand the detail of specific situations.

Use it to find a focus on key areas for innovation.

Use it in reverse (called Value Engineering) to identify specific solutions to detail problems.

It is particularly suited to physical and mechanical problems, but can also be used in other areas.






















How it works

Value Analysis (and its design partner, Value Engineering) is used to increase the value of products or services to all concerned by considering the function of individual items and the benefit of this function and balancing this against the costs incurred in delivering it. The task then becomes to increase the value or decrease the cost.

Q3. Explain different types of Quantitative models. Differentiate between work study and motion study.

Ans.  Quantitative models are needed for a variety of management tasks, including

(a) identi¯cation of critical variables to use for health monitoring,

(b) antici- pating service level violations by using predictive models, and

(c) on-going op- timization of con¯gurations.

Unfortunately, constructing quantitative models requires specialized skills that are in short supply. Even worse, rapid changes in provider con¯gurations and the evolution of business demands mean that quantitative models must be updated on an on-going basis. This paper de-scribes an architecture and algorithms for on-line discovery of quantitativemodels without prior knowledge of the managed elements. The architecture makes use of an element schema that describes managed elements using the common information model (CIM). Algorithms are presented for selecting a subset of the element metrics to use as explanatory variables in a quantitative model and for constructing the quantitative model itself. We further describe a prototype system based on this architecture that incorporates these algo-rithms. We apply the prototype to on-line estimation of response times for

DB2 Universal Database under a TPC-W workload. Of the approximately 500 metrics available from the DB2 performance monitor, our system chooses 3 to construct a model that explains 72% of the variability of response time.

In production and operations management, models refer to any simple representation of  reality in different forms such as mathematical equations, graphical representation, pictorial representation, and physical models. Thus a model could be the well known economic order quantity (EOQ) formula, a PERT network chart, a motion picture of an operation, or pieces of strings stretched on a drawing of a plant layout to study the movement of material. The models help us to analyze and understand the reality. These also help us to work determine optimal conditions to for decision making. For example, the EOQ formula helps us to determine the optimum replenishment quantities that minimize the cost of storing plus replenishing.The number of different models we use in production and operations management run into hundreds, or even more than a thousand. These are really too many to enumerate in a place like these. I am listing below a random list of broad categories of models used in production and operations model.Operations research models. This is actually a very broad classification and covers many of the other categories in the list given here.

o    Inventory models

o    Forecasting models

o    Network models

o    Linear programming models

o    Queuing models

o    Production planning and control models

o    Engineering drawings

o    Photographs and motion pictures used in time and motion studies.

o    Material movement charts

o    Process flow diagrams

o    Systems charts

o    Statistical process control charts.

o    Variance analysis

o    Regression analysis

o    Organization chart

o    Fishbone chart

Work study and motion study

Work study includes a wide field of measurement tools and techniques. Motion study or method study is concerned with analyzing individual human motions (like get object, put object) with a view to improving motion economy.
Q4. What is Rapid Prototyping? Explain the difference between Automated flow line and Automated assembly line with examples.


Ans.  Rapid prototyping is the automatic construction of physical objects using additive manufacturing technology. The first techniques for rapid prototyping became available in the late 1980s and were used to produce models and prototype parts. Today, they are used for a much wider range of applications and are even used to manufacture production-quality parts in relatively small numbers. Some sculptors use the technology to produce complex shapes for fine arts exhibitions.

Automated flow lines : When several automated machines are linked by a transfer system which moves the parts by using handling machines which are also automated, we have an automated flow line. After completing an operation on a machine, the semi finished parts are moved to the next machine in the sequence determined by the process requirements a flow line is established. The parts at various stages from raw material to ready for fitment or assembly are processed continuously to attain the required shapes or acquire special properties to enable them to perform desired functions. The materials need to be moved, held, rotated, lifted, positioned etc. for completing different operations.
Sometimes, a few of the operations can be done on a single machine with a number of attachments. They are moved further to other machines for performing further operations. Human intervention may be needed to verify that the operations are taking place according to standards. When these can be achieved with the help of automation and the processes are conducted with self regulation, we will have automated flow lines established. One important consideration is to balance times that different machines take to complete the operations assigned to them. It is necessary to design the machines in such a way that the operation times are the same throughout the sequence in the flow of the martial. In fixed automation or hard automation, where one component is manufactured using several operations and machines it is possible to achieve this condition – or very nearly. We assume that product life cycles are sufficiently stable to invest heavily on the automated flow lines to achieve reduced cost per unit. The global trends are favouring flexibility in the manufacturing systems. The costs involved in changing the set up of automated flow lines are high. So, automated flow lines are considered only when the product is required to be made in high volumes over a relatively long period. Designers now incorporate flexibility in the machines which will take care of small changes in dimensions by making adjustments or minor changes in the existing machine or layout. The change in movements needed can be achieved by programming the machines. Provision for extra pallets or tool holders or conveyors are made in the original design to accommodate anticipated changes. The logic to be followed is to find out whether the reduction in cost per piece justifies the costs of designing, manufacturing and setting up automated flow lines. Group Technology, Cellular Manufacturing along with conventional Product and Process Layouts are still resorted to as they allow flexibility for the production system. With methodologies of JIT and Lean Manufacturing finding importance and relevance in the competitive field of manufacturing, many companies have found that well designed flow lines suit their purpose well. Flow lines compel engineers to put in place equipments that balance their production rates. It is not possible to think of inventories (Work
In Process) in a flow line. Bottlenecks cannot be permitted. By necessity, every bottleneck gets focused upon and solutions found to ease them. Production managers see every bottleneck as an opportunity to hasten the flow and reduce inventories. However, it is important to note that setting up automated flow lines will not be suitable for many industries

Automated Assembly Lines : All equipments needed to make a finished product are laid out in such a way as to follow the sequence in which the parts or subassemblies are put together and fitted. Usually, a frame, body, base will be the starting point of an assembly. The frame itself consists of a construction made up of several components and would have been ‘assembled’ or ‘fabricated’ in a separate bay or plant and brought to the assembly line. All parts or subassemblies are fitted to enable the product to be in readiness to perform the function it was designed to. This process is called assembly.
Methodologies of achieving the final result may vary, but the basic principle is to fit all parts together and ensure linkages so that their functions are integrated and give out the desired output. Product Layouts are designed so that the assembly tasks are performed in the sequence they are designed. You will note that the same task gets repeated at each station continuously. The finished item comes out at the end of the line
The material goes from station 1 to 5 sequentially. Operation 2 takes longer time, say twice as long. To see that the flow is kept at the same pace we provide two locations 2a and 2b so that operations 3, 4 an 5 need not wait. At 5, we may provide more personnel to complete operations. The time taken at any of the locations should be the same. Otherwise the flow is interrupted. In automated assembly lines the moving pallets move the materials from station to station and moving arms pick up parts, place them at specified places and fasten them by pressing, riveting, screwing or even welding. Sensors will keep track of these activities and move the assemblies to the next stage. An operator will oversee that the assemblies are happening and there are no stoppages. The main consideration for using automated assembly lines is that the volumes justify the huge expenses involved in setting

Up the system.

Q5.Explain Break Even Analysis and Centre of Gravity methods. Explain Product layout and process layout with examples.

Ans.  Break Even Analysis refers to the calculation to determine how much product a company must sell in order to break even on that product. It is an effective analysis to measure the impact of different marketing decisions. It can focus on the product, or incremental changes to the product to determine the potential outcomes of marketing tactics. The formula for a break even analysis is:

Break even point ($) = (Total Fixed Costs + Total Variable Costs).
Total Variable Costs = Variable cost per unit x units sold
Unit contribution (contribution margin) = Price per unit – Variable cost per unit.

When looking at making a change to the marketing program, one can calculate the incremental break even volume, to determine the merits of the change. This determines the required volume needed such

that there is no effect to the company due to the change.
If making changes to fixed costs (changing advertising expenditure etc.):
Incremental break even volume = change in expenditure / unit contribution.
Thus if a company increased its advertising expenditure by $1 million, and its unit contribution for the specific product is $20, then the company would need to sell an additional 50,000 units to break even on the decision.
If making changes to the unit contribution (change in price, or variable costs):
Incremental break even volume = (Old Unit Volume x (Old Unit Contribution – New Unit Contribution)) / New Unit Contribution
Thus if a company increased its price from $15 to $20, and had variable costs of $10, it is increasing its unit contribution from $5 to $10, assume also an old unit volume of 1 million. It could therefore reduce its volume by 500,000 to break even on the decision.
When making changes to a specific product, cannibalization of other products may occur. To calculate the effect of cannibalization, the Break Even Cannibalization rate for a change in a product is:
New Product Unit Contribution / Old Product Unit Contribution.
New Product is the planned addition to a product line (or change to a product within a product line), Old Product is the product that loses sales to the new product (or the product line that loses sales). The cannibalization rate refers to the percentage of new product that would have gone to the old product, this must be lower than the break even cannibalization rate in order for the change to be profitable.

In manufacturing, facility layout consists of configuring the plant site with lines, buildings, major facilities, work areas, aisles, and other pertinent features such as department boundaries. While facility layout for services may be similar to that for manufacturing, it also may be somewhat different—as is the case with offices, retailers, and warehouses. Because of its relative permanence, facility layout probably is one of the most crucial elements affecting efficiency. An efficient layout can reduce unnecessary material handling, help to keep costs low, and maintain product flow through the facility.

Firms in the upper left-hand corner of the product-process matrix have a process structure known as a jumbled flow or a disconnected or intermittent line flow. Upper-left firms generally have a process layout. Firms in the lower right-hand corner of the product-process matrix can have a line or continuous flow. Firms in the lower-right part of the matrix generally have a product layout. Other types of layouts include fixed-position, combination, cellular, and certain types of service layouts.


Process layouts are found primarily in job shops, or firms that produce customized, low-volume products that may require different processing requirements and sequences of operations. Process layouts are facility configurations in which operations of a similar nature or function are grouped together. As such, they occasionally are referred to as functional layouts. Their purpose is to process goods or provide services that involve a variety of processing requirements. A manufacturing example would be a machine shop. A machine shop generally has separate departments where general-purpose machines are grouped together by function (e.g., milling, grinding, drilling, hydraulic presses, and lathes). Therefore, facilities that are configured according to individual functions or processes have a process layout. This type of layout gives the firm the flexibility needed to handle a variety of routes and process requirements. Services that utilize process layouts include hospitals, banks, auto repair, libraries, and universities.

Improving process layouts involves the minimization of transportation cost, distance, or time. To accomplish this some firms use what is known as a Muther grid, where subjective information is summarized on a grid displaying various combinations of department, work group, or machine pairs. Each combination (pair), represented by an intersection on the grid, is assigned a letter indicating the importance of the closeness of the two (A = absolutely necessary; E = very important; I = important; O = ordinary importance; U = unimportant; X = undesirable). Importance generally is based on the shared use of facilities, equipment, workers or records, work flow, communication requirements, or safety requirements. The departments and other elements are then assigned to clusters in order of importance.

Advantages of process layouts include:

  • Flexibility. The firm has the ability to handle a variety of processing requirements.
  • Cost. Sometimes, the general-purpose equipment utilized may be less costly to purchase and less costly and easier to maintain than specialized equipment.
  • Motivation. Employees in this type of layout will probably be able to perform a variety of tasks on multiple machines, as opposed to the boredom of performing a repetitive task on an assembly line. A process layout also allows the employer to use some type of individual incentive system.
  • System protection. Since there are multiple machines available, process layouts are not particularly vulnerable to equipment failures.

Disadvantages of process layouts include:

  • Utilization. Equipment utilization rates in process layout are frequently very low, because machine usage is dependent upon a variety of output requirements.
  • Cost. If batch processing is used, in-process inventory costs could be high. Lower volume means higher per-unit costs. More specialized attention is necessary for both products and customers. Setups are more frequent, hence higher setup costs. Material handling is slower and more inefficient. The span of supervision is small due to job complexities (routing, setups, etc.), so supervisory costs are higher. Additionally, in this type of layout accounting, inventory control, and purchasing usually are highly involved.
  • Confusion. Constantly changing schedules and routings make juggling process requirements more difficult.


Product layouts are found in flow shops (repetitive assembly and process or continuous flow industries). Flow shops produce high-volume, highly standardized products that require highly standardized, repetitive processes. In a product layout, resources are arranged sequentially, based on the routing of the products. In theory, this sequential layout allows the entire process to be laid out in a straight line, which at times may be totally dedicated to the production of only one product or product version. The flow of the line can then be subdivided so that labor and equipment are utilized smoothly throughout the operation.

Two types of lines are used in product layouts: paced and unpaced. Paced lines can use some sort of conveyor that moves output along at a continuous rate so that workers can perform operations on the product as it goes by. For longer operating times, the worker may have to walk alongside the work as it moves until he or she is finished and can walk back to the workstation to begin working on another part (this essentially is how automobile manufacturing works).

On an unpaced line, workers build up queues between workstations to allow a variable work pace. However, this type of line does not work well with large, bulky products because too much storage space may be required. Also, it is difficult to balance an extreme variety of output rates without significant idle time. A technique known as assembly-line balancing can be used to group the individual tasks performed into workstations so that there will be a reasonable balance of work among the workstations.

Product layout efficiency is often enhanced through the use of line balancing. Line balancing is the assignment of tasks to workstations in such a way that workstations have approximately equal time requirements. This minimizes the amount of time that some workstations are idle, due to waiting on parts from an upstream process or to avoid building up an inventory queue in front of a downstream process.

Advantages of product layouts include:

  • Output. Product layouts can generate a large volume of products in a short time.
  • Cost. Unit cost is low as a result of the high volume. Labor specialization results in reduced training time and cost. A wider span of supervision also reduces labor costs. Accounting, purchasing, and inventory control are routine. Because routing is fixed, less attention is required.
  • Utilization. There is a high degree of labor and equipment utilization.

Disadvantages of product layouts include:

  • Motivation. The system’s inherent division of labor can result in dull, repetitive jobs that can prove to be quite stressful. Also, assembly-line layouts make it very hard to administer individual incentive plans.
  • Flexibility. Product layouts are inflexible and cannot easily respond to required system changes—especially changes in product or process design.
  • System protection. The system is at risk from equipment breakdown, absenteeism, and downtime due to preventive maintenance.

PGDBA Semester II

MB0045 – Financial Management

Q1.  What are the 4 finance decisions taken by a finance manager.

Ans. A firm performs finance functions simultaneously and continuously in the normal
course of the business. They do not necessarily occur in a sequence. Finance
functions call for skilful planning, control and execution of a firm’s activities.
Let us note at the outset hat shareholders are made better off by a financial
decision that increases the value of their shares, Thus while performing the
finance function, the financial manager should strive to maximize the market
value of shares. Whatever decision does a manger takes need to result in
wealth maximization of a shareholder.

Investment Decision

Investment decision or capital budgeting involves the decision of allocation of
capital or commitment of funds to long-term assets that would yield benefits in
the future. Two important aspects of the investment decision are:
(a) the evaluation of the prospective profitability of new investments, and
(b) the measurement of a cut-off rate against that the prospective return of new
investments could be compared. Future benefits of investments are difficult to
measure and cannot be predicted with certainty. Because of the uncertain future,
investment decisions involve risk. Investment proposals should, therefore, be
evaluated in terms of both expected return and risk. Besides the decision for
investment managers do see where to commit funds when an asset becomes less
productive or non-profitable.

There is a broad agreement that the correct cut-off rate is the required rate of
return or the opportunity cost of capital. However, there are problems in
computing the opportunity cost of capital in practice from the available data and
information. A decision maker should be aware of capital in practice from the
available data and information. A decision maker should be aware of these

Financing Decision

Financing decision is the second important function to be performed by the
financial manager. Broadly, her or she must decide when, where and how to
acquire funds to meet the firm’s investment needs. The central issue before him
or her is to determine the proportion of equity and debt. The mix of debt and
equity is known as the firm’s capital structure. The financial manager must strive
to obtain the best financing mix or the optimum capital structure for his or her
firm. The firm’s capital structure is considered to be optimum when the market
value of shares is maximized. The use of debt affects the return and risk of
shareholders; it may increase the return on equity funds but it always increases
risk. A proper balance will have to be struck between return and risk. When the
shareholders’ return is maximized with minimum risk, the market value per share
will be maximized and the firm’s capital structure would be considered optimum.
Once the financial manager is able to determine the best combination of debt and
equity, he or she must raise the appropriate amount through the best available
sources. In practice, a firm considers many other factors such as control, flexibility
loan convenience, legal aspects etc. in deciding its capital structure.

Dividend Decision

Dividend decision is the third major financial decision. The financial manager must
decide whether the firm should distribute all profits, or retain them, or distribute
a portion and retain the balance. Like the debt policy, the dividend policy should
be determined in terms of its impact on the shareholders’ value. The optimum
dividend policy is one that maximizes the market value of the firm’s shares. Thus
if shareholders are not indifferent to the firm’s dividend policy, the financial
manager must determine the optimum dividend – payout ratio. The payout ratio is
equal to the percentage of dividends to earnings available to shareholders. The
financial manager should also consider the questions of dividend stability, bonus
shares and cash dividends in practice. Most profitable companies pay cash
dividends regularly. Periodically, additional shares, called bonus share (or stock
dividend), are also issued to the existing shareholders in addition to the cash

Liquidity Decision

Current assets management that affects a firm’s liquidity is yet another important
finances function, in addition to the management of long-term assets. Current assets
should be managed efficiently for safeguarding the firm against the dangers of
illiquidity and insolvency. Investment in current assets affects the firm’s profitability.
Liquidity and risk. A conflict exists between profitability and liquidity while managing
current assets. If the firm does not invest sufficient funds in current assets, it may
become illiquid. But it would lose profitability, as idle current assets would not earn
anything. Thus, a proper trade-off must be achieved between profitability and
liquidity. In order to ensure that neither insufficient nor unnecessary funds are
invested in current assets, the financial manager should develop sound techniques of
managing current assets. He or she should estimate firm’s needs for current assets and
make sure that funds would be made available when needed.
It would thus be clear that financial decisions directly concern the firm’s decision to
acquire or dispose off assets and require commitment or recommitment of funds on a
continuous basis. It is in this context that finance functions are said to influence
production, marketing and other functions of the firm. This, in consequence, finance
functions may affect the size, growth, profitability and risk of the firm, and
ultimately, the value of the firm. To quote Ezra Solomon
The function of financial management is to review and control decisions to commit or
recommit funds to new or ongoing uses. Thus, in addition to raising funds, financial
management is directly concerned with production, marketing and other functions,
within an enterprise whenever decisions are about the acquisition or distribution of
Various financial functions are intimately connected with each other. For instance,
decision pertaining to the proportion in which fixed assets and current assets are
mixed determines the risk complexion of the firm. Costs of various methods of
financing are affected by this risk. Likewise, dividend decisions influence financing
decisions and are themselves influenced by investment decisions.

In view of this, finance manager is expected to call upon the expertise of other
functional managers of the firm particularly in regard to investment of funds.
Decisions pertaining to kinds of fixed assets to be acquired for the firm, level of
inventories to be kept in hand, type of customers to be granted credit facilities,
terms of credit should be made after consulting production and marketing
However, in the management of income finance manager has to act on his own.
The determination of dividend policies is almost exclusively a finance function. A
finance manager has a final say in decisions on dividends than in asset
management decisions.

Financial management is looked on as cutting across functional even disciplinary
boundaries. It is in such an environment that finance manager works as a part of
total management. In principle, a finance manager is held responsible to handle all
such problem: that involve money matters. But in actual practice, as noted above,
he has to call on the expertise of those in other functional areas to discharge his
responsibilities effectively.

Q.2 What are the factors that affect the financial plan of a company?

Ans. To help your organization succeed, you should develop a plan that needs to be followed. This applies to starting the company, developing new product, creating a new department or any undertaking that affects the company’s future. There are several factors that affect planning in an organization. To create an efficient plan, you need to understand the factors involved in the planning process.


In most companies, the priority is generating revenue, and this priority can sometimes interfere with the planning process of any project. For example, if you are in the process of planning a large expansion project and your largest customer suddenly threatens to take their business to your competitor, then you might have to shelve the expansion planning until the customer issue is resolved. When you start the planning process for any project, you need to assign each of the issues facing the company a priority rating. That priority rating will determine what issues will sidetrack you from the planning of your project, and which issues can wait until the process is complete.

Company Resources

Having an idea and developing a plan for your company can help your company to grow and succeed, but if the company does not have the resources to make the plan come together, it can stall progress. One of the first steps to any planning process should be an evaluation of the resources necessary to complete the project, compared to the resources the company has available. Some of the resources to consider are finances, personnel, space requirements, access to materials and vendor relationships.


A company constantly should be forecasting to help prepare for changes in the marketplace. Forecasting sales revenues, materials costs, personnel costs and overhead costs can help a company plan for upcoming projects. Without accurate forecasting, it can be difficult to tell if the plan has any chance of success, if the company has the capabilities to pull off the plan and if the plan will help to strengthen the company’s standing within the industry. For example, if your forecasting for the cost of goods has changed due to a sudden increase in material costs, then that can affect elements of your product roll-out plan, including projected profit and the long-term commitment you might need to make to a supplier to try to get the lowest price possible.

Contingency Planning

To successfully plan, an organization needs to have a contingency plan in place. If the company has decided to pursue a new product line, there needs to be a part of the plan that addresses the possibility that the product line will fail. The reallocation of company resources, the acceptable financial losses and the potential public relations problems that a failed product can cause all need to be part of the organizational planning process from the beginning

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Q.3 Show the relationship between required rate of return and coupon rate on the value of a bond.

Ans. It is important for prospective bond buyers to know how to determine the price of a bond because it will indicate the yield received should the bond be purchased. In this section, we will run through some bond price calculations for various types of bond instruments.

Bonds can be priced at a premium, discount, or at par. If the bond’s price is higher than its par value, it will sell at a premium because its interest rate is higher than current prevailing rates. If the bond’s price is lower than its par value, the bond will sell at a discount because its interest rate is lower than current prevailing interest rates. When you calculate the price of a bond, you are calculating the maximum price you would want to pay for the bond, given the bond’s coupon rate in comparison to the average rate most investors are currently receiving in the bond market. Required yield or required rate of return is the interest rate that a security needs to offer in order to encourage investors to purchase it. Usually the required yield on a bond is equal to or greater than the current prevailing interest rates.

Fundamentally, however, the price of a bond is the sum of the present values of all expected coupon payments plus the present value of the par value at maturity. Calculating bond price is simple: all we are doing is discounting the known future cash flows. Remember that to calculate present value (PV) – which is based on the assumption that each payment is re-invested at some interest rate once it is received–we have to know the interest rate that would earn us a known future value. For bond pricing, this interest rate is the required yield. (If the concepts of present and future value are new to you or you are unfamiliar with the calculations, refer to Understanding the Time Value of Money.)

Here is the formula for calculating a bond’s price, which uses the basic present value (PV) formula:

C = coupon payment
n = number of payments
i = interest rate, or required yield
M = value at maturity, or par value

The succession of coupon payments to be received in the future is referred to as an ordinary annuity, which is a series of fixed payments at set intervals over a fixed period of time. (Coupons on a straight bond are paid at ordinary annuity.) The first payment of an ordinary annuity occurs one interval from the time at which the debt security is acquired. The calculation assumes this time is the present.

You may have guessed that the bond pricing formula shown above may be tedious to calculate, as it requires adding the present value of each future coupon payment. Because these payments are paid at an ordinary annuity, however, we can use the shorter PV-of-ordinary-annuity formula that is mathematically equivalent to the summation of all the PVs of future cash flows. This PV-of-ordinary-annuity formula replaces the need to add all the present values of the future coupon. The following diagram illustrates how present value is calculated for an ordinary annuity:

Each full moneybag on the top right represents the fixed coupon payments (future value) received in periods one, two and three. Notice how the present value decreases for those coupon payments that are further into the future the present value of the second coupon payment is worth less than the first coupon and the third coupon is worth the lowest amount today. The farther into the future a payment is to be received, the less it is worth today – is the fundamental concept for which the PV-of-ordinary-annuity formula accounts. It calculates the sum of the present values of all future cash flows, but unlike the bond-pricing formula we saw earlier, it doesn’t require that we add the value of each coupon payment. (For more on calculating the time value of annuities, see Anything but Ordinary: Calculating the Present and Future Value of Annuities and Understanding the Time Value of Money. )

By incorporating the annuity model into the bond pricing formula, which requires us to also include the present value of the par value received at maturity, we arrive at the following formula:

Let’s go through a basic example to find the price of a plain vanilla bond.

Example 1: Calculate the price of a bond with a par value of $1,000 to be paid in ten years, a coupon rate of 10%, and a required yield of 12%. In our example we’ll assume that coupon payments are made semi-annually to bond holders and that the next coupon payment is expected in six months. Here are the steps we have to take to calculate the price:

1. Determine the Number of Coupon Payments: Because two coupon payments will be made each year for ten years, we will have a total of 20 coupon payments.

2. Determine the Value of Each Coupon Payment: Because the coupon payments are semi-annual, divide the coupon rate in half. The coupon rate is the percentage off the bond’s par value. As a result, each semi-annual coupon payment will be $50 ($1,000 X 0.05).

3. Determine the Semi-Annual Yield: Like the coupon rate, the required yield of 12% must be divided by two because the number of periods used in the calculation has doubled. If we left the required yield at 12%, our bond price would be very low and inaccurate. Therefore, the required semi-annual yield is 6% (0.12/2).

4. Plug the Amounts Into the Formula:

From the above calculation, we have determined that the bond is selling at a discount; the bond price is less than its par value because the required yield of the bond is greater than the coupon rate. The bond must sell at a discount to attract investors, who could find higher interest elsewhere in the prevailing rates. In other words, because investors can make a larger return in the market, they need an extra incentive to invest in the bonds.

Accounting for Different Payment Frequencies
In the example above coupons were paid semi-annually, so we divided the interest rate and coupon payments in half to represent the two payments per year. You may be now wondering whether there is a formula that does not require steps two and three outlined above, which are required if the coupon payments occur more than once a year. A simple modification of the above formula will allow you to adjust interest rates and coupon payments to calculate a bond price for any payment frequency:

Notice that the only modification to the original formula is the addition of  “F”, which represents the frequency of coupon payments, or the number of times a year the coupon is paid. Therefore, for bonds paying annual coupons, F would have a value of one. Should a bond pay quarterly payments, F would equal four, and if the bond paid semi-annual coupons, F would be two.

Q.4 Discuss the implication of financial leverage for a firm.

Ans.  The financial leverage implies the employment of source of funds, involving fixed return so as to cause more than a proportionate change in earnings per share (EPS) due to change in operating profits. Like the operating leverage, financial leverage can be positive when operating profits are increasing and can be negative in the situation of decrease in such profits. In view of these, financial leverage will affect the financial risk of the firm. An important analytical tool for financial leverage is the indifference point at which the EPS/market price is the same for different financial plans under consideration.

The objective of this study was to provide additional evidence on the relationship between financial leverage and the market value of common stock. Numerous empirical studies have been done in this area, and, concurrently, many theories have been developed to explain the relationship between financial leverage and the market value of common stock. Because of the methodological weaknesses of past studies, however, no conclusions can be drawn as to the validity of the theories. Theories on financial leverage may be classified into three categories: irrelevance theorem, rising from value indefinitely with increase in financial leverage, and optimal financial leverage. Empirical implications of these categories along with the consequences of serious confounding effects are analyzed. The implications are then compared with evidence from actual events involving financial leverage changes, and distinguished from each other as finely as possible, using simple and multiple regression analyses, normal Z-test, and a simulation technique. The evidence shows that changes in the market value of common stock are positively related to changes in financial leverage for some firms and negatively related for other firms. This evidence is consistent with the existence of an optimal financial leverage for each firm, assuming that financial leverages of firms with a positive relationship are below the optimum and those of firms with a negative relationship are above the optimum. The results of the study do not depend upon the definition of the market portfolio, the definition of the event period, or the choice of financial leverage measure. Betas estimated from equally weighted market portfolios were generally higher than those estimated from value weighted market portfolios during 1981-1982. However, the results of the study were the same for both portfolios. Abnormal returns were computed for seven and two day event periods, and the results were the same for both periods. Seven different definitions of financial leverage were tested, and the results were the same for all measures.

PGDBA -Semester II

MB0046 – Marketing Management

Q.1 What is Marketing Information System? Explain its characteristics, benefits and information types.

Ans. A Marketing Information System can be defined as ‘a system in which marketing information is formally gathered, stored, analysed and distributed to managers in accord with their informational needs on a regular basis’.

Set of procedures and practices employed in analyzing and assessing marketing information, gathered continuously from sources inside and outside of a firm. Timely marketing information provides basis for decisions such as product development or improvement, pricing, packaging, distribution, media selection, and promotion.

Characteristics of MIS


Philip Kotler defines MIS as “a system that consists of people, equipment and procedures to gather,

sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision


Its characteristics are as follows:

1. It is a planned system developed to facilitate smooth and continuous flow of information.

2. It provides pertinent information, collected from sources both internal and external to the company, for use as the basis of marketing decision making.

3. It provides right information at the right time to the right person.

A well designed MIS serves as a company’s nerve centre, continuously monitoring the market

environment both inside and outside the organization. In the process, it collects lot of data and stores

in the form of a database which is maintained in an organized manner. Marketers classify and

analyze this data from the database as needed.

Benefits of MIS(Marketing Information System)


Various benefits of having a MIS and resultant flow of marketing information are given below:

1. It allows marketing managers to carry out their analysis, planning implementation and control

responsibilities more effectively.

2. It ensures effective tapping of marketing opportunities and enables the company to develop

effective safeguard against emerging marketing threats.

3. It provides marketing intelligence to the firm and helps in early spotting of changing trends.

4. It helps the firm adapt its products and services to the needs and tastes of the customers.

5. By providing quality marketing information to the decision maker, MIS helps in improving the

quality of decision making.

Types of Marketing Information


A Marketing Information System supplies three types of information.

1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly, quarterly,

or annual interval. This includes data such as sales, Market Share, sales call reports, inventory levels, payables, and receivables etc. which are made available regularly. Information on customer awareness of company’s brands, advertising campaigns and similar data on close competitors can also be provided.

2. Monitoring Information is the data obtained from regular scanning of certain sources such as trade journals and other publications. Here relevant data from external environment is captured to monitor changes and trends related to marketing situation. Data about competitors can also be part of this category. Some of these data can be purchased at a price from commercial sources such as Market Research agencies or from Government sources.

3. Problem related or customized information is developed in response to some specific requirement related to a marketing problem or any particular data requested by a manager. Primary Data or Secondary Data (or both) are collected through survey Research in response to specific need. For example, if the company has developed a new product, the marketing manager may want to find out the opinion of the target customers before launching the product in the market. Such data is generated by conducting a market research study with adequate sample size, and the findings obtained are used to help decide whether the product is accepted and can be launched.

Q.2 a. Examine how a firm’s macro environment operates. 

b. Mention the key points in Psychoanalytic model of consumer behaviour.


Ans.  The term micro-environment denotes those elements over which the marketing firm has control or which it can use in order to gain information that will better help it in its marketing operations. In other words, these are elements that can be manipulated, or used to glean information, in order to provide fuller satisfaction to the company’s customers. The objective of marketing philosophy is to make profits through satisfying customers. This is accomplished through the manipulation of the variables over which a company has control in such a way as to optimise this objective. The variables are what Neil Borden has termed ‘the marketing mix’ which is a combination of all the ‘ingredients’ in a ‘recipe’ that is designed to prove most attractive to customers. In this case the ingredients are individual elements that marketing can manipulate into the most appropriate mix. E Jerome McCarthy further dubbed the variables that the company can control in order to reach its target market the ‘four Ps’. Each of these is discussed in detail in later chapters, but a brief discussion now follows upon each of these elements of the marketing mix together with an explanation of how they fit into the overall notion of marketing.

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:

  • Political
  • Economic
  • Social
  • Technological

The acronym PEST (or sometimes rearranged as “STEP”) is used to describe a framework for the analysis of these macroenvironmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram:

    Environmental Scan



External Analysis

    Internal Analysis

/                       \

Macroenvironment  Microenvironment 



Political Factors

Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:

  • tax policy
  • employment laws
  • environmental regulations
  • trade restrictions and tariffs
  • political stability

Economic Factors

Economic factors affect the purchasing power of potential customers and the firm’s cost of capital. The following are examples of factors in the macroeconomy:

  • economic growth
  • interest rates
  • exchange rates
  • inflation rate

Social Factors

Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors include:

  • health consciousness
  • population growth rate
  • age distribution
  • career attitudes
  • emphasis on safety

Technological Factors

Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:

  • R&D activity
  • automation
  • technology incentives
  • rate of technological change

External Opportunities and Threats

The PEST factors combined with external micro environmental factors can be classified as opportunities and threats in a SWOT analysis.

The Psychoanalytical Model: The psychoanalytical model draws from Freudian Psychology.

According to this model, the individual consumer has a complex set of deep-seated motives which drive him towards certain buying decisions. The buyer has a private world with all his hidden fears, suppressed desires and totally subjective longings. His buying action can be influenced by appealing to these desires and longings. The psychoanalytical theory is attributed to the work of eminent psychologist Sigmund Freud. Freud introduced personality as a motivating force in human behavior.

According to this theory, the mental framework of a human being is composed of three elements, namely,

1. The id or the instinctive, pleasure seeking element. It is the reservoir of the instinctive impulses that a man is born with and whose processes are entirely subconscious. It includes the aggressive, destructive and sexual impulses of man.

2. The superego or the internal filter that presents to the individual the behavioral expectations of society. It develops out of the id, dominates the ego and represents the inhibitions of instinct which is characteristic of man. It represents the moral and ethical elements, the conscience.

3. The ego or the control device that maintains a balance between the id and the superego. It is the most superficial portion of the id. It is modified by the influence of the outside world. Its processes are entirely conscious because it is concerned with the perception of the outside world.

The basic theme of the theory is the belief that a person is unable to satisfy all his needs within the bounds of society. Consequently, such unsatisfied needs create tension within an individual which have to be repressed. Such repressed tension is always said to exist in the subconscious and continues to influence consumer behavior.

4. The Sociological Model: According to the sociological model, the individual buyer is influenced by society or intimate groups as well as social classes. His buying decisions are not totally governed by utility; He has a desire to emulate, follow and fit in with his immediate environment.

5. The Nicosia Model: In recent years, some efforts have been made by marketing scholars to build buyer behavior models totally from the marketing man’s standpoint. The Nicosia model and the Howard and Sheth model are two important models in this category. Both of them belong to the category called the systems model, where the human being is analyzed as a system with stimuli as the input to the system and behavior as the output of the system. Francesco Nicosia, an expert in consumer motivation and behavior put forward his model of buyer behavior in 1966.

The model tries to establish the linkages between a firm and its consumer – how the activities of the firm influence the consumer and result in his decision to buy. The messages from the firm first influence the predisposition of the consumer towards the product. Depending on the situation, he develops a certain attitude towards the product. It may lead to a search for the product or an evaluation of the product. If these steps have a positive impact on him, it may result in a decision to buy. This is the sum and substance of the ‘activity explanations’ in the Nicosia Model. The

Nicosia Model groups these activities into four basic fields. Field one has two subfields the firm’s attributes and the consumer’s attributes. An advertising message from the firm reaches the consumer’s attributes. Depending on the way the message is received by the consumer, a certain attribute may develop, and this becomes the input for Field Two. Field Two is the area of search and evaluation of the advertised product and other alternatives. If this process results in a motivation to buy, it becomes the input for Field Three. Field Three consists of the act of purchase. And Field Four consists of the use of the purchased item.

Q.3 Explain the key roles played and various steps involved in organizational buying.



Point 1 – Introduction.

The need for an understanding of the organizational buying process has grown in recent years due to the many competitive challenges presented in business-to-business markets. Since 1980 there have been a number ofkey changes in this area, including the growth of outsourcing, the increasing power enjoyed by purchasing departments and the importance  given to developing partnerships with suppliers.

Point 2 – The organizational buying behaviour process.

The organizational buying behaviour process is well documented with many models depicting the various phases, the members involved, and the decisions made in each phase. The basic five phase model can be extended to eight; purchase initiation; evaluations criteria formation; information search; supplier definition for RFQ; evaluation of quotations; negotiations; suppliers choice; and choice implementation (Matbuy, 1986).

Point 3 – The buying centre. The buying centre consists of those people in the organizational who are  involved directly or indirectly in the buying process, i.e. the user, buyer influencer, decider and gatekeeper to who the role of ‘initiator’ has also been added. The buyers in the process are subject to a wide variety and complexity of buying motives and rules of selection. The Matbuy model encourages marketers to focus their efforts on who is making what decisions based on which criteria.

Point 4 – Risk and uncertainty –

The driving forces of organizational buying behaviour. This is concerned with the role of risk or uncertainty on buying behaviour. The level of risk depends upon the characteristics of the buying situation faced. The supplier can influence the degree of perceived uncertainty by the buyer and cause certain desired behavioural reactions by the use of information and the implementation of certain

actions. The risks perceived by the customer can result from a combination of the characteristics of various factors: the transaction involved, the relationship with the supplier, and his position vis-a-vis the supply market.

Point 5 – Factors influencing organizational buying behaviour.

Three key factors are shown to influence organizational buying behaviour, these are, types of buying situations and situational factors, geographical and cultural factors and time factors.

Point 6 – Purchasing Strategy.

The purchasing function is of great importance because its actions will  impact directly on the organization’s profitability. Purchasing strategy aims to evaluate and classify the various items purchased in order to be able to choose and manage suppliers accordingly. Classification is along two dimensions: importance of items purchased and characteristics of the supply market. Actions can be taken to influence the supply market. Based on the type of items purchased and on its position in the buying matrix, a company will develop different relationships with suppliers depending upon the number of suppliers, the supplier’s share, characteristics of selected suppliers, and the nature of customer-supplier relationships. The degree of centralization of buying activities and the missions and status of the buying function can help support purchasing strategy. The company will adapt its procedures to the type of items purchased which in turn will influence relationships with suppliers.

Point 7 – The future.

Two activities which will be crucial to the future development of organizational buying behaviour will be information technology and production technologies.

Point 8 – Conclusion.

Organizational buying behaviour is a very complex area, however, an understanding of the key factors are fundamental to marketing strategy and thus an organization’s ability to compete effectively in the market place.


Q.4 Explain the different marketing philosophies and its approach.

Ans. Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others.

According to the American Marketing Association, “Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goods”

There are six competing philosophies under which organizations conduct marketing activities “the production concept, product concept, selling concept, marketing concept, customer concept; and societal concept.

1) The Production Concept: The production concept is one of the oldest concepts in business. The production concept holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs and mass distribution.

They assume that consumers are primarily interested in products availability and low prices. This philosophy makes sense in developing countries, where consumers are more interested in obtaining the product than its features. It is also used when a company wants to expand the market.

2. The product Concept – Product concept holds that consumer will favour these products that offer the most quality, performance and innovative features. Managers in these organizations focus on making superior products and improving them over time. They assume that buyers admire well-made products and can evaluate quality and performance product oriented companies often trust that their engineers can design exceptional products. They get little or no customer input, and very often they will not even examine competitor’s products.

3. The Selling Concept: The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products. The organization most, therefore, undertakes an aggressive selling and promotion effort. This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotion tools to stimulate more buying. The selling concept is epitomized by the thinking that “The purpose of marketing is to sell more stuff to more people for more money in order to make more profit

Most firms practice the selling concept when they have over capacity. Their aim is to sell what they make rather then make what market wants.

4. The Marketing Concept: The marketing concepts hold that the key to achieving its organizational goals consists of the company being more effective then competitors in creating, delivering and communicating superior customer value to its chosen target markets.

The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. There is a contrast between selling and marketing concepts:

“Selling focuses on the needs of the seller; marketing on the needs of the buyer”.

Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the ideas of satisfying the needs of the customers by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.

5. The customer Concept: Under customer concept, companies shape separate offers, services and messages to individual customers. These companies collect information on each customer’s past transactions, demographics, psychographics and media and distribution preferences. They hope to achieve profitable growth through capturing a larger share of each customer’s expenditures by building high customer loyalty and focusing on customer lifetime value.

The ability of a company to deal with customers are at a time become practical as a result of advances in factory customization, computers, the internet and database marketing software.

6. The Societal Marketing Concept: The societal marketing concept holds that the organization’s goal is to determine the needs, wants and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well being.

The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often-conflicting criteria of company profits, consumer want satisfaction and public interest.

Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales and increase press coverage. They believe that consumers will increasingly look for signs of good corporate citizenship that go beyond supplying rational and emotional benefits.

Q. 5 What are the various stages involved in decision process when a consumer is buying new product? Also, explain the adoption process.


Ans. Stages of the Consumer Buying Process

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity…discussed next.

The 6 stages are:

  1. Problem Recognition(awareness of need)–difference between the desired state and the actual condition. Deficit in assortment of products. Hunger–Food. Hunger stimulates your need to eat.
    Can be stimulated by the marketer through product information–did not know you were deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes.
  2. Information search
    • Internal search, memory.
    • External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc.

A successful information search leaves a buyer with possible alternatives, the evoked set.

Hungry, want to go out and eat, evoked set is

    • chinese food
    • indian food
    • burger king
    • klondike kates etc
  1. Evaluation of Alternatives–need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, indian gets highest rank etc.

If not satisfied with your choice then return to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by “framing” alternatives.

  1. Purchase decision–Choose buying alternative, includes product, package, store, method of purchase etc.
  2. Purchase–May differ from decision, time lapse between 4 & 5, product availability.
  3. Post-Purchase Evaluation–outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc.
    After eating an indian meal, may think that really you wanted a chinese meal instead.

Adoption Process

Adoption is an individual’s decision to become a regular user of a product. How do potential customers learn about new products, try them, and adopt or reject them? The consumer adoption process is later followed by the consumer loyalty process, which is the concern of the established producer. Years ago, new product marketers used a mass market approach to launch products. This approach had two main drawbacks: It called for heavy marketing expenditures, and it involved many wasted exposures. These drawbacks led to a second approach, heavy user target marketing. This approach makes sense, provided that heavy users are identifiable and are early adopters. However, even within the heavy user group, many heavy users are loyal to existing brands. New product marketers now aim at consumers who are early adopters.

The theory of innovation diffusion and consumer adoption helps marketers identify early adopters.

An innovation is any good, service, or idea that is perceived by someone as new. The idea may have a long History, but it is an innovation to the person who sees it as new. Innovations take time to spread through the social system. The Innovation diffusion process is defined as “the spread of a new idea from its source of invention or creation to its ultimate users or adopters. The consumer adoption process is the mental process through which an individual passes from first hearing about an innovation to final adoption.

Adopters of new products have been observed to move through five stages:

1. Awareness : The consumer becomes aware of the innovation but lacks information about it.
2. Interest : The consumer is stimulated to seek information about the innovation.
3. Evaluation: The consumer considers whether to try the innovation
4. Trial: The consumer tries the innovation to improve his or her estimate of its value.
5. Adoption : The consumer decides to make full and regular use of the innovation.

Q. 6 Explain briefly the marketing mix elements for an automobile company giving sufficient examples.

Ans.  Marketing mix is the combination of elements that you will use to market your product. There are four elements: Product, Place, Price and Promotion. They are called the four Ps of the marketing mix.

The objectives of this lesson about marketing mix is to give you:

-The tools you need for establishing your detailed marketing plan and forecasting your sales.

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching


You have gotten a rough idea about the market situation and the possible positioning of your product. Of course, it’s far to be sufficient. Now, you must write your detailed planning. It means that brainstorming is ended and that you have to go to the specifics in examining and checking all the hypothesis you had made in the preceding chapters. You will use the marketing mix.

Some people think that the four Ps are old fashionable and propose a new paradigm: The four Cs! Product becomes customer needs; Place becomes convenience, price is replaced by cost to the user, promotion becomes communication. It looks like a joke but the Cs is more customer-oriented.


A good product makes its marketing by itself because it gives benefits to the customer. We can expect that you have right now a clear idea about the benefits your product can offer.

Suppose now that the competitors products offer the same benefits, same quality, same price. You have then to differentiate your product with design, features, packaging, services, warranties, return and so on. In general, differentiation is mainly related to:

-The design: it can be a decisive advantage but it changes with fads. For example, a fun board must offer a good and fashionable design adapted to young people.

-The packaging: It must provides a better appearance and a convenient use. In food business, products often differ only by packaging.

-The safety: It does not concern fun board but it matters very much for products used by kids.

-The “green”: A friendly product to environment gets an advantage among some segments.

In business to business and for expensive items, the best mean of differentiation are warranties, return policy, maintenance service, time payments and financial and insurance services linked to the product


A crucial decision in any marketing mix is to correctly identify the distribution channels. The question ” how to reach the customer” must always be in your mind.

-Definition: The place is where you can expect to find your customer and consequently, where the sale is realized. Knowing this place, you have to look for a distribution channel in order to reach your customer.

In fact, instead of “place” it would be better to use the word “distribution” but the MBA lingo uses “place” to memorize the 4 Ps of the marketing mix!


Price means the pricing strategy you will use. You have already fixed, as an hypothesis a customer price fitted to your customer profile but you will have now to bargain it with the wholesalers and retailers. Do not be foolish: They know better the market than you and you have to listen their advices.


Advertising, public relations and so on are included in promotion and consequently in the 4Ps. Sometimes, packaging becomes a fifth P. As promotion is closely linked to the sales, I will mention here the most common features about the sale strategy.

-Definition: The function of promotion is to affect the customer behavior in order to close a sale.

Of course, it must be consistent with the buying process described in the consumer analysis.

Promotion includes mainly three topics: advertisement, public relations, and sales promotions.


It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice about three important notions:

Reach is the percentage of the target market which is affected by your advertisement. For example, if you advertise on radio you must know how many people belonging to your segment can be affected.

Frequency is the number of time a person is exposed to your message. It is said that a person must be exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating point. You have to evaluate it before any advertisement campaign.

Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest, create desire and finally require action that is to say close the sale.


There are some magical words that you can use in any message:




-Public relations:

Public relations are more subtle and rely mainly on your own personality. For example, you can deliver public speeches on subjects such as economics, geo-economics, futurology to several organizations (civic groups, political groups, fraternal organizations, professional associations)


Sales bring in the money. Salesmen are directly exposed to the pressure of finding prospects, making deals, beating competition and bringing money.


PGDBA Semester II

MB0047 – Management Information Systems

Q1. What is MIS? Define the characteristics of MIS? What are the basic Functions of MIS? Give some Disadvantage of MIS?

Ans. Definition :

Organized approach to the study of information needs of a management at every level in making operational, tactical, and strategic decisions. Its objective is to design and implement man-machine procedures, processes, and routines that provide suitably detailed reports in an accurate, consistent, and timely manner. Modern, computerized systems continuously gather relevant data, both from inside and outside the organization. This data is then processed, integrated, and stored in a centralized database (or data warehouse) where it is constantly updated and made available to all who have the authority to access it, in a form that suits their purpose.

Characteristics of MIS:
MIS is mainly designed to take care of the needs of the managers in the organization.
MIS aids in integrating the information generated by various departments of the organization.
MIS helps in identifying a proper mechanism of storage of data.
MIS also helps in establishing mechanism to eliminate redundancies in data.
MIS as a system can be broken down into sub systems.

The role and significance of MIS in business and its classification is explained. It is possible to understand the various phases of development in MIS based on the type of system required in any organization.

Functions of MIS

1. Data processing
It includes the collection, transmission, storage, processing and output of data. It simplifies the statistics and reduces to the lowest cost by supplying an unified format.
2. Function of prediction
It predicts the future situation by applying modern mathematics, statistics or simulation.

3. Function of plan
It arranges reasonably the plans of each functional department in accordance with the restrictions afforded by enterprises and provides the appropriate planning reports according to different management.

4. Function of control
It monitors and inspects the operation of plans and comprises with the differences between operation and plan in accordance with the data afforded by every functional department, and be assistant to managers to control timely each method by analyzing the reasons why the differences comes into being.

5. Function of assistance
It derives instantly the best answers of related problems by applying to various of mathematics’ mode and analyzing a plentiful data stored in computers in the hope of using rationally human resource, financial resource, material resource and information resource for relative abundant economic benefits.


Disadvantages of MIS


1.highly senstive requires constant monitoring.
2.buddgeting of MIS extremely difficult.
3.Quality of outputs governed by quality of inputs.
4.lack of flexiblity to update itself.
5.effectiveness decreases due to frequent changes in top management
6.takes into account only qualitative factors and ignores non-qualitative factors like morale of worker, attitude of worker etc..

Q2. Explain Knowledge based system? Explain DSS and OLAP with example?

Ans. Knowledge-based system focuses on systems that use knowledge-based techniques to support human decision-making, learning and action it is a computer system that is programmed to imitate human problem-solving by means of artificial intelligence and reference to a database of knowledge on a particular subject. Also it based on the methods and techniques of artificial intelligence and their core components are the knowledge base and the inference mechanisms.
Decision Support Systems (DSS)
DSS is an interactive computer based system designed to help the decision makers to use all l the resources available and make use in the decision making. In management many a time problems arise out of situations for which simple solution may not be possible. To solve such problems you may have to use complex theories. The models that would be required to solve such problems may have to be identified. DSS requires a lot of managerial abilities and managers judgment.
You may gather and present the following information by using decision support application:
• Accessing all of your current information assets, including legacy and relational data sources, cubes, data warehouses, and data marts
• Comparative sales figures between one week and the next
• Projected revenue figures based on new product sales assumptions
• The consequences of different decision alternatives, given past experience in a context that is described.

Manager may sometimes find it difficult to solve such problems. E.g. – In a sales problem if there is multiple decision variables modeled as a simple linear problem but having multiple optima, it becomes difficult to take a decision. Since any of the multiple optima would give optimum results. But the strategy to select the one most suitable under conditions prevailing in the market, requires skills beyond the model.
It would take some trials to select a best strategy. Under such circumstances it would be easy to take decision if a ready system of databases of various market conditions and corresponding appropriate decision is available. A system which consists of database pertaining to decision making based on certain rules is known as decision support system. It is a flexible system which can be customized to suit the organization needs. It can work in the interactive mode in order to enable managers to take quick decisions. You can consider decision support systems as the best when it includes high-level summary reports or charts and allow the user to drill down for more detailed information.
A DSS has the capability to update its decision database. Whenever manager feels that a particular decision is unique and not available in the system, the manager can chose to update the database with such decisions. This will strengthen the DSS to take decisions in future..
There is no scope for errors in decision making when such systems are used as aid to decision making. DSS is a consistent decision making system. It can be used to generate reports of various lever management activities. It is capable of performing mathematical calculations and logical calculation depending upon the model adopted to solve the problem. You can summarize the benefits of DSS into following:

• Improves personal efficiency
• Expedites problem solving
• Facilitates interpersonal communication
• Promotes learning or training
• Increases organizational control
• Generates new evidence in support of a decision
• Creates a competitive advantage over competition
• Encourages exploration and discovery on the part of the decision maker
• Reveals new approaches to thinking about the problem space

Online Analytical Processing (OLAP)

OLAP refers to a system in which there are predefined multiple instances of various modules used in business applications. Any input to such a system results in verification of the facts with respect to the available instances.
A nearest match is found analytically and the results displayed form the database. The output is sent only after thorough verification of the input facts fed to the system. The system goes through a series of multiple checks of the various parameters used in business decision making. OLAP is also referred to as a multi dimensional analytical model. Many big companies use OLAP to get good returns in business.
The querying process of the OLAP is very strong. It helps the management take decisions like which month would be appropriate to launch a product in the market, what should be the production quantity to maximize the returns, what should be the stocking policy in order to minimize the wastage etc.
A model of OLAP may be well represented in the form of a 3D box. There are six faces of the box. Each adjoining faces with common vertex may be considered to represent the various parameter of the business situation under consideration. E.g.: Region, Sales & demand, Product etc.

Decision Support Systems (DSS)

DSS is an interactive computer based system designed to help the decision makers to use all l the resources available and make use in the decision making. In management many a time problems arise out of situations for which simple solution may not be possible. To solve such problems you may have to use complex theories. The models that would be required to solve such problems may have to be identified. DSS requires a lot of managerial abilities and managers judgment.

You may gather and present the following information by using decision support application:

 Accessing all of your current information assets, including legacy and relational data sources, cubes, data warehouses, and data marts

 Comparative sales figures between one week and the next

 Projected revenue figures based on new product sales assumptions

 The consequences of different decision alternatives, given past experience in a context that is described.

Q3.What are Value Chain Analysis & describe its significance in MIS? Explain what is meant by BPR? What is its significance? How Data warehousing & Data Mining is useful in terms of MIS?



The existing system in the organization is totally reexamined and radically modified for incorporating the latest technology. This process of change for the betterment of the organization is called as Business process re-engineering. This process is mainly used to modernize and make the organizations efficient. BPR directly affects the performance. It is used to gain an understanding the process of business and to understand the process to make it better and re-designing and thereby improving the system.

BPR is mainly used for change in the work process. Latest software is used and accordingly the business procedures are modified, so that documents are worked upon more easily and efficiently. This is known as workflow management.

Signification of BPR

Business process are a group of activities performed by various departments, various organizations or between individuals that is mainly used for transactions in business. There may be people who do this transaction or tools. We all do them at one point or another either as a supplier or customer. You will really appreciate the need of process improvement or change in the organizations conduct with business if you have ever waited in the queue for a longer time to purchase 1 kilo of rice from a Public Distribution Shop (PDS-ration shop). The process is called the check-out process. It is called process because uniform standard system has been maintained to undertake such a task. The system starts with forming a queue, receiving the needed item form the shop, getting it billed, payment which involves billing, paying amount and receiving the receipt of purchase and the process ends up with the exit from the store. It is the transaction between customer and supplier.

Data Warehousing – Data Warehouse is defined as collection of database which is referred as relational database for the purpose of querying and analysis rather than just transaction processing. Data warehouse is usually maintained to store heuristic data for future use. Data warehousing is usually used to generate reports. Integration and separation of data are the two basic features need to be kept in mind while creating a data warehousing. The main output from data warehouse systems are; either tabular listings (queries) with minimal formatting or highly formatted “formal” reports on business activities. This becomes a convenient way to handle the information being generated by various processes. Data warehouse is an archive of information collected from wide multiple sources, stored under a unified scheme, at a single site. This data is stored for a long time permitting the user an access to archived data for years. The data stored and the subsequent report generated out of a querying process enables decision making quickly. This concept is useful for big companies having plenty of data on their business processes. Big companies have bigger problems and complex problems. Decision makers require access to information from all sources. Setting up queries on individual processes may be tedious and inefficient.


Data Mining – Data mining is primarily used as a part of information system today, by companies with a strong consumer focus – retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among “internal” factors such as price, product positioning, or staff skills, and “external” factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it enables them to “drill down” into summary information to view detail transactional data. With data mining, a retailer could use point-of-sale records of customer purchases to send targeted promotions based on an individual’s purchase history. By mining demographic data from comment or warranty cards, the retailer could develop products and promotions to appeal to specific customer segments.


Q4. Explain DFD & Data Dictionary? Explain in detail how the information requirement is determined for an organization?


Data flow diagrams represent the logical flow of data within the system. DFD do not explain how the processes convert the input data into output. They do not explain how the processing takes place.

DFD uses few symbols like circles and rectangles connected by arrows to represent data flows. DFD can easily illustrate relationships among data, flows, external entities an stores. DFD can also be drawn in increasing levels of detail, starting with a summary high level view and proceeding o more detailed lower level views.

Rounded rectangles represent processes that transform flow of data or work to be done.

Rectangle represents external agents- the boundary of the system. It is source or destination of data.

The open-ended boxes represent data stores, sometimes called files or databases. These data stores correspond to all instances of a single entity in a data model.

Arrow represents data flows, inputs and outputs to end from the processes.

A number of guideline should be used in DFD

 Choose meaningful names for the symbols on the diagram.

 Number the processes consistently. The numbers do not imply the sequence.

 Avoid over complex DFD.

 Make sure the diagrams are balanced


Data Dictionary

The data dictionary is used to create and store definitions of data, location, format for storage and other characteristics. The data dictionary can be used to retrieve the definition of data that has already been used in an application. The data dictionary also stores some of the description of data structures, such as entities, attributes and relationships. It can also have software to update itself and to produce reports on its contents and to answer some of the queries.

Q5. What is ERP? Explain its existence before and its future after? What are the advantages & Disadvantages of ERP? What is Artificial Intelligence? How is it different from Neural Networks?


Manufacturing management systems have evolved in stages over the few decades from a simple means of calculating materials requirements to the automation of an entire enterprise. Around 1980, over-frequent changes in sales forecasts, entailing continual readjustments in production, as well as the unsuitability of the parameters fixed by the system, led MRP (Material Requirement Planning) to evolve into a new concept : Manufacturing Resource Planning (or MRP2) and finally the generic concept Enterprise Resource Planning (ERP).

ERP Before and After


Prior to the concept of ERP systems, departments within an organization (for example, the human resources (HR)) department, the payroll department, and the financial department) would have their own computer systems. The HR computer system (often called HRMS or HRIS) would typically contain information on the department, reporting structure, and personal details of employees. The payroll department would typically calculate and store paycheck information. The financial department would typically store financial transactions for the organization. Each system would have to rely on a set of common data to communicate with each other. For the HRIS to send salary information to the payroll system, an employee number would need to be assigned and remain static between the two systems to accurately identify an employee. The financial system was not interested in the employee-level data, but only in the payouts made by the payroll systems, such as the tax payments to various authorities, payments for employee benefits to providers, and so on. This provided complications. For instance, a person could not be paid in the payroll system without an employee number.


ERP software, among other things, combined the data of formerly separate applications. This made the worry of keeping numbers in synchronization across multiple systems disappears. It standardized and reduced the number of software specialties required within larger organizations.

Advantages and Disadvantages

Advantages – In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Tasks that need to interface with one another may involve:

 A totally integrated system

 The ability to streamline different processes and workflows

 The ability to easily share data across various departments in an organization

 Improved efficiency and productivity levels

 Better tracking and forecasting

 Lower costs

 Improved customer service

Disadvantages – Many problems organizations have with ERP systems are due to inadequate investment in ongoing training for involved personnel, including those implementing and testing changes, as well as a lack of corporate policy protecting the integrity of the data in the ERP systems and how it is used.

While advantages usually outweigh disadvantages for most organizations implementing an ERP system, here are some of the most common obstacles experienced:

Usually many obstacles can be prevented if adequate investment is made and adequate training is involved, however, success does depend on skills and the experience of the workforce to quickly adapt to the new system.

 Customization in many situations is limited

 The need to reengineer business processes

 ERP systems can be cost prohibitive to install and run

 Technical support can be shoddy

 ERP’s may be too rigid for specific organizations that are either new or want to move in a new direction in the near future.

Artificial Intelligence

Artificial Intelligence is the science and technology based on various functions to develop a system that can think and work like a human being. It can reason, analyze, learn, conclude and solve problems. The systems which use this type of intelligence are known as artificial intelligent systems and their intelligence is referred to as artificial intelligence. It was said that the computer don’t have common sense. Here in AI, the main idea is to make the computer think like human beings, so that it can be then said that computers also have common sense. More precisely the aim is to obtain a knowledge based computer system that will help managers to take quick decisions in business.


Artificial Intelligence and Neural Networks

Artificial intelligence is a field of science and technology based on disciplines such as computer science, biology, psychology, linguistics, mathematics and engineering. The goal of AI is to develop computers that can simulate the ability to think, see, hear, walk, talk and feel. In other words, simulation of computer functions normally associated with human intelligence, such as reasoning, learning and problem solving.

AI can be grouped under three major areas: cognitive science, robotics and natural interfaces.

Cognitive science focuses on researching on how the human brain works and how humans think and learn. Applications in the cognitive science area of AI include the development of expert systems and other knowledge-based systems that add a knowledge base and some reasoning capability to information systems. Also included are adaptive learning systems that can modify their behavior based on information they acquire as they operate. Chess-playing systems are some examples of such systems.

Fussy logic systems can process data that are incomplete or ambiguous. Thus, they can solve semi-structured problems with incomplete knowledge by developing approximate inferences and answers, as humans do.

Neural network software can learn by processing sample problems and their solutions. As neural nets start to recognize patterns, they can begin to program themselves to solve such problems on their own.

Neural networks are computing systems modeled after the human brain’s mesh like network of interconnected processing elements, called neurons. The human brain is estimated to have over 100 billion neuron brain cells. The neural networks are lot simpler in architecture. Like the brain, the interconnected processors in a neural network operate in parallel and interact dynamically with each other.

This enables the network to operate and learn from the data it processes, similar to the human brain. That is, it learns to recognize patterns and relationships in the data. The more data examples it receives as input, the better it can learn to duplicate the results of the examples it processes. Thus, the neural networks will change the strengths of the interconnections between the processing elements in response to changing patterns in the data it receives and results that occur

Q 6. Distinguish between closed decision making system & open decision making system? What is ‘what – if‘analysis? Why is more time spend in problem analysis & problem definition as compared to the time spends on decision analysis?



If the manager operates in an environment not known to him, then the decision-making system is termed as an open decision-making system. The conditions of this system in contrast closed decision-making system are:

a) The manager does not know all the decision alternatives.

b) The outcome of the decision is also not known fully. The knowledge of the outcome may be a probabilistic one.

c) No method, rule or model is available to study and finalise one decision among the set of decision alternatives.

What if analysis

Decisions are made using a model of the problem for developing various solution alternatives and testing them for best choice. The model is built with some variables and relationship between variables considered values of variables or relationship in the model may not hold good and therefore solution needs to be tested for an outcome, if the considered values of variables or relationship change. This method of analysis is called ‘what if analysis.’

Decision Analysis by Analytical Modelling

Based on the methods discussed, a decision is made but such decision needs to be analysed for conditions and assumptions considered in the decision model. The process is executed through analytical modelling of problem and solution. The model is analysed in four ways.

 What if analysis • Goal Seeking Analysis

 Sensitivity analysis • Goal Achieving analysis







MB0048 –Operation Research

Q1. a. Explain how and why Operation Research methods have been valuable in aiding executive decisions.

b. Discuss the usefulness of Operation Research in decision making process and the role of computers in this field.


Churchman, Aackoff and Aruoff defined Operations Research as: the application of scientific methods, techniques and tools to operation of a system with optimum solutions to the problems”, where ‘optimum’ refers to the best possible alternative.

The objective of Operations Research is to provide a scientific basis to the decision-makers for solving problems involving interaction of various components of the organisation. You can achieve this by employing a team of scientists from different disciplines, to work together for finding the best possible solution in the interest of the organisation as a whole. The solution thus obtained is known as an optimal decision.

You can also define Operations Research as The use of scientific methods to provide criteria for decisions regarding man, machine, and systems involving repetitive operations”.OR “Operation Techniques is a bunch of mathematical techniques.”

b. “Operation Research is an aid for the executive in making his decisions based on scientific methods analysis”. Discuss the above statement in brief.


“Operation Research is an aid for the executive in making his decisions based on scientific methods analysis”.


Any problem, simple or complicated, can use OR techniques to find the best possible solution. This section will explain the scope of OR by seeing its application in various fields of everyday life.

i) In Defense Operations: In modern warfare, the defense operations are carried out by three major independent components namely Air Force, Army and Navy. The activities in each of these components can be further divided in four sub-components namely: administration, intelligence, operations and training and supply. The applications of modern warfare techniques in each of the components of military organisations require expertise knowledge in respective fields. Furthermore, each component works to drive maximum gains from its operations and there is always a possibility that the strategy beneficial to one component may be unfeasible for another component. Thus in

defense operations, there is a requirement to co-ordinate the activities of various components, which gives maximum benefit to the organisation as a whole, having maximum use of the individual components. A team of scientists from various disciplines come together to study the strategies of different components. After appropriate analysis of the various courses of actions, the team selects the best course of action, known as the ‘optimum strategy’.

ii) In Industry: The system of modern industries is so complex that the optimum point of operation in its various components cannot be intuitively judged by an individual. The business environment is always changing and any decision useful at one time may not be so good some time later. There is always a need to check the validity of decisions continuously against the situations. The industrial revolution with increased division of labour and introduction of management responsibilities has made each component an independent unit having their own goals. For example: production department minimises the cost of production but maximise output. Marketing department maximises the output, but minimises cost of unit sales. Finance department tries to optimise the capital investment and personnel department appoints good people at minimum cost. Thus each department plans its own objectives and all these objectives of various department or components come to conflict with one another and may not agree to the overall objectives of the organisation. The application of OR techniques helps in overcoming this difficulty by integrating the diversified activities of various components to serve the interest of the organisation as a whole efficiently. OR methods in industry can be applied in the fields of production, inventory controls and marketing, purchasing, transportation and competitive strategies.

iii) Planning: In modern times, it has become necessary for every government to have careful planning, for economic development of the country. OR techniques can be fruitfully applied to maximise the per capita income, with minimum sacrifice and time. A government can thus use OR for framing future economic and social policies.

iv) Agriculture: With increase in population, there is a need to increase agriculture output. But this cannot be done arbitrarily. There are several restrictions. Hence the need to determine a course of action serving the best under the given restrictions. You can solve this problem by applying OR techniques.

v) In Hospitals: OR methods can solve waiting problems in out-patient department of big hospitals and administrative problems of the hospital organisations.

vi) In Transport: You can apply different OR methods to regulate the arrival of trains and processing times minimise the passengers waiting time and reduce congestion, formulate suitable transportation policy, thereby reducing the costs and time of trans-shipment.

vii) Research and Development: You can apply OR methodologies in the field of R&D for several purposes, such as to control and plan product introductions.

Q2. Explain how the linear programming technique can be helpful in decision-making in the areas of Marketing and Finance.


Linear programming problems are a special class of mathematical programming problems for which the objective function and all constraints are linear. A classic example of the application of linear programming is the maximization of profits given various production or cost constraints.

Linear programming can be applied to a variety of business problems, such as marketing mix determination, financial decision making, production scheduling, workforce assignment, and resource blending. Such problems are generally solved using the “simplex method.”


The local Chamber of Commerce periodically sponsors public service seminars and programs. Promotional plans are under way for this year’s program. Advertising alternatives include television, radio, and newspaper. Audience estimates, costs, and maximum media usage limitations are shown in Exhibit 1.

If the promotional budget is limited to $18,200, how many commercial messages should be run on each medium to maximize total audience contact? Linear programming can find the answer.

Q3. a. How do you recognise optimality in the simplex method?

b. Write the role of pivot element in simplex table?

Ans.  Simplex method is used for solving Linear programming problem especially when more than two variables are involved

1.     Set up the problem. 

That is, write the objective function and the constraints.

2.     Convert the inequalities into equations.

This is done by adding one slack variable for each inequality.

3.     Construct the initial simplex tableau.

        Write the objective function as the bottom row.

4.     The most negative entry in the bottom row  identifies a column.

5.     Calculate the quotients.  The smallest quotient identifies a row.  The element in the intersection of the column identified in step 4 and the row identified in this step is identified as the pivot element.

The quotients are computed by dividing the far right column by the identified column in step 4.   A quotient that is a zero, or a negative number, or that has a zero in the denominator, is ignored.

6.    Perform pivoting  to make all other entries in this column zero.

        This is done the same way as we did with the Gauss-Jordan method.

7.     When there are no more negative entries in the bottom row, we are finished; otherwise, we start again from step 4.

8.     Read off your answers.

Get the variables using the columns with 1 and 0s.  All other variables are zero.  The maximum value you are looking for appears in the bottom right hand corner.


Niki holds two part-time jobs, Job I and Job II.  She never wants to work more than a total of 12 hours a week.  She

has determined that for every hour she works at Job I, she needs 2 hours of preparation time, and for every hour

she works at Job II, she needs one hour of preparation time, and she cannot spend more than 16 hours for

preparation.  If she makes $40 an hour at Job I, and $30 an hour at Job II, how many hours should she work per

week at each job to maximize her income?

Solution: In solving this problem, we will  follow the algorithm listed above.

1.Set up the problem.  That is, write the objective function and the constraints.

Since the simplex method is used for problems that consist of many variables, it is not practical to use the variables x, y, z etc.  We use the symbols x1, x2, x3, and so on.

Let x1 = The number of hours per week Niki will work at Job I.

and x2 = The number of hours per week Niki will work at Job II.

It is customary to choose the variable that is to be maximized as Z.

The problem is formulated the same way as we did in the last chapter.

Maximize         Z = 40×1 + 30×2

Subject to:       x1  +  x2  ≤  12

2×1 + x2  ≤  16

x1 ≥ 0;  x2  ≥  0

2.  Convert the inequalities into equations.   This is done by adding one slack variable for each inequality.

For example to convert the inequality x1  +  x2  ≤  12 into an equation, we add a non-negative variable y1, and we get

x1  +  x2  +  y1  = 12

Here the variable y1 picks up the slack, and it represents the amount by which x1  +  x2  falls short of 12.  In this problem, if Niki works fewer that 12 hours, say 10, then y1 is 2.  Later when we read off the final solution from the simplex table, the values of the slack variables will identify the unused amounts.

We can even rewrite the objective function Z = 40×1 + 30×2 as  – 40×1 – 30×2 + Z = 0.

After adding the slack variables, our problem reads

  Objective function:      – 40×1 – 30×2  +  Z = 0

Subject to constraints:   x1  +  x2  +  y1  = 12

2×1 + x2  +  y2  =  16

x1 ≥ 0;  x2  ≥  0

3.  Construct the initial simplex tableau.   Write the objective function as the bottom row.

Now that the inequalities are converted into equations, we can represent the problem into an augmented matrix called the initial simplex tableau as follows.

























Here the vertical line separates the left hand side of the equations from the right side.  The horizontal line separates the constraints from the objective function.  The right side of the equation is represented by the column C.

The reader needs to observe that the last four columns of this matrix look like the final matrix for the solution of a system of equations.  If we arbitrarily choose x1 = 0 and x2 = 0, we get

Which reads

y1 = 12

y2 = 16

Z   = 0

The solution obtained by arbitrarily assigning values to some variables and then solving for the remaining variables is called the basic solution associated with the tableau.  So the above solution is the basic solution associated with the initial simplex tableau.   We can label the basic solution variable in the right of the last column as shown in the table below.



























4.  The most negative entry in the bottom row  identifies a column.

The most negative entry in the bottom row is –40, therefore the column 1 is































Q4. What is the significance of duality theory of linear programming? Describe the general rules for writing the dual of a linear programming problem.

Ans.Linear programming (LP) is a mathematical method for determining a way to achieve the best outcome (such as maximum profit or lowest cost) in a given mathematical model for some list of requirements represented as linear relationships. Linear programming is a specific case of mathematical programming.

More formally, linear programming is a technique for the optimization of a linear objective function, subject to linear equality and linear inequality constraints. Given a polytope and a real-valued affine function defined on this polytope, a linear programming method will find a point on the polytope where this function has the smallest (or largest) value if such point exists, by searching through the polytope vertices.

Linear programs are problems that can be expressed in canonical form:

where x represents the vector of variables (to be determined), c and b are vectors of (known) coefficients and A is a (known) matrix of coefficients. The expression to be maximized or minimized is called the objective function (cTx in this case). The equations Ax ≤ b are the constraints which specify a convex polytope over which the objective function is to be optimized. (In this context, two vectors are comparable when every entry in one is less-than or equal-to the corresponding entry in the other. Otherwise, they are incomparable.)

Linear programming can be applied to various fields of study. It is used most extensively in business and economics, but can also be utilized for some engineering problems. Industries that use linear programming models include transportation, energy, telecommunications, and manufacturing. It has proved useful in modeling diverse types of problems in planning, routing, scheduling, assignment, and design.

Duality: Every linear programming problem, referred to as a primal problem, can be converted into a dual problem, which provides an upper bound to the optimal value of the primal problem. In matrix form, we can express the primal problem as:

Maximize cTx subject to Axb, x ≥ 0;

with the corresponding symmetric dual problem,

Minimize bTy subject to ATyc, y ≥ 0.

An alternative primal formulation is:

Maximize cTx subject to Axb;

with the corresponding asymmetric dual problem,

Minimize bTy subject to ATy = c, y ≥ 0.

There are two ideas fundamental to duality theory. One is the fact that (for the symmetric dual) the dual of a dual linear program is the original primal linear program. Additionally, every feasible solution for a linear program gives a bound on the optimal value of the objective function of its dual. The weak duality theorem states that the objective function value of the dual at any feasible solution is always greater than or equal to the objective function value of the primal at any feasible solution. The strong duality theorem states that if the primal has an optimal solution, x*, then the dual also has an optimal solution, y*, such that cTx*=bTy*.

A linear program can also be unbounded or infeasible. Duality theory tells us that if the primal is unbounded then the dual is infeasible by the weak duality theorem. Likewise, if the dual is unbounded, then the primal must be infeasible. However, it is possible for both the dual and the primal to be infeasible









































PGDBA Semester II

MB0049- Project Management

Q.1 Describe in detail the various phases of Project management life cycle.

Ans. Projects too have to chore through their life-cycles adhering to a system. Every project irrespective of its size, scope has to adapt a system. A system in the project management refers to the existence of interrelationship of activities in a project. The absence of a system makes a project die.

No matter what project it is that you’re preparing for, the project management life cycle can assist you in narrowing your focus, keeping your objectives in order and finishing said project on time, on budget and with a minimum of headaches. Every project management life cycle contains five steps: Initiation, Planning, Execution, Monitoring/Control and Closure. No one step is more important than the other and each step plays a crucial role in getting your project off the ground, through the race, down the stretch and across the finish line.

Phases of Project management life cycle

1) Initiation: In this first step you provide an over-view of the project in addition to the strategy you plan on using in order to achieve the desired results. During the Initiation phase you’ll appoint a project manager who in turn will — based on their experience and skills — select his team members. And lest you think you need to be a Bill Gates or Donald Trump in order to see your project take on a life of it’s own, fear not: there are some great technological tools available to get you through the Initiation phase of the project management life cycle.

2) Planning: The all-important second step of any successful project management life cycle is planning and should include a detailed breakdown and assignment of each task of your project from beginning to end. The Planning Phase will also include a risk assessment in addition to defining the criteria needed for the successful completion of each task. In short, the working processis defined, stake holders are identified and reporting frequency and channels explained.

3 & 4) Execution and Control :Steps Three and Four take you into deeper water. When it comes to the project management cycle, execution and control just may be the most important of the five steps in that it ensures project activities are properly executed and controlled. During the Execution and Control phases, the planned solution is implemented to solve the problem specified in the project’s requirements. In product and system development, a design resulting in a specific set of product requirements is created. This convergence is measured by prototypes, testing, and reviews. As the Execution and Control phases progress, groups across the organization become more deeply involved in planning for the final testing, production, and support.

5) Closure

By the time you reach Step Five — Closure — the project manager should be tweaking the little things to ensure that the project is brought to its proper conclusion. The Closure phase is typically highlighted by a written formal project review report which contains the following elements: a formal acceptance of the final product (by the client), Weighted Critical Measurements (a match between the initial requirements laid out by the client against the final delivered product), lessons learned, project resources, and a formal project closure notification to higher management.

The Project Management Cycle saves time and keeps everyone on the team focused. Fortunately, modern technology provides a variety of templates that will take you from A-to-Z (or in this case from Start-to-Finish) making the Project Management Cycle user friendly no matter what your level of management experience!

Q.2 List and explain the various aspects of programme management.



Project Management

Project management is the planning, organizing, directing, and controlling of company resources.

It is clear from this definition that project management is concerned with the dynamic allocation, utilization, and direction of resources (both human and technical), with time — in relation to both individual efforts and product delivery schedule — and with costs, relating to both the acquisition and consumption of funding. As a corollary, it is safe to say that without the direction project management provides, work would have to proceed via a series of negotiations, and/or it would not align with the goals, value proposition, or needs of the enterprise.

Within a program, these same responsibilities (i.e., allocation, utilization, and direction) are assigned to people at three levels in the management hierarchy; the higher the level, the more general the responsibilities. For example, at the bottom of the management hierarchy, project managers are assigned to the various projects within the overall program. Each manager carries out the management responsibilities we described above.

At the middle of the hierarchy is the program manager/director, whose major responsibility is to ensure that the work effort achieves the outcome specified in the business and IT strategies. This involves setting and reviewing objectives, coordinating activities across projects, and overseeing the integration and reuse of interim work products and results. This person spends more time and effort on integration activities, negotiating changes in plans, and communicating than on the other project management activities we described (e.g., allocating resources, ensuring adherence to schedule, budget, etc.).

At the top of the program management hierarchy are the program sponsor(s) and the program steering committee. Their major responsibility is to own and oversee the implementation of the program’s underlying business and IT strategies, and to define the program’s connection to the enterprise’s overall business plan(s) and direction. Their management activities include providing and interpreting policy, creating an environment that fosters sustainable momentum for the program (i.e., removing barriers both inside and outside the enterprise), and periodically reviewing program progress and interim results to ensure alignment with the overall strategic vision.

These individuals receive periodic summary reports and briefings on funding consumption, resources and their utilization, and delivery of interim work products and results. Typically, they will focus on these reports only if there is significant deviation from the plan.

So, let’s return to the questions we posed at the start of this section: What is program management? Is it really management at all?

If you think of management activities strictly as those we defined for project management, then the answer to the second question is “No,” or maybe “Partly.” At the project level, managers do still perform these activities, but the program manager/director addresses a different set of program goals or needs, which requires a different “bag of tricks” as well as a different view of what is happening and what needs to get done. And at the top of the hierarchy, the executive leaders who set goals and oversee the program certainly do not perform the same detailed activities as project managers

Q.3 Write a short note on the following: 

a. Project progress control tools and mechanisms

 b. Process in bringing about a change in project management.

Ans.  Project progress control tools and mechanism

Project monitoring and control also provides information to support status reporting, progress measurement, forecasting and updating current cost and schedule information. During this process, it is also important to ensure that implementation of approved changes are monitored when and as they occur.

As for tools and techniques used in facilitating project monitoring and control, automated project management information systems and Earned Value are among the most commonly used. Both are also used to update information. Earned Value also provides a means for forecasting future performance based upon past performance.

Status reports are used for communicating project progress and status. Variance Analysis reports are typically used to identify variances and the information often used as a basis for determining corrective actions.

The ideal suite of project management tools would provide fully integrated functionality such that:

  • tools share the same communication medium to the team (eg Web, Intranet, Exchange server, EMail, Client/Server)
  • information can be automatically transferred to other tools, or, better still, be held only once (eg team names, task lists, EMail addresses, distribution lists)
  • efficiency and effectiveness is supported by automatic messaging and workflow control – the applications will always prompt those responsible for action.

The tools that are used in project planning are

  1. 1.     Project organization


Skills and activities

  • Prepare an outline project justification, plan and project budget
  • Selection and briefing of the project team, assigning roles and organization
  • Feasibility study- risk and key success factors
  • Project definition and project plan
  • Communicate to the team
  • Allocating and monitoring the work and cost
  • Ensuring work and team cohesion
  • Reporting progress
  • Monitoring progress and managing changes
  • Helping the team to solve project problems
  • Satisfactory delivery
  • Compiling lessons from project experience


  1. 2.     Project structure

Development plan, project tracking and oversight.

  1. 3.     Project Key personnel – Identify those business areas that are within the scope or directly interface with the scope boundary and list them in the “Business area” column of the project assignment worksheet

Identify the key personnel for each area and list them in the “Person” column of the project assignment worksheet.

  1. 4.     Project management team

It is a senior management team, which will be accountable for the project.

  • Identify project sponsor, client representative and technical representative.
  • Stage managers- who will plan and manage the project on a day-to-day basis for this stage
  • Project coordinators- client coordinator and technical coordinator
  • Clearly define these coordination, control activities and identify the brief suitable personnel to carry them out
  1. 5.     Key stakeholders

Identify management level personnel who are critical to the success of the project.

Document the responsibilities of stakeholders

6.   Stage teams

Identify appropriate personnel required for the stage, define the team structure and appoint team leaders

Document the time commitment and responsibilities to be performed by the team members.

  1. 7.   Key resources

Individuals assigned to a key resource role may work towards gathering “Business key resources” and “Technical key resources”. They are project coordinators and team invitees.

  1. 8.   Work Breakdown Structure (WBS)

The entire process of a project may be considered to be made up on number of sub process placed in different stage called the Work Breakdown Structure (WBS).

A typical example of a work breakdown structure of a recruitment process is indicated below :

This is the technique to analyze the content of work and cost by breaking it down into its component parts.

Project key stages form the highest level of the WBS, which is then used to show the details at the lower levels of the project. Each key stage comprises many tasks identified at the start of planning and later this list will have to be validated.

WBS is produced by Identifying the key elements, breaking each element down into component parts and continuing to breakdown until manageable work packages have been identified. These can then be allocated to the appropriate person.The WBS does not show dependencies other than a grouping under the key stages. It is not time based- there is no timescale o the drawing.

  1. 9.             Task duration

Identifying lead and lag times helps in working out task duration.

            Lead time: An amount of time, which a successor task can overlap with its predecessor task, i.e. the time before the completion of the predecessor at which the successor can start.

            Lag time: An amount of time, between a predecessor and a successor task, i.e. the time after the completion of the predecessor that the start of the successor is delayed


Q.4 Describe in brief the various phases of the quality control process.


The definition of the ISO 8204 for quality:

“Totality of characteristics of an entity that bears on its ability to satisfy stated and implied needs.”

This means that the Software product conforms to requirements defined.


Description of Phases:


Software Quality Management (SQM) describes the processes that ensure that the Software Project would reach its goals i.e. meet the client’s expectations.

Any phase of SDLC has its own independent stages of planning, execution, monitoring, control & reporting. Likewise Software Quality Management has the following three categories or key phases:

1.     Quality Planning

2.     Quality Assurance

3.     Quality Control

Quality Planning:

Quality Planning is one of the most important parts of Software Quality Management. It is the start activity of SQM. Through proper planning we can ensure that the processes that make a product are audited correctly to meet the overall project objective. The staring of Quality Planning process is followed differently by different Organization. It has been described in different Quality Policy and Documentation across various Organizations.

Other industry standards related to the Software Project can be referred to Planning phases when needed. These act as Standard inputs for some specific projects. The Planning stage is having following inputs:-

1.     Quality Policy of a Company

2.     Organization Standards

3.     Referencing Industry Standards

4.     Regulatory compliances

5.     Statement Of Work

6.     Project specific Requirements

Quality planning process can ensure that standards are as per client’s expectations. The outcomes of Quality Planning process are as follows:-

1.     Standards defined for the project

2.     Quality Plan

Various tools and techniques are used to create the quality plan. Few of these tools and techniques are briefly described in this article. Here are some over views:-

 Benchmark:  Deciding on the present product standards by comparing with the performances of similar products which is already exist in the market.

 Cost of Quality: The total cost of quality is a summation of prevention, appraisal and failure costs.

 Design of Experiments:  Statistical data can be used to determine the factors influencing the Quality of the product.

 Other tools: There are various tools used in the Planning process such as  Cost Benefit Analysis, Cause and Effect Diagrams, System Flow Characteristics.

All of the above key points aids in the formation of a Quality Management Plan for a particular project.

Quality Assurance:

Quality Plan which is created during planning is the input to Quality Assurance Process. The Assurance stage is having the following inputs:

1.     Quality Audits

2.     Various Techniques used to evaluate performance of project

Quality Assurance Process helps us to ensure that the Project is following the Quality Management Plan. The tools and techniques which are used in Planning Process such as System Flow Charectistics, Design of Experiments, Cause and Effect Diagrams can be implemented here too, as per requirements.

Quality Control:

The next step to Quality Assurance Process is Quality Control. The Control stage is having following inputs:

1. Quality Management Plan.
2. Quality Standards for the Project.
3. Actual Observations and Measurements of the work done or work in Progress.

The Quality Control Processes use various tools to Observe and Measure if the work done or not. If the Work done and it is found that the deliverable is not satisfactory then it can be sent back to the development team for fixes.

If the work done meets the requirements as defined then it is accepted and released to the clients.

Q.5 Write short note on the following Project Management tools:

a. Quality Certification

b. Strategic inflection point

c. Force field analysis

d. Information risk management


Quality Certification

Quality certification has become extremely important in competitive markets and especially in gaining foothold in exports. To avail the certification of ISO-9000, a unit has to undertake significant costs; the small scale industries have been found wanting mainly on account of resource crunch to implement quality systems to obtain this certification. However, as a paradigm shift, SSI must make ‘Quality’ a way of life.

It has been decided to push the quality upgradation programme in the SSI Sector in a big way.

A scheme has been launched to give financial incentive to those SSI units who acquire ISO-9000 certification, by reimbursing 75% of their costs of obtaining certification, subject to a maximum of Rs. 0.75 lacs per unit.

In order to promote modernization and technology up gradation in SSI, the units are assisted in improving the quality of their products.

A new scheme has been launched to assist SSI units in obtaining ISO-9000 or an equivalent international quality standard. Subject to an upper ceiling of Rs. 075 lacs, each unit is given financial assistance equal to 75% of the costs incurred in acquiring the quality standard.

The SSI units are also encouraged to participate in quality awareness and learning programmes organised specially for their benefit.

Strategic inflection point

Point at which a corporation facing a new situation must alter the path it is on and adapt, or fall into decline. The term was coined by Hungarian-born US computer entrepreneur Andy Grove, chairman of microprocessor company Intel. Grove believes strategic inflection points occur when a company’s competitive position goes through a transition. The idea concerns how companies recognize and adapt to paradigm changes. At a strategic inflection point the way a business operates, and the concept of it as a business, undergoes a change.

Force field analysis

Force field analysis is an influential development in the field of social science. It provides a framework for looking at the factors (forces) that influence a situation, originally social situations. It looks at forces that are either driving movement toward a goal (helping forces) or blocking movement toward a goal (hindering forces). The principle, developed by Kurt Lewin, is a significant contribution to the fields of social science, psychology, social psychology, organizational development, process management, and change management.

Lewin, a social psychologist, believed the “field” to be a Gestalt psychological environment existing in an individual’s (or in the collective group) mind at a certain point in time that can be mathematically described in a topological constellation of constructs. The “field” is very dynamic, changing with time and experience. When fully constructed, an individual’s “field” (Lewin used the term “life space”) describes that person’s motives, values, needs, moods, goals, anxieties, and ideals.

Lewin believed that changes of an individual’s “life space” depend upon that individual’s internalization of external stimuli (from the physical and social world) into the “life space.” Although Lewin did not use the word “experiential,” (see experiential learning) he nonetheless believed that interaction (experience) of the “life space” with “external stimuli” (at what he calls the “boundary zone”) were important for development (or regression). For Lewin, development (or regression) of an individual occurs when their “life space” has a “boundary zone” experience with external stimuli. Note, it is not merely the experience that causes change in the “life space,” but the acceptance (internalization) of external stimuli.

Lewin took these same principles and applied them to the analysis of group conflict, learning, adolescence, hatred, morale, German society, etc. This approach allowed him to break down common misconceptions of these social phenomena, and to determine their basic elemental constructs. He used theory, mathematics, and common sense to define a force field, and hence to determine the causes of human and group behavior.

Information risk management

Information Risk Management follows information as it is created, distributed, stored, copied, transformed and interacted with throughout its lifecycle.

Three Pillars to an Information Risk Strategy

1) Information-centric approach: Begin by understanding what information is critical to key business initiatives, such as growth through acquisitions or expanding partnerships. Then diligently ‘follow the data’ to gain a more holistic view of all the places where it exists across the organization, where the points of vulnerability are, and what events could put your business at risk.”

2) Risk/Reward analysis: Security investments should be prioritized, based on the amount of risk a given activity entails relative to the potential business reward, and in keeping with the organization’s appetite for risk.

3) Ensuring repeatability: Once enterprise information has been located and a risk assessment performed, the next step is to implement controls — including policies, technologies, and tools — to mitigate that risk. Here, organizations often turn to frameworks like ISO 27002 and the PCI Data Security Standard.

Q.6 List and describe in brief the various types of review used for improving performance of a project.

Ans.                                                     Performance Measurement

Most of us have heard some version of the standard performance measurement cliches: “what gets measured gets done,” “ if you don’t measure results, you can’t tell success from failure and thus you can’t claim or reward success or avoid unintentionally rewarding failure,” “ if you can’t recognize success, you can’t learn from it; if you can’t recognize failure, you can’t correct it,” “if you can’t measure it, you can neither manage it nor improve it,” but what eludes many of us is the easy path to identifying truly strategic measurements without falling back on things that are easier to measure such as input, project or operational process measurements.

Performance Measurement is addressed in detail in Step Five of the Nine Steps to Success® methodology. In this step, Performance Measures are developed for each of the Strategic Objectives. Leading and lagging measures are identified, expected targets and thresholds are established, and baseline and benchmarking data is developed. The focus on Strategic Objectives, which should articulate exactly what the organization is trying to accomplish, is the key to identifying truly strategic measurements.

Strategic performance measures monitor the implementation and effectiveness of an organization’s strategies, determine the gap between actual and targeted performance and determine organization effectiveness and operational efficiency.

Good Performance Measurement

  • Focus employees’ attention on what matters most to success
  • Allow measurement of accomplishments, not just of the work that is performed
  • Provide a common language for communication
  • Are explicitly defined in terms of owner, unit of measure, collection frequency, data quality, expected value(targets), and thresholds
  • Are valid, to ensure measurement of the right things
  • Are verifiable, to ensure data collection accuracy

Problems in Performance Appraisals:

  • discourages teamwork
  • evaluators are inconsistent or use different criteria and standards
  • only valuable for very good or poor employees
  • encourages employees to achieve short term goals
  • managers has complete power over the employees
  • too subjective
  • produces emotional anguish


  • Make collaboration a criterion on which employees will be evaluated
  • Provide training for managers; have the HR department look for patterns on appraisals that suggest bias or over or under evaluation
  • Rate selectively(introduce different or various criteria and disclose better performance and coach for worst performer without disclosing the weakness of the candidate) or increase in frequency of performance evaluation.
  • Include long term and short term goals in appraisal process
  • Introduce M.B.O.(Management By Objectives)
  • Make criteria specific and test selectively{Evaluate specific behaviors or results}
  • Focus on behaviors; do not criticize employees; conduct appraisal on time.




PGDBA- Semester II

MB0044 – Production & Operations Management

Q1. Explain Logical process and Physical process modeling. What are the ingredients of Business Process?


 Business Process Modeling

A process is a coordinated set of activities designed to produce a specific outcome. There are processes for saving a file, constructing a building, and cooking a meal. In fact, there is a process for almost everything we do. A business process is a type of process designed to achieve a particular business objective.

Business processes consist of many components, including:

  • The data needed to accomplish the desired business objective
  • Individual work tasks that manipulate, review, or act upon the data in some way
  • Decisions that affect the data in the process or the manner in which the process is conducted
  • The movement of data between tasks in the process
  • Individuals and groups which perform tasks

Processes can be manual or automated, fully documented or simply knowledge in the minds of one or more people. They can be simple or complex. They can be formal, requiring exact adherence to all details; or flexible, provided the desired outcome is achieved.

Logical Process Modeling

Logical Process Modeling is the representation of a business process, detailing all the activities in the process from gathering the initial data to reaching the desired outcome. These are the kinds of activities described in a logical process model:

  • Gathering the data to be acted upon
  • Controlling access to the data during the process execution
  • Determining which work task in the process should be accomplished next
  • Delivering the appropriate subset of the data to the corresponding work task
  • Assuring that all necessary data exists and all required actions have been performed at each task
  • Providing a mechanism to indicate acceptance of the results of the process, such as, electronic “signatures”

All business processes are made up of these actions. The most complex of processes can be broken down into these concepts. The complexity comes in the manner in which the process activities are connected together. Some activities may occur in sequential order, while some may be performed in parallel. There may be circular paths in the process (a re-work loop, for example). It is likely there will be some combination of these.

The movement of data and the decisions made determining the paths the data follow during the process comprise the process model. The contains only business activities, uses business terminology (not software acronyms, technical jargon, etc.…), completely describes the activities of the business area being modeled, and is independent of any individual or position working in the organization. Like its sibling, Logical Data Modeling, Logical Process Modeling does not include redundant activities, technology dependent activities, physical limitations or requirements or current systems limitations or requirements. The process model is a representation of the business view of the set of activities under analysis.

Heretofore, many applications and systems were built without a logical process model or a rigorous examination of the processes needed to accomplish the business goals. This resulted in applications that did not meet the needs of the users and / or were difficult to maintain and enhance.

Problems with an unmodeled system include the following:

  • Not knowing who is in possession of the data at any point in time
  • Lack of control over access to the data at any point in the process
  • Inability to determine quickly where in the process the data resides and how long it has been there
  • Difficulties in making adjustments to a specific execution of a business process
  • Inconsistent process execution

. Ingredients of Business Process

1) Time: You must understand that time is money. In business, our objective is to make money. Period. But the question is how productively you convert your time into money. Are you making full use of your time or you just let the time pass by you?

How much you make depends on how good you are at converting time to money. If you are already productive, then you may want to ask what are the things you can do to
improve further the ratio of dollar/second? If you are making $0.01/second, what you can do to make it $0.02/second? Or even more. Remember time is the most valuable asset and once it’s gone, it’s gone. Also time is also the fairest distribution of resources every human being receives.

2) People: To be successful in business, you must have people connections. I mean the right people. People consist of customers, suppliers, partners, staff, and associates.

One thing that you must not leave out is your mentor or coach. Having genuine mentors or coaches is very important and it can make a very big difference in your business.

To make sure that you have more profits, you must serve people well. Organize your database of people connections. By simply knowing who does what, who supplies what, who needs what, where to get what make you miles ahead of other people. To organize your connections, you can either use a paper folder or computer spreadsheet.

3) Knowledge and Skills: When I talk about knowledge and skills, I am not referring to academic knowledge that you find in schools or colleges. What’s more important to you
is knowledge and skills that can bring you results you want.

How many MBA holders that you know of have become business owners and have made tones of money? That shows getting the right knowledge and skills is important. Don’t blindly go after knowledge that could drown you. Go for knowledge and skills that are universally tested and proven.

Examples of right knowledge and skills are where to get what from who, money making trends, marketing strategies, art of dealing with people, negotiation skills, selling skills, skills of managing and growing money, investment skills, universal laws of success, and more. Don’t waste time on unnecessary knowledge as I went through that before. There’s only so much that you need to know and learn. Be sharp and focus when you acquire knowledge and skills. Don’t follow what normal people do.

4) Personal Health: In fact, this is the most important ingredient of all. How can you run a business without a healthy body? In order to maintain an optimum health, you have to provide your body with proper nutrients and sufficient exercise. And also don’t forget about emotional well being. Don’t let anger and other negative emotions control you.

This is where positive and empowering attitudes come into play. Maintaining your body is just like maintaining your car. If you send your car to workshop for regular service and pump petrol regularly, why don’t you do the same for your body? It’s something for you to think about. Don’t be stingy over spending money for your own health because physical and mental health can cause you a lot of money in the long run if your body is not taken care of properly.

5) Money: Let’s face it. It does take money to make money even you need a little. But you might not need a lot of money to start a business because there are many ways to
start one with low capital.

I meet a lot of people who want to be rich but are not willing to invest the money. You must invest in something in order to for you to get something. The law of sowing and
reaping is at work. Don’t expect something without investing anything. Money is one of the investments you need to make.

Even though you don’t need to have a capital for your business, but at least you must be able to cover your expenses while building your business. You also need money to buy products to stock up and other stuff. So, you must at least come up with whatever amount that you have to start a business.

These are the five basic ingredients of business success. Do your best to acquire or grow or invest in these ingredients. But the good thing is you don’t need to have a perfect combination of ingredients to get started. You can still perfect the ingredients along the way. Somehow, get it started with what you’ve got.
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Q2. Explain Project Management knowledge areas. With an example explain work Breakdown Structure.


The Project management knowledge areas are described in the following.

Project integration management describes the processes and activities needed to identify, define, combine, unify and coordinate the various project management elements within the project management process groups. The project management processes are develop project charter, develop preliminary project scope statement, develop project management plan, direct and manage project execution, monitor and control project work, integrated change control and close project.

Project scope management describes the processes needed to ensure that the project includes all the work required – and only the work required – to complete the project successfully. The project management processes are plan scope, define scope, create work breakdown structure, verify scope and control scope.

Project time management describes the processes required to ensure on-time project completion. The project management processes are define project activities, sequence activities, estimate activity resources, estimate activity duration and develop and control project schedule.

Project cost management describes the processes involved in planning, estimating, budgeting and controlling costs to ensure that the project is completed within the approved budget. The project management processes are cost estimating, cost budgeting and cost control.

Project quality management describes the processes involved in assuring that the project will satisfy the objectives for which it was undertaken. The project management processes are quality planning, perform quality assurance and perform quality control.

Project human resource management describes the processes that organise and manage the project team. The project management processes are human resource planning, acquire project team, develop project team and manage project team.

Project communications management describes the processes concerning the timely and appropriate generation, collection, dissemination, storage and ultimate disposition of project information. The project management processes are communications planning, information distribution, performance reporting and manage stakeholders.

Project risk management describes the processes concerned with conducting risk management on a project. The project management processes are risk management planning, risk identification, qualitative risk analysis, quantitative risk analysis, risk response planning and risk monitoring and control.

Project procurement management describes the processes that purchase or acquire products, services or results as well as contract management processes. The project management processes are plan purchases and acquisitions, plan contracting, request seller responses, select sellers, contract administration and contract closure.

Work Breakdown Structure

A work breakdown structure (WBS) in project management and systems engineering, is a tool used to define and group a project‘s discrete work elements in a way that helps organize and define the total work scope of the project.[1]

A work breakdown structure element may be a product, data, a service, or any combination. A WBS also provides the necessary framework for detailed cost estimating and control along with providing guidance for schedule development and control. Additionally the WBS is a dynamic tool and can be revised and updated as needed by the project manager.

Example of a product oriented work breakdown structure of an aircraft system


Q3.Take an example of any product or project and explain Project Management Life Cycle.

In industry, product lifecycle management (PLM) is the process of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal.[1] PLM integrates people, data, processes and business systems and provides a product information backbone for companies and their extended enterprise.[2]

‘Product lifecycle management’ (PLM) should be distinguished from ‘Product life cycle management (marketing)‘ (PLCM). PLM describes the engineering aspect of a product, from managing descriptions and properties of a product through its development and useful life; whereas, PLCM refers to the commercial management of life of a product in the business market with respect to costs and sales measures.

Product lifecycle management is one of the four cornerstones of a corporation’s information technology structure.[3] All companies need to manage communications and information with their customers (CRM-Customer Relationship Management), their suppliers (SCM-Supply Chain Management), their resources within the enterprise (ERP-Enterprise Resource Planning) and their planning (SDLC-Systems Development Life Cycle). In addition, manufacturing engineering companies must also develop, describe, manage and communicate information about their products.

One form of PLM is called people-centric PLM. While traditional PLM tools have been deployed only on release or during the release phase, people-centric PLM targets the design phase.



Recent (as of 2009) ICT development (EU funded PROMISE project 2004-2008) has allowed PLM to extend beyond traditional PLM and integrate sensor data and real time ‘lifecycle event data’ into PLM, as well as allowing this information to be made available to different players in the total lifecycle of an individual product (closing the information loop). This has resulted in the extension of PLM into Closed Loop Lifecycle Management



Documented benefits of product lifecycle management include:[4][5]

  • Reduced time to market
  • Improved product quality
  • Reduced prototyping costs
  • More accurate and timely Request For Quote generation
  • Ability to quickly identify potential sales opportunities and revenue contributions
  • Savings through the re-use of original data
  • A framework for product optimization
  • Reduced waste
  • Savings through the complete integration of engineering workflows
  • Documentation that can assist in proving Compliance for RoHS or Title 21 CFR Part 11
  • Ability to provide Contract Manufacturers with access to a centralized product record

Q4. Explain PIMS. What is the difference between key Success Factor (KSF) and Knowledge (K) Factor? Explain with example.

Ans. Project Management Information System (PMIS) are system tools and techniques used in project management to deliver information. Project managers use the techniques and tools to collect, combine and distribute information through electronic and manual means. Project Management Information System (PMIS) is used by upper and lower management to communicate with each other.
Project Management Information System (PMIS) help plan, execute and close project management goals. During the planning process, project managers use PMIS for budget framework such as estimating costs. The Project Management Information System is also used to create a specific schedule and define the scope baseline. At the execution of the project management goals, the project management team collects information into one database. The PMIS is used to compare the baseline with the actual accomplishment of each activity, manage materials, collect financial data, and keep a record for reporting purposes. During the close of the project, the Project Management Information System is used to review the goals to check if the tasks were accomplished. Then, it is used to create a final report of the project close.
To conclude, the project management information system (PMIS) is used to plan schedules, budget and execute work to be accomplished in project management

Key Success Factors

Definition: The factors that are a necessary condition for success in a given market.


  • When writing a business plan, it’s crucial to identify what will make your business a success. Think of key success factors as the small towns you must pass through to reach your destination. If you don’t consult a map to found out where those towns are, you may miss a turnoff and your destination. Key success factors, also known as critical success factors, keep you and your employees on track to make your business a success.
  • Increasing the sales of a product or service is a common key success factor, but it should be linked to a measurable goal, such as “sales of product X will increase by 30 percent in the fourth quarter.” Measuring the outcome of the goals related to your key success factors is essential to keeping your business on target.
  • Almost all businesses can benefit from having the key success factor “attract new customers.” Decide how many new customers your business needs to succeed, and set a related goal, such as “increase walk-in traffic by 25 percent by offering samples at the door.” Other examples of common key success factors are, “retain quality employees,” “increase profit margin” and “increase customer satisfaction.”
  • Some businesses are subject to more regulation than others. Manufacturing facilities must comply with OSHA regulations, and they may want to develop a key success factor that addresses the company’s compliance. For example, “Provide all employees with hazardous material training.”
  • Key success factors should always be relevant to the business you are in. An example of an industry specific key success factor is “increase load factor relative to the industry average.” This key success factor is specific to the airline industry, as referenced in “Airline Industry Key Success Factors” in the Graziadio Business Report. Fleet management is essential to airlines, limousine companies and taxi services, but it’s not relevant to the development of computer games.
  • The key success factor “Build a manufacturing facility to produce 80 percent of inventory” is an example of what calls temporal factors. According to the web site, temporal factors “relate to short-term situations, often crises. These CSF’s may be important, but are usually short-lived.” In this example, once the manufacturing facility is constructed and operational, the key success factor is no longer needed and can be replaced by a currently relevant one.

Measurable Key Success Factors

General Key Success Factors

Regulatory Key Success Factors

Industry Specific Key Success Factors

Temporal Key Success Factors

Knowledge factor

India may be a brain bank to the world. but it doesn’t help if other countries cash in on this more frequently than india itself. The state of Indian higher education is the weak link in this chain it’s the reason why Indians spend $3 billion annually seeking education abroad.

Those who study abroad tend to stay on abroad, while according to a NASSCOM-Mckinsey estimate only 10-25 per cent of those earning a college degree in India are employable.

Now the National Knowledge Commission (NKC) has written to the prime minister stating that raising the number of indian universities from 350 to 1,500 is critical if India’s growth is to be sustained.

As NKC Chairman Sam Pitroda notes, only 7 per cent of India’s population aged 18-24 enters higher education, which is half the Asian average. China has created 1,250 new universities within just the last three years.

India’s percentage of youth enrolled in college has to be brought up to at least asian levels while at the same time enhancing academic standards.

The only way such a sweeping revamp can be carried out is if today’s centrally managed education mono-polies are dismantled, and education is depoliticised and debureaucratised.


Q5. Explain the seven principles of supply chain management. Take an example of any product in the market and explain the scenario of Bullwhip effect.

Ans. There is many steps which involved in SCM implementation are- Business Process, sales and marketing. Logistics, costing, demand planning, trade- off analysis, environmental requirement, process stability, integrated supply, supplier management, product design, suppiers, customers, material specifications, etc.
Some important aspect of SCM-

The level of competition existing in the market and the impact of competitive forces on the product development.
Designing and working on a strategic logic for better growth through value invention. Working out new value curve in the product development along with necessary break point.

Using it to analyses markets and the economies in product design. Tine, customer, quality of product and the concept of survival of fittest.

Steps of SCM principals:

Group customer by need: Effective SCM groups, customer by tietinct service meeds those particular segment.
Customize the logistics networks: In designing their logistics network, companies need to focus on the service requirement and profit potential of the customer segments identified.
Listen to signals of market demand and plan accordingly- sales and operations planners must monitor the entire supply chain to detect early warning signals of changing customer demand and needs.
Differentiate the product closer to the customer-companies today no longer can afford to stock pile inventory to compensate for possible forecasting errors, instead, they need to postpone product differentiation in the manufacturing. Process closer to actual customer demand.

Strategically manage the source of supply-by working closely with their key suppliers to reduce the overall casts of owning materials and services; SCM maximizes profit margins both for themselves, and their supplies.
Develop a supply chain wide technology strategy- as one of the cornerstones of successful SCM information technology must be able to support multiple levels of decision making.

Adopt channel spanning performance measures- Excellent supply performance measurement systems do more than just monitor internal functions. They apply performance criteria that embrace bathe service and financial metrics, including as such as each accounts true profitability.







































PGDBA- Semester II

MB0045 – Financial Management

Q1. Discuss the objective of Profit maximization Vs Wealth maximization.

Ans. The financial management come a long way by shifting its focus from traditional approach to modern approach. The modern approach focuses on wealth maximization rather than profit maximization. This gives a longer term horizon for assessment, making way for sustainable performance by businesses.

A myopic person or business is mostly concerned about short term benefits. A short term horizon can fulfill objective of earning profit but may not help in creating wealth. It is because wealth creation needs a longer term horizon Therefore, Finance Management or Financial Management emphasizes on wealth maximization rather than profit maximization. For a business, it is not necessary that profit should be the only objective; it may concentrate on various other aspects like increasing sales, capturing more market share etc, which will take care of profitability. So, we can say that profit maximization is a subset of wealth and being a subset, it will facilitate wealth creation.

Giving priority to value creation, managers have now shifted from traditional approach to modern approach of financial management that focuses on wealth maximization. This leads to better and true evaluation of business. For e.g., under wealth maximization, more importance is given to cash flows rather than profitability. As it is said that profit is a relative term, it can be a figure in some currency, it can be in percentage etc. For e.g. a profit of say $10,000 cannot be judged as good or bad for a business, till it is compared with investment, sales etc. Similarly, duration of earning the profit is also important i.e. whether it is earned in short term or long term.

In wealth maximization, major emphasizes is on cash flows rather than profit. So, to evaluate various alternatives for decision making, cash flows are taken under consideration. For e.g. to measure the worth of a project, criteria like:

present value of its cash inflow – present value of cash outflows” (net present value) is taken. This approach considers cash flows rather than profits into consideration and also use discounting technique to find out worth of a project. Thus, maximization of wealth approach believes that money has time value.

An obvious question that arises now is that how can we measure wealth. Well, a basic principle is that ultimately wealth maximization should be discovered in increased net worth or value of business.  So, to measure the same, value of business is said to be a function of two factors – earnings per share and capitalization rate. And it can be measured by adopting following relation:

Value of business = EPS / Capitalization rate

At times, wealth maximization may create conflict, known as agency problem. This describes conflict between the owners and managers of firm. As, managers are the agents appointed by owners, a strategic investor or the owner of the firm would be majorly concerned about the longer term performance of the business that can lead to maximization of shareholder’s wealth. Whereas, a manager might focus on taking such decisions that can bring quick result, so that he/she can get credit for good performance. However, in course of fulfilling the same, a manager might opt for risky decisions which can put on stake the owner’s objectives.

Hence, a manager should align his/her objective to broad objective of organization and achieve a tradeoff between risk and return while making decision; keeping in mind the ultimate goal of financial management i.e. to maximize the wealth of its current shareholders.


Q2. Explain the Net operating approach to capital structure.

Ans. net operating income approach examines the effects of changes in capital structure in terms of net operating income. In the net income approach discussed above net income available to shareholders is obtained by deducting interest on debentures form net operating income. Then overall value of the firm is calculated through capitalization rate of equities obtained on the basis of net operating income, it is called net income approach. In the second approach, on the other hand overall value of the firm is assessed on the basis of net operating income not on the basis of net income. Hence this second approach is known as net operating income approach.

The NOI approach implies that (i) whatever may be the change in capital structure the overall value of the firm is not affected. Thus the overall value of the firm is independent of the degree of leverage in capital structure. (ii) Similarly the overall cost of capital is not affected by any change in the degree of leverage in capital structure. The overall cost of capital is independent of leverage.

If the cost of debt is less than that of equity capital the overall cost of capital must decrease with the increase in debts whereas it is assumed under this method that overall cost of capital is unaffected and hence it remains constant irrespective of the change in the ratio of debts to equity capital. How can this assumption be justified? The advocates of this method are of the opinion that the degree of risk of business increases with the increase in the amount of debts. Consequently the rate of equity over investment in equity shares thus on the one hand cost of capital decreases with the increase in the volume of debts; on the other hand cost of equity capital increases to the same extent. Hence the benefit of leverage is wiped out and overall cost of capital remains at the same level as before. Let us illustrate this point.
If follows that with the increase in debts rate of equity capitalization also increases and consequently the overall cost of capital remains constant; it does not decline.

To put the same in other words there are two parts of the cost of capital. One is the explicit cost which is expressed in terms of interest charges on debentures. The other is implicit cost which refers to the increase in the rate of equity capitalization resulting from the increase in risk of business due to higher level of debts.

Optimum capital structure

This approach suggests that whatever may be the degree of leverage the market value of the firm remains constant. In spite of the change in the ratio of debts to equity the market value of its equity shares remains constant. This means there does not exist a optimum capital structure. Every capital structure is optimum according to net operating income approach.

Q.3 What do you understand by operating cycle.

Ans.  An operating cycle is the length of time between the acquisition of inventory and the sale of that inventory and subsequent generation of a profit. The shorter the operating cycle, the faster a business gets a return on investment (ROI) for the inventory it stocks. As a general rule, companies want to keep their operating cycles short for a number of reasons, but in certain industries, a long operating cycle is actually the norm. Operating cycles are not tied to accounting periods, but are rather calculated in terms of how long goods sit in inventory before sale.

When a business buys inventory, it ties up money in the inventory until it can be sold. This money may be borrowed or paid up front, but in either case, once the business has purchased inventory, those funds are not available for other uses. The business views this as an acceptable tradeoff because the inventory is an investment that will hopefully generate returns, but keeping the operating cycle short is still a goal for most businesses so they can keep their liquidity high.

Keeping inventory during a long operating cycle does not just tie up funds. Inventory must be stored and this can become costly, especially with items that require special handling, such as humidity controls or security. Furthermore, inventory can depreciate if it is kept in a store too long. In the case of perishable goods, it can even be rendered unsalable. Inventory must also be insured and managed by staff members who need to be paid, and this adds to overall operating expenses.

There are cases where a long operating cycle in unavoidable. Wineries and distilleries, for example, keep inventory on hand for years before it is sold, because of the nature of the business. In these industries, the return on investment happens in the long term, rather than the short term. Such companies are usually structured in a way that allows them to borrow against existing inventory or land if funds are needed to finance short-term operations.

Operating cycles can fluctuate. During periods of economic stagnation, inventory tends to sit around longer, while periods of growth may be marked by more rapid turnover. Certain products can be consistent sellers that move in and out of inventory quickly. Others, like big ticket items, may be purchased less frequently. All of these issues must be accounted for when making decisions about ordering and pricing items for inventory.


Q.4 What is the implication of operating leverage for a firm.


Operating leverage: Operating leverage is the extent to which a firm uses fixed costs in producing its goods or offering its services. Fixed costs include advertising expenses, administrative costs, equipment and technology, depreciation, and taxes, but not interest on debt, which is part of financial leverage. By using fixed production costs, a company can increase its profits. If a company has a large percentage of fixed costs, it has a high degree of operating leverage. Automated and high-tech companies, utility companies, and airlines generally have high degrees of operating leverage.

As an illustration of operating leverage, assume two firms, A and B, produce and sell widgets. Firm A uses a highly automated production process with robotic machines, whereas firm B assembles the widgets using primarily semiskilled labor. Table 1 shows both firm’s operating cost structures.

Highly automated firm A has fixed costs of $35,000 per year and variable costs of only $1.00 per unit, whereas labor-intensive firm B has fixed costs of only $15,000 per year, but its variable cost per unit is much higher at $3.00 per unit. Both firms produce and sell 10,000 widgets per year at a price of $5.00 per widget.

Firm A has a higher amount of operating leverage because of its higher fixed costs, but firm A also has a higher breakeven point—the point at which total costs equal total sales. Nevertheless, a change of I percent in sales causes more than a I percent change in operating profits for firm A, but not for firm B. The “degree of operating leverage” measures this effect. The following simplified equation demonstrates the type of equation used to compute the degree of operating leverage, although to calculate this figure the equation would require several additional factors such as the quantity produced, variable cost per unit, and the price per unit, which are used to determine changes in profits and sales:

Operating leverage is a double-edged sword, however. If firm A’s sales decrease by I percent, its profits will decrease by more than I percent, too. Hence, the degree of operating leverage shows the responsiveness of profits to a given change in sales.

Implications: Total risk can be divided into two parts: business risk and financial risk. Business risk refers to the stability of a company’s assets if it uses no debt or preferred stock financing. Business risk stems from the unpredictable nature of doing business, i.e., the unpredictability of consumer demand for products and services. As a result, it also involves the uncertainty of long-term profitability. When a company uses debt or preferred stock financing, additional risk—financial risk—is placed on the company’s common shareholders. They demand a higher expected return for assuming this additional risk, which in turn, raises a company’s costs. Consequently, companies with high degrees of business risk tend to be financed with relatively low amounts of debt. The opposite also holds: companies with low amounts of business risk can afford to use more debt financing while keeping total risk at tolerable levels. Moreover, using debt as leverage is a successful tool during periods of inflation. Debt fails, however, to provide leverage during periods of deflation, such as the period during the late 1990s brought on by the Asian financial crisis.

PGDBA-Semester II

MB0046 – Marketing Management


Q.1 What is product mix? What are the strategies involved in product mix and product line?


The product mix of a business includes product lines and individual products. A product line is a set of products in the product mix that are closely interrelated either because they serve in a similar way, sold to the similar client groups or have same price range. A product is a unique component in the product line that is different in size, cost, look, or some other attribute. Product choices at these levels are normally of 2 sorts: Those that have variety and range of the product line and those that are modified in the product mix occur over time.

Product Mix is the total number of product choices a company offers their customer. If you make muffins, and you offer Blueberry and Cranberry, your product mix has 2 choices.  The product mix grows as the number of features on the product grows.  A true evaluation of the mix can ONLY be done with a feature/option level analysis.  That is because customers buy features and options.  The strength of the mix is based on how well the feature choices are capturing sales and market demand.

Strategies involved in Product Mix and Product Line

When the product is a part of product-mix, there are five kinds of strategies involved:

I. Product Line Pricing In product line pricing, management must decide on the price steps to set between various products in a line. This should take into account the differences in products features, customer evaluations, competitor’s prices etc.

 II. Optional-Product Pricing The pricing of optional or accessory products along with the main product. For example, a car buyer may choose to order a CD changer as an optional product.

III. Captive-Product Pricing Setting a price for products which must be used along with the main product. For example, HP makes printers and cartridges. It makes very low margins on its printer (the main product) but very high margins on cartridges .

IV. By-Product Pricing Setting a price for the by-products. Like in processing meats, petroleum products, chemicals etc. Using by-product pricing, the manufacturer will find a market for the by-products and should accept any price that covers more than the cost of storing and delivering them. For example, at Alba, water is obtained as a by-product while manufacturing aluminum. This water can now be sold to the market.

V. Product Bundle Pricing Combining several products and offering the bundle at a reduced price. For example, fast food restaurants bundle a burger, French fires and soft drink at a combo price.

Q.2 What is a distribution channel? Explain the factors to be considered while setting up a distribution channel

Ans.                                                                 Distribution channel

Definition: Path or ‘pipeline‘ through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them flow in the opposite direction (from consumer to the vendor). A distribution channel can be as short as being direct from the vendor to the consumer or may include several inter-connected (usually independent but mutually dependent) intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches the final buyer. Also called channel of distribution or marketing channel.

Channel of Distributions

A channel of distribution or trade channel is defined as the path or route along which goods move from producers or manufacturers to ultimate consumers or industrial users. In other words, it is a distribution network through which producer puts his products in the market and passes it to the actual users. This channel consists of :- producers, consumers or users and the various middlemen like wholesalers, selling agents and retailers(dealers) who intervene between the producers and consumers. Therefore, the channel serves to bridge the gap between the point of production and the point of consumption thereby creating time, place and possession utilities.

A channel of distribution consists of three types of flows:-

  • Downward flow of goods from producers to consumers
  • Upward flow of cash payments for goods from consumers to producers
  • Flow of marketing information in both downward and upward direction i.e. Flow of information on new products, new uses of existing products,etc from producers to consumers. And flow of information in the form of feedback on the wants,suggestions,complaints,etc from consumers/users to producers.

An entrepreneur has a number of alternative channels available to him for distributing his products. These channels vary in the number and types of middlemen involved. Some channels are short and directly link producers with customers. Whereas other channels are long and indirectly link the two through one or more middlemen.

These channels of distribution are broadly divided into four types:-

  • Producer-Customer:- This is the simplest and shortest channel in which no middlemen is involved and producers directly sell their products to the consumers. It is fast and economical channel of distribution. Under it, the producer or entrepreneur performs all the marketing activities himself and has full control over distribution. A producer may sell directly to consumers through door-to-door salesmen, direct mail or through his own retail stores. Big firms adopt this channel to cut distribution costs and to sell industrial products of high value. Small producers and producers of perishable commodities also sell directly to local consumers.
  • Producer-Retailer-Customer:- This channel of distribution involves only one middlemen called ‘retailer’. Under it, the producer sells his product to big retailers (or retailers who buy goods in large quantities) who in turn sell to the ultimate consumers.This channel relieves the manufacturer from burden of selling the goods himself and at the same time gives him control over the process of distribution. This is often suited for distribution of consumer durables and products of high value.
  • Producer-Wholesaler-Retailer-Customer:- This is the most common and traditional channel of distribution. Under it, two middlemen i.e. wholesalers and retailers are involved. Here, the producer sells his product to wholesalers, who in turn sell it to retailers. And retailers finally sell the product to the ultimate consumers. This channel is suitable for the producers having limited finance, narrow product line and who needed expert services and promotional support of wholesalers. This is mostly used for the products with widely scattered market.
  • Producer-Agent-Wholesaler-Retailer-Customer:- This is the longest channel of distribution in which three middlemen are involved. This is used when the producer wants to be fully relieved of the problem of distribution and thus hands over his entire output to the selling agents. The agents distribute the product among a few wholesalers. Each wholesaler distribute the product among a number of retailers who finally sell it to the ultimate consumers. This channel is suitable for wider distribution of various industrial products.

An entrepreneur has to choose a suitable channel of distribution for his product such that the channel chosen is flexible, effective and consistent with the declared marketing policies and programmes of the firm. While selecting a distribution channel, the entrepreneur should compare the costs, sales volume and profits expected from alternative channels of distribution and take into account the following factors:-

  • Product Consideration:- The type and the nature of products manufactured is one of the important elements in choosing the distribution channel. The major product related factors are:-
    • Products of low unit value and of common use are generally sold through middlemen. Whereas, expensive consumer goods and industrial products are sold directly by the producer himself.
    • Perishable products; products subjected to frequent changes in fashion or style as well as heavy and bulky products follow relatively shorter routes and are generally distributed directly to minimize costs.
    • Industrial products requiring demonstration, installation and after sale service are often sold directly to the consumers. While the consumer products of technical nature are generally sold through retailers.
    • An entrepreneur producing a wide range of products may find it economical to set up his own retail outlets and sell directly to the consumers. On the other hand, firms producing a narrow range of products may their products distribute through wholesalers and retailers.
    • A new product needs greater promotional efforts in the initial stages and hence few middlemen may be required.
  • Market Consideration:- Another important factor influencing the choice of distribution channel is the nature of the target market. Some of the important features in this respect are:-
    • If the market for the product is meant for industrial users, the channel of distribution will not need any middlemen because they buy the product in large quantities. short one and may as they buy in a large quantity. While in the case of the goods meant for domestic consumers, middlemen may have to be involved.
    • If the number of prospective customers is small or the market for the product is geographically located in a limited area, direct selling is more suitable. While in case of a large number of potential customers, use of middlemen becomes necessary.
    • If the customers place order for the product in big lots, direct selling is preferred. But, if the product is sold in small quantities, middlemen are used to distribute such products.
  • Other Considerations:- There are several other factors that an entrepreneur must take into account while choosing a distribution channel. Some of these are as follows:-
    • A new business firm may need to involve one or more middlemen in order to promote its product, while a well established firm with a good market standing may sell its product directly to the consumers.
    • A small firm which cannot invest in setting up its own distribution network has to depend on middlemen for selling its product. On the other hand, a large firm can establish its own retail outlets.
    • The distribution costs of each channel is also an important factor because it affects the price of the final product. Generally, a less expensive channel is preferred. But sometimes, a channel which is more convenient to the customers is preferred even if it is more expensive.
    • If the demand for the product is high, more number of channels may be used to profitably distribute the product to maximum number of customers. But, if the demand is low only a few channels would be sufficient.
    • The nature and the type of the middlemen required by the firm and its availability also affects the choice of the distribution channel. A company prefers a middlemen who can maximize the volume of sales of their product and also offers other services like storage, promotion as well as after sale services. When the desired type of middlemen are not available, the manufacturer will have to establish his own distribution network.

All these factors or considerations affecting the choice of a distribution channel are inter-related and interdependent. Hence, an entrepreneur must choose the most efficient and cost effective channel of distribution by taking into account all these factors as a whole in the light of the prevailing economic conditions. Such a decision is very important for a business to sustain long term profitability.

Q.3 Discuss the communication development process with examples.

Ans. Everyone communicates. Some better than others. Understanding the communication process can help improve communication at home, at work and with friends.

Communication seems so natural and one generally assumes that there is no need of working on it. It is so untrue. Most fights or arguments with spouses, children or friends are the result of bad communication. How much of an argument is caused by ineffective communication? How much of what is said is taken in the wrong context? How much of the meaning was changed or lost? How much was totally misunderstood or came out wrong? All of those are examples of broken communication.
Development Communication designs communication strategies for development projects and reform programs, economic and sector work, Country Assistance Strategies and Poverty Reduction Strategies. Building on the communication audit, which provides an understanding of the social, cultural and political nuances and assessment of local communication capacity, the Development Communication division works with task teams and government counterparts to prepare communication strategies with the objective of promoting constituencies for support and putting in place a transparent and inclusive development process.

This involves:

  • segmenting audiences based on their positions,
  • framing the issues,
  • preparing appropriate messages to mobilize support and address the right concerns,
  • finding the most effective mix of channels to reach audiences,
  • creating communication capacity on the ground to implement the process,
  • building consensus, and
  • designing mechanisms for supervision and evaluation.

Development Communication is creating a repository of knowledge based on its own experience and international best practices in development communications. This intellectual base of Development Communication operational and capacity building work is continually updated and customized to meet country-specific needs. The division also maintains a database of communication professionals around the world and their market costs so their expertise can be harnessed when needed.

Q.4. Select any mobile handset and mobile company and then evaluate its positioning strengths or weakness in terms of attributes, benefits, values, brand name and brand equity.


Ans.                                          Strength or Weakness of HTC  Mobile Handset



HTC is one of the leading manufacturers of PDAs and smart phones around the world.  It is one of the fastest growing companies in the world and maximizing its market share rapidly.

SWOT Analysis

SWOT is the tool to see that where organization stands, which areas required improvement, which areas required serious consideration, which would be the source of growth, which things need avoidance and so on. The SWOT of HTC will help to understand the position of HTC in the market.


It is the leading maker of PDAs smart phones in the world. It is establishing in the world rapidly and attracting more and more customers from all around the world.

It has successfully recognized its brand name and has got the good image about the product quality. Its products are considered as reliable products and its gaining more and more success rapidly.

The research and development in HTC has been given more importance as it is the way to know what customers want.

There is the strong set up of research and development in HTC.

The portfolio of HTC is quite wide it has made 42 smart phones product up till now.

The customer base of HTC is also very wide as it caters the customer national and international both and the no. of customers also increasing as the time passes.


As its weakness, HTC is not a very much recognized brand in the market. Its competitors, which are Nokia, Blackberry, Apple etc. are way much popular and have acquired a big share of market.

Another weakness is that, they got a very small range of cell phones models as compared to their competitor, Nokia, which has got a huge variety of smart phones, from cheapest to most expensive one.


HTC is providing Touch Screen Cell Phones, which are very much in demand these days, most of the people, who use expensive cell phones, goes for Touch Screen. On the other side, Since HTC collaborated with Google and launched their cell phones with Google Android OS install in it, their market also got increased. It is also said that, because of the name of Google, HTC got popularity. Google popularity plays a huge role in the success of HTC.

3G technology has been launched all over the world, and is getting launched in other countries as well. Since HTC cell phones have got 3G technology support, so it is an opportunity for HTC company that where ever the 3G technology launches, HTC’s cell phones demands would raise their.


The major threat to HTC, or any other Smartphone company, is a very much popular and highly in-demand brand, Apple iPhone. It is a big hindrance in the demand of HTC cell phones.

Apart from that, the financial crunch could also be the threat for the company. That’s because HTC smart phones are expensive and are not affordable for many of the smart phones users. On the other side Nokia’s smart phones are way cheaper, and are providing the same characteristics, which a Smartphone should have. So lot of people prefers Nokia on HTC.

Q. 5 What is retailing? Explain the functions and different types of retailing with its key features.


Retailing involves selling products and services to consumers for their personal or family use.  Department stores, like Burdines and Macy’s, discount stores like Wal-Mart and K-Mart, and specialty stores like The Gap, Zales Jewelers and Toys ‘R’ Us, are all examples of retail stores.  Service providers, like dentists, hotels and hair salons, and on-line stores, like, are also retailers.

Retailers play a significant role as a conduit between manufacturers, wholesalers, suppliers and consumers. In this context, they perform various functions like sorting, breaking bulk, holding stock, as a channel of communication, storage, advertising and certain additional services.


Manufacturers usually make one or a variety of products and would like to sell their entire inventory to a few buyers to redu7ce costs. Final consumers, in contrast, prefer a large variety of goods and services to choose from and usually buy them in small quantities. Retailers are able to balance the demands of both sides, by collection an assortment of goods from different sources, buying them in sufficiently large quantities and selling them to consumers in small units.

The above process is referred to as the sorting process. Through this process, retailers undertake activities and perform functions that add to the value of the products and services sold to the consumer. Supermarkets in the US offer, on and average, 15,000 different items from 500 companies. Customers are able to choose from a wide range of designs, sizes and brands from just one location. If each manufacturer had a separate store for its own products, customers would have to visit several stores to complete their shopping. While all retailers offer an assortment, they specialize in types of assortment offered and the market to which the offering is made. Westside provides clothing and accessories, while a chain like Nilgiris specializes in food and bakery items. Shoppers’ Stop targets the elite urban class, while Pantaloons is targeted at the middle class.

Breaking Bulk

Breaking bulk is another function performed by retailing. The word retailing is derived from the French word retailer, meaning ‘to cut a piece off’. To reduce transportation costs, manufacturers and wholesalers typically ship large cartons of the product, which are then tailored by the retailers into smaller quantities to meet individual consumption needs.

Holding Stock

Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an inventory that allows for instant availability of the product to the consumers. It helps to keep prices stable and enables the manufacturer to regulate production. Consumers can keep a small stock of products at home as they know that this can be replenished by the retailer and can save on inventory carrying costs.

Additional Services

Retailers ease the change in ownership of merchandise by providing services that make it convenient to buy and use products. Providing product guarantees, after-sales service and dealing with consumer complaints are some of the services that add value to the actual product at the retailers’ end. Retailers also offer credit and hire-purchase facilities to the customers to enable them to buy a product now and pay for it later. Retailers fill orders, promptly process, deliver and install products. Salespeople are also employed by retailers to answer queries and provide additional information about the displayed products. The display itself allows the consumer to see and test products before actual purchase. Retail essentially completes transactions with customers.

Channel of Communication

Retailers also act as the channel of communication and information between the wholesalers or suppliers and the consumers. From advertisements, salespeople and display, shoppers learn about the characteristics and features of a product or services offered. Manufacturers, in their turn, learn of sales forecasts, delivery delays, and customer complaints. The manufacturer can then modify defective or unsatisfactory merchandise and services.

Transport and Advertising Functions

Small manufacturers can use retailers to provide assistance with transport, storage, advertising and pre-payment of merchandise. This also works the other way round in case the number of retailers is small. The number of functions performed by a particular retailer has a direct relation to the percentage and volume of sales needed to cover both their costs and profits.

Q. 6 a. What is CRM? What are its objectives? (2 marks)

b. Write a short note on Brand development. (8 marks)


Ans. CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers’ needs and behaviors in order to develop stronger relationships with them. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends.

CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers.

Objectives of CRM

CRM, the technology, along with human resources of the company, enables the company to analyze the behavior of customers and their value. The main areas of focus are as the name suggests: customer , relationship , and the management of relationship and the main objectives to implement CRM in the business strategy are:

  • To simplify marketing and sales process
  • To make call centers more efficient
  • To provide better customer service
  • To discover new customers and increase customer revenue
  • To cross sell products more effectively

The CRM processes should fully support the basic steps of customer life cycle . The basic steps are:

  • Attracting present and new customers
  • Acquiring new customers
  • Serving the customers
  • Finally, retaining the customers


Brand development

A plan to improve the performance of a particular product or service. For example, as part of brand development a firm may initiate a new advertising campaign that includes free samples.














PGDBA Semester II

MB0047 – Management Information Systems

Q1. How hardware & software support in various MIS activities of the organization? Explain the transaction stages from manual system to automated systems?


Ans. Generally hardware in the form of personal computers and peripherals like printers, fax, machines, copier, scanners etc are used in organization to support various MIS activities of the organization. Computers are widely used to support in MIS activities. Some of the types commonly used in business are desktop  computer, notebook computer, PDA etc.


Advantage of PC in Organization for MIS activities

Speed: A PC can process data at a very high speed. It can process millions of instructions within fractions of seconds.

Storage: A PC can store large amount of data in a small space. Information can easily transform from one place to another place.

Communication: PC with internet is used as a powerful tool of communication for every business activity.

Accuracy: A PC is highly reliable in the sense that it could be used to perform calculations continuously for hours with a great degree of accuracy.

Conferencing: A PC with internet offers facility of video conferencing worldwide. Business people across the globe travel a lot to meet their business partner, colleague and customer etc to discuss about business activities.


Software support in MIS activities


MS-Windows: Windows is an operating system. It supports various applications like MS-Office, Lotus Smart Suite, Outlook etc.


MS-Excel: It is used to make charts, graphs, pivot tables and MIS reports etc.

MS-WORD: It is used for letter drafting.

MS-Power Point: Power point is used for presentation



Q2. Explain the various behavioral factors of management organization? As per Porter, how can performance of individual corporations be determined?

Ans.  The value of Information is not present day discovery. We have always observed that the Information is the asset of any organization. The existence of information is since the Big bang happened and then on it went on. But the value of information is being used only after the industrial revolution. Before, it was only in the record which we are using now in an efficient way. The first information was binary. Information is generated by interactions; information is
by interaction, as without comparison, without a context, without interaction, there is nothing.

Traditional information systems are said to contain data, which is then processed. The processed data is called information. The processing of data takes place by selecting the required fact and organizing it in a way to form meaningful information which is used for some organizational needs.

In Manual systems, a series of action takes which may be similar as well as different to
processing in traditional systems. For instance, in hospital information systems the patient details
can be viewed by the administrator as well as patient. But the views perceived by these are
different. One may view it as a record to take print and other may be the source of his ailment
description. What is common to the two systems is the idea of transformation. Transformation
occurs when systems participants are faced with cues from their environment, which may be data
or situations, and the participants then define and redefine what to do next, either processing data
or developing a situation, altering the system each time to transform it to a state closer to the
participants goal or objective. When a fact from either type of system is presented for
manipulation, a transformation can occur. Thus, transformation is common to both types of

A transformation had to necessarily go through the following stages ±
a) appraisal of the procedures  b) types of documents  c) storage systems  d) formulations and coding  e) verification and validation  f) review  g) documentation
After the industrial revolution slowly manual systems were transformed into digital form by

means of computer and related instrument

Q2. Explain the various behavioral factors of management organization? As per Porter, how can

performance of individual corporations be determined?


Behavioral factors

The implementation of computer based information systems in general and MSS in particular is affected by the way people perceive these systems and by how they behave in accepting them. User resistance is a major behavioral factor associated with the adoption of new systems. The following are compiled by Jiang et al. (2000); reasons that employees resist new systems:

· Change in job content

· Loss of status

· Change in interpersonal relationships

· Loss of power,  Change in decision making approach
· Uncertainty or unfamiliarity or misinformation
· Job security
The major behavioral factors are
a) Decision styles  symbolic processing of AI is heuristic; DSS and ANN are analytic
b) Need for explanation  ES provides explanation, ANN does not, DSS may provide partial explanation. Explanation can reduce resistance to change

c) Organizational climate ± some organizations lead and support innovations and new

technologies whereas others wait and lag behind in making changes

d) Organizational expectations ± over expectation can result in disappointments and termination

of innovation. Over expectation was observed in most early intelligent systems.

e) Resistance to change can be strong in MSS because the impacts may be significant.


Out of many possible interpretations of a strategy an organization adopts in business, it is found
that a majority is concerned with competition between corporations. Competition means
cultivating unique strengths and capabilities, and defending them against imitation by other
firms. Another alternative sees competition as a process linked to innovation in product, market,
or technology. Strategic information systems theory is concerned with the use of information
technology to support or sharpen an enterprises competitive strategy. Competitive strategy is an
enterprises plan for achieving sustainable competitive advantage over, or reducing the edge of,
its adversaries. The performance of individual corporations is determined by the extent to which
they manage the following (as given by Porter)

a) the bargaining power of suppliers  b) the bargaining power of buyer c) the threat of new entrants;
d) the threat of substitute products; and  e) Rivalry among existing firms.
Porters Forces Driving Industry Competition (Porter 1980)

There are two basic factors which may be considered to be adopted by organization in their


a) low cost

b) product differentiation

Enterprise can succeed relative to their competitors if they possess sustainable competitive advantage in either of these two. Another important consideration in positioning isµ competitive scope, or the breadth of the enterprises target markets within its industry, i.e. the range of product varieties it offers, the distribution channels it employs, the types of buyers it serves, the geographic areas in which it sells, and the array of related industries in which it competes. Under Porters framework, enterprises have four generic strategies available to them whereby

they can attain above-average performance.

They are:

a) cost leadership          b) differentiation            c) cost focus    d) focused differentiation.

Q 3. Compare various types of development aspect of Information System? Explain the various stages of SDLC?


Development of Information Systems

a) Development and Implementation of the MIS

Once the plan for MIS is made, the development of the MIS, calls for determining the strategy of
development. As discussed earlier, the plan consists of various systems and subsystems. The
development strategy determines where to begin and in what sequence the development can take
place with the sole objective of assuring the information support.

The choice of the system or the sub-system depends on its position in the total MIS plan, the size of the system, the users understanding of the systems and the complexity and its interface with other systems. The designer first develops systems independently and starts integrating them with other systems, enlarging the system scope and meeting the varying information needs.

Determining the position of the system in the MIS is easy. The real problem is the degree of
structure, and formalisation in the system and procedures which determine the timing and
duration of development of the system. Higher the degree of structured-ness and formalisation,
greater is the stabilization of the rules, the procedures, decision-making and the understanding of
the overall business activity. Here, it is observed that the users and the designers interaction is
smooth, and their needs are clearly understood and respected mutually. The development
becomes a method of approach with certainty in input process and outputs.


b) Prototype Approach

When the system is complex, the development strategy is Prototyping of the System. Prototyping is a process of progressively ascertaining the information needs, developing methodology, trying it out on a smaller scale with respect to the data and the complexity, ensuring that it satisfies the needs of the users, and assess the problems of development and implementation.

This process, therefore, identifies the problem areas, inadequacies in the prototype vis-à-vis
fulfillment of the information needs. The designer then takes steps to remove the inadequacies.
This may call upon changing the prototype of the system, questioning the information needs,
streamlining the operational systems and procedures and move user interaction.

In the prototyping approach, the designers task becomes difficult, when there are multiple users of the same system and the inputs they use are used by some other users as well. For example, a lot of input data comes from the purchase department, which is used in accounts and inventory management.

The attitudes of various users and their role as the originators of the data need to be developed
with a high degree of positivism. It requires, of all personnel, to appreciate that the information is
a corporate resource, and all have to contribute as per the designated role by the designer to fulfil
the corporate information needs. When it comes to information the functional, the departmental,
the personal boundaries do not exist. This call upon each individual to comply with the design
needs and provide without fail the necessary data inputs whenever required as per the
specification discussed and finalised by the designer.

Bringing the multiple users on the same platform and changing their attitudes toward informa-
tion, as a corporate resource, is the managerial task of the system designer. The qualification,
experience, knowledge, of the state of art, and an understanding of the corporate business, helps
considerably, in overcoming the problem of changing the attitudes of the multiple users and the
originators of the data.





Stages of SDLC

System development cycle stages are sometimes known as system study. System concepts which are important in developing business information systems expedite problem solving and improve the quality of decision-making. The system analyst has to do a lot in this connection. They are confronted with the challenging task of creating new systems an planning major changes in the organization. The system analyst gives a system development project, meaning and direction.

The typical breakdown of an information systems life cycle includes a feasibility study,
requirements, collection and analysis, design, prototyping, implementation, validation, testing
and operation. It may be represented in the form of a block diagram as shown below:

a)Feasibility study: It is concerned with determining the cost effectiveness of various alternatives in the designs of the information system and the priorities among the various system components.

b) Requirements, collection and analysis: It is concerned with understanding the mission of the information systems, that is, the application areas of the system within the enterprise and the problems that the system should solve.

c) Design: It is concerned with the specification of the information systems structure. There are two types of design: database design and application design. The database design is the design of the database design and the application design is the design of the application programs.

d) Prototyping: A prototype is a simplified implementation that is produced in order to verify in practice that the previous phases of the design were well conducted.

e) Implementation : It is concerned with the programming of the final operational version of the information system. Implementation alternatives are carefully verifies and compared.

f) Validation and testing: It is the process of assuring that each phase of the development process is of acceptable quality and is an accurate transformation from the previous phase.

Q4. Compare & Contrast E-enterprise business model with traditional business organization
model? Explain how in E-enterprise manager role & responsibilities are changed? Explain how
manager is a knowledge worker in E-enterprise?


Managing the E-enterprise

Due to Internet capabilities and web technology, traditional business organisation definition has
undergone a change where scope of the enterprise now includes other company locations,
business partners, customers and vendors. It has no geographic boundaries as it can extend its
operations where Internet works. All this is possible due to Internet and web moving traditional
paper driven organisation to information driven Internet enabled E-business enterprise. E-
business enterprise is open twenty-four hours, and being independent, managers, vendors,
customers transact business anytime from anywhere.

Internet capabilities have given E-business enterprise a cutting edge capability advantage to
increase the business value. It has opened new channels of business as buying and selling can be
done on Internet. It enables to reach new markets across the world anywhere due to
communication capabilities. It has empowered customers and vendors / suppliers through
secured access to information to act, wherever necessary. The cost of business operations has
come down significantly due to the elimination of paper-driven processes, faster communication
and effective collaborative working. The effect of these radical changes is the reduction in
administrative and management overheads, reduction in inventory, faster delivery of goods and
services to the customers.

In E-business enterprise traditional people organisation based on µCommand Control¶ principle
is absent. It is replaced by people organisations that are empowered by information and
knowledge to perform their role. They are supported by information systems, application

packages, and decision-support systems. It is no longer functional, product, and project or matrix organisation of people but E-organisation where people work in network environment as a team or work group in virtual mode.

E-business enterprise is more process-driven, technology-enabled and uses its own information and knowledge to perform. It is lean in number, flat in structure, broad in scope and a learning organisation. In E-business enterprise, most of the things are electronic, use digital technologies and work on databases, knowledge bases, directories and document repositories. The business processes are conducted through enterprise software like ERP, SCM, and CRM supported by data warehouse, decision support, and knowledge management systems.

Today most of the business organisations are using Internet technology, network, and wireless
technology for improving the business performance measured in terms of cost, efficiency,
competitiveness and profitability. They are using E-business, E-commerce solutions to reach
faraway locations to deliver product and services. The enterprise solutions like ERP, SCM, and
CRM run on Internet (Internet / Extranet) & Wide Area Network (WAN). The business
processes across the organisation and outside run on
E-technology platform using digital technology. Hence today¶s business firm is also called E-
enterprise or Digital firm.

The paradigm shift to E-enterprise has brought four transformations, namely:
a) Domestic business to global business. b) Industrial manufacturing economy to knowledge-based service economy. c) Enterprise Resource Management to Enterprise Network Management d)· Manual document driven business process to paperless, automated, electronically transacted business process.

These transformations have made conventional organisation design obsolete. The basis of
conventional organisation design is command & control which is nowcol l aborat es& cont rol .
This change has affected the organisation structure, scope of operations, reporting mechanisms,
work practices, workflows, and business processes at large.

In E-enterprise, business is conducted electronically. Buyers and sellers through Internet drive
the market and Internet-based web systems. Buying and selling is possible on Internet. Books,
CDs, computer, white goods and many such goods are bought and sold on Internet. The new
channel of business is well-known as E-commerce. On the same lines, banking, insurance,
healthcare are being managed through Internet E-banking,
E-billing, E-audit, & use of Credit cards, Smart card, ATM, E-money are the examples of the E-
commerce application.

The digital firm, which uses Internet and web technology and uses E-business and E-commerce solutions, is a reality and is going to increase in number.

MIS for E-business is different compared to conventional MIS design of an organisation. The
role of MIS in E-business organization is to deal with changes in global market and enterprises.
MIS produces more knowledge-based products. Knowledge management system is formally
recognized as a part of MIS. It is effectively used for strategic planning for survival and growth,
increase in profit and productivity and so on.

To achieve the said benefits of E-business organisation, it is necessary to redesign the organisa- tion to realize the benefits of digital firm. The organisation structure should be lean and flat. Get rid of rigid established infrastructure such as branch office or zonal office. Allow people to work from anywhere. Automate processes after re-engineering the process to cut down process cycle time. Make use of groupware technology on Internet platform for faster response processing.

Another challenge is to convert domestic process design to work for international process, where
integration of multinational information systems using different communication standards,
country-specific accounting practices, and laws of security are to be adhered strictly.

Internet and networking technology has thrown another challenge to enlarge the scope of
organisation where customers and vendors become part of the organisation. This technology
offers a solution to communicate, co-ordinate, and collaborate with customers, vendors and
business partners. This is just not a technical change in business operations but a cultural change
in the mindset of managers and workers to look beyond the conventional organisation. It means
changing the organisation behaviour to take competitive advantage of the E-business technology.

The last but not the least important is the challenge to organise and implement information
architecture and information technology platforms, considering multiple locations and multiple
information needs arising due to global operations of the business into a comprehensive MIS.

Q5. What do you understand by service level Agreements (SLAs)? Why are they needed? What is the role of CIO in drafting these? Explain the various security hazards faced by an IS?

Ans. A service level agreement (frequently abbreviated as SLA) is a part of a service contractw here the level of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery time (of the service) or performance. As an example, internet service providers will commonly include service level agreements within the terms of their contracts with customers to define the level(s) of service being sold in plain language terms (typically the (SLA) will in this case have a technical definition in terms ofM TTF,M TT R, various data rates, etc.)

A service level agreement (SLA) is a negotiated agreement between two parties where one is the customer and the other is the service provider. This can be a legally binding formal or informal “contract” (see internal department relationships).Contracts between the service provider and other third parties are often (incorrectly) called SLAs  as the level of service has been set by the (principal) customer, there can be no “agreement” between third parties (these agreements are simply a “contract”). Operating LevelAgreements or OLA(s), however, may be used by internal groups to support SLA(s).

Role of CIO in drafting SLAS

One of the major responsibilities of the CIO is to establish the credibility of the systems organization. The systems department should not only focus on providing better service to the various lines of business but also help businesses operate better. If the CIO wants to be taken seriously, he needs to do what other executives do and have his own business metrics and performance measurements, so that he can effectively measure his internal business

performance. Other business departments have them, but CIOs generally do not because IT has always been viewed as a cost center. Measurements in IT tend to be vague and lacking in context. For example, ‘I had 14 projects last year, and I did them well.’ But there is no real business measurement there. How many projects should the manager have had? Did he really have the capacity to handle 14 projects? ACIO should explore running their area more like a service operation rather than a cost center, and develop metrics that track the performance of the information systems staff, as well as the equipment comprising the applications, infrastructure, and networks under the CIO’s control. The first step, they say, is to implement service level agreements (SLAs) with business units. It sets the expectation on the technical areas of theCIO’s operations.At a minimum, they should set up what is expected and what levels of service the equipment will provide. The underlying SLAs should be some sort of a chargeback system with business units, particularly when it comes to apportioning staff time. If information systems are now providing a service, the staff needs to understand where the service is being used to be properly remunerated or to demonstrate where the value is. The second part of the IT operations equation is computer equipment, and CIOs must have a firm

handle on how that equipment is being used. There are softwares to help with the people picture, and there are other products that can monitor hardware performance, such as network and server uptime. One of the major roles of the CIO is to make the organization information systems savvy and increase the technological maturity of the information systems organization.A major part of the CIO’s job is to make the users aware of the opportunities arising as a result of technical innovations, how this can help them perform better, and familiarizing them with computers and information systems applications. The information systems management also has the job of helping the end users adapt to the changes caused by information systems, and to encourage their use. Finally, CIOs need to institute life cycle management with their applications and computer equipment. Most IT organizations do not have any idea of the life cycle of an application  how long they want it to last, and when it needs to be refurbished, replaced, or

disposed of. Lacking this knowledge, it is easy for applications to linger long after they should be gone, and for companies to spend far too much money on maintaining ailing applications.

Security Hazards faced by an Information system:

Security of the information system can be broken because of the following reasons:

i)Malfunctions: In this type of security hazard, all the components of a system are involved. People, software and hardware errors course the biggest problem. More dangerous are the problems which are created by human beings due to the omission, neglect and incompetence.

ii) Fraud and unauthorized access: This hazard is due to dishonesty, cheating or deceit. This can be done through

a) Infiltration and industrial espionage

b) Tapping data from communication lines

c) Unauthorized browsing through lines by online terminals, etc.

iii) Power and communication failure: In some locations they are the most frequent hazards than any other else because availability of both of them depends upon the location. Sometimes communication channel are busy or noisy. There are power cuts and sometimes high voltage serge destroys a sensitive component of the computer.


Q6. Case Study: Information system in a restaurant.

Ans.                                                                 CASE SUMMARY

A waiter takes an order at a table, and then enters it online via one of the six terminals located in the restaurant dining room. The order is routed to a printer in the appropriate preparation area: the cold item printer if it is a salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink. A customers meal check-listing (bill) the items ordered and the respective prices are automatically generated. This ordering system eliminates the old three-carbon-copy guest check system as well as any problems caused by a waiters handwriting. When the kitchen runs out of a food item, the cooks send out an out of stock message, which will be displayed on the dining room terminals when waiters try to order that item. This gives the waiters faster feedback, enabling them to give better service to the customers. Other system features aid management in the planning and control of their restaurant business. The system provides up-to-the-minute information on the food items ordered and breaks out percentages showing sales of each item versus total sales. This helps management plan menus according to customers tastes. The system also compares the weekly sales totals versus food costs, allowing planning for tighter cost controls. In addition, whenever an order is voided, the reasons for the void are keyed in. This may help later in management decisions, especially if the voids consistently related to food or service. Acceptance of the system by the users is exceptionally high since the waiters and waitresses were involved in the selection and design process. All potential users were asked to give their impressions and ideas about the various systems available before one was chosen

















PGDBA- Semester II

MB0048 – Operation Research

Q1. What are the essential characteristics of Operation Research? Mention different phases in an Operation Research study. Point out some limitations of O.R?

Ans.                                         Characteristics of Operations Research

Operations research, an interdisciplinary division of mathematics and science, uses statistics, algorithms and mathematical modeling techniques to solve complex problems for the best possible solutions. This science is basically concerned with optimizing maxima and minima of the objective functions involved. Examples of maxima could be profit, performance and yield. Minima could be loss and risk. The management of various companies has benefited immensely from operations research.

Operations research is also known as OR. It has basic characteristics such as systems orientation, using interdisciplinary groups, applying scientific methodology, providing quantitative answers, revelation of newer problems and the consideration of human factors in relation to the state under which research is being conducted.

Systems Orientation

o    This approach recognizes the fact that the behavior of any part of the system has an effect on the system as a whole. This stresses the idea that the interaction between parts of the system is what determines the functioning of the system. No single part of the system can have a bearing effect on the whole. OR attempts appraise the effect the changes of any single part would have on the performance of the system as a whole. It then searches for the causes of the problem that has arisen either in one part of the system or in the interrelation parts.

Interdisciplinary groups

o    The team performing the operational research is drawn from different disciplines. The disciplines could include mathematics, psychology, statistics, physics, economics and engineering. The knowledge of all the people involved aids the research and preparation of the scientific model.

Application of Scientific Methodology

o    OR extensively uses scientific means and methods to solve problems. Most OR studies cannot be conducted in laboratories, and the findings cannot be applied to natural environments. Therefore, scientific and mathematical models are used for studies. Simulation of these models is carried out, and the findings are then studied with respect to the real environment.

New Problems Revealed

o    Finding a solution to a problem in OR uncovers additional problems. To obtain maximum benefits from the study, ongoing and continuous research is necessary. New problems must be pursued immediately to be resolved. A company looking to reduce costs in manufacturing might discover in the process that it needs to buy one more component to manufacture the end product. Such a scenario would result in unexpected costs and budget overruns. Ensuring flexibility for such contingencies is a key characteristic of OR.

Provides Quantitative Answers

o    The solutions found by using operations research are always quantitative. OR considers two or more options and emphasizes the best one. The company must decide which option is the best alternative for it.

Human Factors

o    In other forms of quantitative research, human factors are not considered, but in OR, human factors are a prime consideration. People involved in the process may become sick, which would affect the company’s output.

·  Formulate the problem: This is the most important process, it is generally lengthy and time consuming. The activities that constitute this step are visits, observations, research, etc. With the help of such activities, the O.R. scientist gets sufficient information and support to proceed and is better prepared to formulate the problem. This process starts with understanding of the organizational climate, its objectives and expectations. Further, the alternative courses of action are discovered in this step.

  • Develop a model: Once a problem is formulated, the next step is to express the problem into a mathematical model that represents systems, processes or environment in the form of equations, relationships or formulas. We have to identify both the static and dynamic structural elements, and device mathematical formulas to represent the interrelationships among elements. The proposed model may be field tested and modified in order to work under stated environmental constraints. A model may also be modified if the management is not satisfied with the answer that it gives.
  • Select appropriate data input: Garbage in and garbage out is a famous saying. No model will work appropriately if data input is not appropriate. The purpose of this step is to have sufficient input to operate and test the model.
  • Solution of the model: After selecting the appropriate data input, the next step is to find a solution. If the model is not behaving properly, then updating and modification is considered at this stage.
  • Validation of the model: A model is said to be valid if it can provide a reliable prediction of the system’s performance. A model must be applicable for a longer time and can be updated from time to time taking into consideration the past, present and future aspects of the problem.
  • Implement the solution: The implementation of the solution involves so many behavioural issues and the implementing authority is responsible for resolving these issues. The gap between one who provides a solution and one who wishes to use it should be eliminated. To achieve this, O.R. scientist as well as management should play a positive role. A properly implemented solution obtained through O.R. techniques results in improved working and wins the management support.


  • Dependence on an Electronic Computer: O.R. techniques try to find out an optimal solution taking into account all the factors. In the modern society, these factors are enormous and expressing them in quantity and establishing relationships among these require voluminous calculations that can only be handled by computers.
  • Non-Quantifiable Factors: O.R. techniques provide a solution only when all the elements related to a problem can be quantified. All relevant variables do not lend themselves to quantification. Factors that cannot be quantified find no place in O.R. models.
  • Distance between Manager and Operations Researcher: O.R. being specialist’s job requires a mathematician or a statistician, who might not be aware of the business problems. Similarly, a manager fails to understand the complex working of O.R. Thus, there is a gap between the two.
  • Money and Time Costs: When the basic data are subjected to frequent changes, incorporating them into the O.R. models is a costly affair. Moreover, a fairly good solution at present may be more desirable than a perfect O.R. solution available after sometime.
  • Implementation: Implementation of decisions is a delicate task. It must take into account the complexities of human relations and behaviour.

Q2. What are the common methods to obtain an initial basic feasible solution for a transportation problem whose cost and requirement table is given? Give a stepwise procedure for one of them?


Transportation Problem & its basic assumption
This model studies the minimization of the cost of transporting a commodity from a number
of sources to several destinations. The supply at each source and the demand at each
destination are known. The transportation problem involves m sources, each of which has

i (i = 1, 2, …..,m) units of homogeneous product and
n destinations, each of which requires
bj (j = 1, 2…., n) units of products. Here a
i and bj are positive
integers. The cost cij of transporting one unit of the product from the
ith source to the
jth destination is given for each
i and j
. The objective is to develop an integral transportation schedule that meets all demands
from the inventory at a minimum total transportation cost.It is assumed that the total supply
and the total demand are equal.i.e.

Condition (1)The condition (1) is guaranteed by creating either a fictitious destination with a
demand equal to the surplus if total demand is less than the total supply or a (dummy)
source with a supply equal to the shortage if total demand exceeds total supply. The cost of
transportation from the fictitious destination to all sources and from all destinations to the
fictitious sources are assumed to be zero so that total cost of transportation will remain the

Formulation of Transportation Problem

The standard mathematical model for the transportation problem is as follows. Let xij be number of units of the homogenous product to be transported from source i to the
destination j Then objective is to

A necessary and sufficient condition for the existence of a feasible solution to the
transportation problem (2) is that

Q3. a. What are the properties of a game? Explain the “best strategy” on the basis of minmax criterion of optimality.

b. State the assumptions underlying game theory. Discuss its importance to business decisions.

Ans.  a)


Minimax (sometimes minmax) is a decision rule used in decision theory, game theory, statistics and philosophy for minimizing the possible loss while maximizing the potential gain. Alternatively, it can be thought of as maximizing the minimum gain (maximin). Originally formulated for two-player zero-sum game theory, covering both the cases where players take alternate moves and those where they make simultaneous moves, it has also been extended to more complex games and to general decision making in the presence of uncertainty.

Game theory

In the theory of simultaneous games, a minimax strategy is a mixed strategy which is part of the solution to a zero-sum game. In zero-sum games, the minimax solution is the same as the Nash equilibrium.

 Minimax theorem

The minimax theorem states:

For every two-person, zero-sum game with finitely many strategies, there exists a value V and a mixed strategy for each player, such that (a) Given player 2’s strategy, the best payoff possible for player 1 is V, and (b) Given player 1’s strategy, the best payoff possible for player 2 is −V.

Equivalently, Player 1’s strategy guarantees him a payoff of V regardless of Player 2’s strategy, and similarly Player 2 can guarantee himself a payoff of −V. The name minimax arises because each player minimizes the maximum payoff possible for the other—since the game is zero-sum, he also maximizes his own minimum payoff.

This theorem was established by John von Neumann,[1] who is quoted as saying “As far as I can see, there could be no theory of games … without that theorem … I thought there was nothing worth publishing until the Minimax Theorem was proved”.[2]

See Sion’s minimax theorem and Parthasarathy’s theorem for generalizations; see also example of a game without a value.


B chooses B1

B chooses B2

B chooses B3

A chooses A1

    +3     −2     +2

A chooses A2

    −1      0     +4

A chooses A3

    −4     −3     +1

The following example of a zero-sum game, where A and B make simultaneous moves, illustrates minimax solutions. Suppose each player has three choices and consider the payoff matrix for A displayed at right. Assume the payoff matrix for B is the same matrix with the signs reversed (i.e. if the choices are A1 and B1 then B pays 3 to A). Then, the minimax choice for A is A2 since the worst possible result is then having to pay 1, while the simple minimax choice for B is B2 since the worst possible result is then no payment. However, this solution is not stable, since if B believes A will choose A2 then B will choose B1 to gain 1; then if A believes B will choose B1 then A will choose A1 to gain 3; and then B will choose B2; and eventually both players will realize the difficulty of making a choice. So a more stable strategy is needed.

Some choices are dominated by others and can be eliminated: A will not choose A3 since either A1 or A2 will produce a better result, no matter what B chooses; B will not choose B3 since some mixtures of B1 and B2 will produce a better result, no matter what A chooses.

A can avoid having to make an expected payment of more than 1/3 by choosing A1 with probability 1/6 and A2 with probability 5/6, no matter what B chooses. B can ensure an expected gain of at least 1/3 by using a randomized strategy of choosing B1 with probability 1/3 and B2 with probability 2/3, no matter what A chooses. These mixed minimax strategies are now stable and cannot be improved.


Brandenburger and Nalebuff discuss how game theory works and how companies can use the principles to make decisions. The authors state that managers can use the principles to create new strategies for competing where the chances for success are much higher than they would be if they continued to compete under the same rules. A classic example used in the article is the case of General Motors. The automobile industry was facing many expenses due to the incentives that were being used at the retailers. General Motors responded by issuing a new credit card where the cardholders could apply a portion of their charges towards purchasing a GM car. GM even went so far as to allow cardholders to use a smaller portion of their charges towards purchasing a Ford car, allowing both companies to be able to raise their prices and increase long term profits. This action by GM created a new system where both GM and Ford could be better off, unlike the traditional competitive model where one company must profit at the expense of another.

The authors state that while the traditional win-lose strategy may sometimes be appropriate, but that the win-win system can be ideal in many circumstances. One advantage to win-win strategies is that since they have not been used much, they can yield many previously unidentified opportunities. Another major advantage is that since other companies have the opportunity to come out ahead as well, they are less likely to show resistance. The last advantage is that when other companies imitate the move the initial company benefits as well, in contrast to the initial company losing ground as they would in a win-lose situation.
The authors also state that there are five elements to competition that can be changed to provide a more optimal outcome. These elements are: the players (or companies competing), added values brought by each competitor, the rules under which competition takes place, the tactics used, and the scope or boundaries that are established. By understanding these factors, companies can apply different strategies to increase their own odds of success.
The first way that companies can increase their chances of success involves changing who the companies are that are involved in the business. One way that companies can improve their odds of success is by introducing new companies into the business. For example, both Coke and Pepsi wanted to get a contract to have Monsanto as a supplier. Since Monsanto had a monopoly at the time, they encouraged Holland Sweetener Company to compete with Monsanto. Since it seemed Monsanto no longer had a monopoly on the market, they were able to get more favorable contracts with Monsanto. Another way that companies can improve their chances is by helping other companies introduce more or better complimentary products.
Companies can also change the added values of themselves or their competitors. Obviously, companies can build a better brand or change their business practices so they operate more efficiently. However, the authors discuss how they can also lower the value of reducing the value of other companies as a viable strategy. Nintendo reduced the added value of retailers by not filling all of their orders, thus leaving a shortage and reducing the bargaining power of the stores buying its products. They also limited the number of licenses available to aspiring programmers, lowering their added value. They even lowered the value held by comic book characters when they developed characters of their own that became widely popular, presumably so that they wouldn’t have to pay as much to license these characters.
Changing the rules is another way in which companies can benefit. The authors introduce the idea of judo economics, where a large company may be willing to allow a smaller company to capture a small market share rather than compete by lowering its prices. As long as it does not become too powerful or greedy, a small company can often participate in the same market without having to compete with larger companies on unfavorable terms. Kiwi International Air Lines introduced services on its carriers that were of lower prices to get market share, but made sure that the competitors understood that they had no intention of capturing more than 10% of any market.
Companies can also change perceptions to make themselves better off. This can be accomplished either by making things clearer or more uncertain. In 1994, the New York Post attempted to make radical price changes in order to get the Daily News to raise its price to regain subscribers. However, the Daily News misunderstood and both newspapers were headed for a price war. The New York Post had to make its intentions clear, and both papers were able to raise their prices and not lose revenue. The authors also show an example of how investment banks can maintain ambiguity to benefit themselves. If the client is more optimistic than the investment bank, the bank can try to charge a higher commission as long as the client does not develop a more realistic appraisal of the company’s value.
Finally, companies can change the boundaries within which they compete. For example, when Sega was unable to gain market share from Nintendo’s 8-bit systems, it changed the game by introducing a new 16-bit system. It took Nintendo 2 years to respond with its own 16-bit system, which gave Sega the opportunity to capture market share and build a strong brand image. This example shows how companies can think outside the box to change the way competition takes place in their industry.
Brandenburger and Nalebuff have illustrated how companies that recognize they can change the rules of competition can vastly improve their odds of success, and sometimes respond in a way that benefits both themselves and the competition. If companies are able to develop a system where they can make both themselves and their competitors better off, then they do not have to worry so much about their competitors trying to counter their moves. Also, because companies can easily copy each other’s ideas, it is to a firm’s advantage if they can benefit when their competitors copy their idea, which is not usually possible under the traditional win-lose structure.
This article has some parallels with the article “Competing on Analytics” by (). The biggest factor that both of these articles have in common is how crucial it is for managers to understand everything they can about their business and the environment in which they work. In “Competing on Analytics”, the authors say that it is important to be familiar with this information so that managers can change the way they compete to improve their chances of success. At the end of “The Right Game: Use Game Theory to Shape Strategy”, the authors discuss how in order for companies to be able to change the environment or rules under which they compete they need to understand everything they can about the constructs under which they are competing. Whether a manager intends to use analytics or game theory to be successful, he or she must first have all available information and use that information to understand how to make the company better off. However, the work shown in “Competing on Analytics” tends to place an emphasis almost exclusively on the use of quantitative data to improve efficiency or market share of the company. “The Right Game”, however focuses more on using information to find creative ways of changing the constructs or rules applied between companies, often yielding a much broader impact.

Q4. a. Compare CPM and PERT explaining similarities and mentioning where they mainly differ.


The Major Differences and Similarities between CPM and PERT

CPM (Critical Path Method) & PERT(Program Evaluation and Review Technique)

1)PERT is a probabilistic tool used with three 1)CPM is a deterministic tool, with only single
Estimating the duration for completion of estimate of duration.

2)This tool is basically a tool for planning 2)CPM also allows and explicit estimate of and control of time. costs in addition to time, therefore CPM can  control both time and cost.

3)PERT is more suitable for R&D related 3)CPM is best suited for routine and those projects where the project is performed for projects where time and cost estimates can the first time and the estimate of duration be accurately calculated are uncertain.

4)The probability factor i major in PERT 4)The deterministic factor is more so values or so outcomes may not be exact. outcomes are generally accurate and realistic.

Extensions of both PERT and CPM allow the user to manage other resources in addition to time and money, to trade off resources, to analyze different types of schedules, and to balance the use of resources. Tensions of both PERT and CPM allow the user to manage other resources in addition to time and money, to trade off resources, to analyze different types of schedules, and to balance the use of resources.


_ In mathematics, networks are called graphs, the entities are nodes, and the links are edges

_ Graph theory starts in the 18th century, with Leonhard Euler

_ The problem of Königsberg bridges

_ Since then graphs have been studied extensively.


Graph Theory

_ Graph G=(V,E)

_ V = set of vertices

_ E = set of edges                                                                           2

_ An edge is defined by the

two vertices which it


_ optionally:                                                      1                                          3

A direction and/or a weight

_ Two vertices are adjacent

if they are connected by

an edge                                                                       4                       5

_ A vertex’s degree is the

number of its edges

Graph G=(V,E)                                                                                              2

V = set of vertices

E = set of edges

Each edge is now an                                                     1                                                       3

arrow, not just a line ->


The indegree of a vertex

is the number of                                                                               5

incoming edges                                                                                                                 4

The outdegree of a vertex

is the number of outgoing


PGDBA- Semester II

MB0049 – Project Management

Q.1 Explain the nine steps which take project management to a New Horizon


The following nine steps are suggestive measures to provide new dimensions to the management of projects.

Step 1:

Believing in discontinuity and not continuity with incremental improvements

Continuity or the status quo is a function of quantum of changes. Incremental improvements are valid only when the rate of change is not excessive. Both the continuity and incremental improvements are linked with the rate of change and quantum. Beyond a threshold of rate of change, one cannot go with the continuity and incremental improvements. The modern day Internet and technological based world has witnessed the unprecedented rate of change and explosion in the quantum of changes. It is this process which has resulted in making continuity theory as baseless. Continuity in principle is to preserve the past where as discontinuity breaks the linkage with the past to the extent it can have fewer constraints to move into the future. There is no choice except to believe in discontinuity as only then mind and body is prepared to accept the unknowns and be ready to face it and control thereafter.


Owning the problems and sharing the solutions

More one owns problem, more he becomes experienced. It is not the number of years of service one has performed for a company but how much number of problems was faced and owned is now becoming the benchmark to define an experienced person from inexperienced. The true spirit of entrepreneurial outlook is to own the problems and solve the same and in this process make Money. The fixed mould mentality is to empower the problems to be faced outside than oneself and get the credit for solutions.

Step 3:

Breaking the status quo mentality

No change means perpetuation of the Present into the Future. This is in contradiction to the nature as Future is not the extension of Present. Breaking the status quo mentality implies in taming the future as it is the future which becomes Present at some point of time. Focusing into Future and affecting the Present is antiestablishment and require concerted efforts to move out from the comfortable zones. Project managers can hardly afford to have status quo mentality as day in and day out they are involved in acting in present to affect Future. At times, when we do not get away from the status quo mentality, contradictions fall apart everywhere in the project between the two types of group- the champions of future and those who believe in extending Present.

Step 4:

Stepping out of comfortable zone

As apart of the step 3 and in a way extension of it, the comfortable zone is to dear to break and cross. Fear of uncertainties makes the comfortable zone more comfortable than if the fear did not exist. The project managers of tomorrow are those who have so called comfortable zone carve out from that area which conventionally is uncomfortable and that is the zone of uncertainties. If we seek comforts in conquering the uncertainties with planning and indomitable spirit of winning, then we are able to provide project leadership and inspire the team members to plunge into risk taking.

Step 5:

Human Capital by passing Financial Capital

While the agriculture society witnessed the Nature as the foremost, the 20th century saw the men-machine interaction as the key factor for the capital formation. 21st century in this Internet age is beginning to see the human capital surpassing the financial capital. Venture capitalists were all over the place to fund any idea, which they thought would create a brave new world. Its consequent failure in the last couple of years could not be attributed to the over faith in Human capital but absence of effective filtering mechanism from good to bad idea. While Return On Investment (ROI) could be seen as financial driven phenomena, Return On Time Invested (ROTI) is basically based human efforts and its deployment. ROTI will be more meaningful to ROI in the context of new processes on their way to unfold in the beginning of 21st century.

Step 6:

Transform work culture from 5 to 7 dimensions

Conventionally we all live in the conventional 5 dimensions of space i.e. X, Y and Z, Time and Mind. We need to supplement on these 5 dimensions the additional 2 dimensions of Passion and Joy If we do what we want do then the gap between Wish and Reality is so little that one is in position to provide its very best. It is his/her added 2 dimensions, which make the total difference. The new miracles in project management will take place when we bring the work of joy like in the art domain of music and paintings in our project work.

Step 7:

Real number of encounters replacing number of years of experience

The experience profile should be redefined by the number of encounters and problems faced instead of number of years. The wisdom evolved based on encounters is far richer than accumulated simply by repeating the same encounters n number of times in one’s employee ship. The secret is to increase the encounters meaningful to ones own dream or passion profile.

Step 8:

Seeking meaning out of change

Change is first degree. It is a must. Change can be threat or an opportunity. It depends how one looks at it. If change is resisted, it becomes all the more difficult to see the real outcome of the change as it is partly distorted. Project implies change and that too a temporary one. It is essential to make people to have a real communication about the change. One of the major strategies to bring about a change is to communicate, communicate and communicate.

Step 9:

Detachment from the fruits of the results

To act is within one’s control. To get the reward as a reaction to the action is not within one’s purview. Too  much emphasis on that part, which is not within our control, is a wasteful exercise instead concentrates on actions to the best of one’s ability. The results so arrived at must be analyzed from the cause and effect relationship and constant learning must be made out of all such actions or group of actions. Attachment with the results of the actions often dilute one’s own energy and may shift one’s focus from the main road to its detour. Detachment from the results does not imply one should not demand or expect materialistic benefits, no, it only means that in case you do not get what you deserve, leave it and move forward rather than brooding over that part which is not within one’s control. The journey comes to a standstill if we get attached to the surroundings and to the results of the present beyond a small time frame. Project managers and team members are never stationary. They must move on. In summary, the new discovery or dimensions in project management heavily depends on the human factor of breaking ceilings, getting motivated all the time, working with passion, detachment with the results rather than with the actions, human capital surpassing that of financial capital, breaking the status quo mentality, owning the problems and solutions and creating discontinuity. The journey has just begun and it must continue as in the human race, there is no finishing line.


 Q.2 Discuss the traits of a successful project manager.

Ans. Ten Traits of a Successful Project Manager

This short article highlights some of the best traits of a successful project manager. He or she has many of these abilities:

  1. In Touch – Regularly checks the “pulse” of the project. The balance is in checking often enough for scope and length of the project, without over-checking.
  2. Good Vibrations – Has inner and outer warmth. The manager understands people, and can use humor as a relief.
  3. Rock-solid – Has a solid character. Everyone respects and trusts the manager and his actions.
  4. Does the Job – Has a preference for action – doesn’t wait for issues to resolve themselves.
  5. Good Reactions – Anticipates problems and plans as he can to handle or avoid them.
  6. Not Scattered – Can handle mulitple tasks with proper focus. His management style is balanced between multi-tasking and focusing on the important details and tasks. This trait is connected to good time management.
  7. Focused Picture – When buried in details, she can also look at the big picture, and understands how the teams efforts are integrated in the whole of the project.
  8. Quality Workmanship – Through leading by example, quality outcomes and products are achieved.
  9. Bends, but Unbreakable – Has flexibility, but can make firm decisions. It is a key trait to be able to understand when decisions have to be made by the manager (as opposed to letting others intercede or make decisions for the manager by default.)
  10. Leverages Tools – Learns and uses tools to help manage projects. A good PM doesn’t get buried learning complex project management tools – especially if she does not yet know the theories or uses behind techniques (such as earned-value management or PERT charts).

Q.3 Define the change management model.



1) Change management is a systematic approach to dealing with change, both from the perspective of an organization and on the individual level. A somewhat ambiguous term, change management has at least three different aspects, including: adapting to change, controlling change, and effecting change. A proactive approach to dealing with change is at the core of all three aspects. For an organization, change management means defining and implementing procedures and/or technologies to deal with changes in the business environment and to profit from changing opportunities

Successful adaptation to change is as crucial within an organization as it is in the natural world. Just like plants and animals, organizations and the individuals in them inevitably encounter changing conditions that they are powerless to control. The more effectively you deal with change, the more likely you are to thrive. Adaptation might involve establishing a structured methodology for responding to changes in the business environment (such as a fluctuation in the economy, or a threat from a competitor) or establishing coping mechanisms for responding to changes in the workplace (such as new policies, or technologies).

Terry Paulson, the author of Paulson on Change, quotes an uncle’s advice: “It’s easiest to ride a horse in the direction it is going.” In other words, don’t struggle against change; learn to use it to your advantage.

2) In a computer system environment, change management refers to a systematic approach to keeping track of the details of the system (for example, what operating system release is running on each computer and which fixes have been applied).


The Change Management Model

The model follows a 3-phase, 8-step process which is represented graphically below.  Click on the graphic below to view the phase and step descriptions.


A change management model

Dealing With The Truths of Change

Leaders of change take note:

• Emotional reactions are at least as important as any other aspect of implementing change.

• The higher the involvement in change, the less negative the inevitable reactions.

• The intensity of emotional reaction is proportionate to the speed of change.

• The unresolved effects of change are cumulative.

• The longer a group / individual / situation has remained static, the greater the investment in the status quo. Therefore, the greater the resistance and reaction.

• Rewards and incentives can cause people to change, but they will not neutralise their feelings of loss.

Dealing With Change Misconceptions

• Change happens quickly
• Survivors are glad they have a job
• Time takes care of everything
• Everyone who is not on board has something wrong with them
• The weak people are the ones who leave
• During change, those who appear OK really are
• People “hear” what senior management communicates
• People take senior management communication at face value
• If the communication is done “right” the first time, it is enough
• By changing the formal relationship, how we “do business” will change
• The transition behaviour of the senior management is invisible to the rest of the organisation
• Pressures that caused the change will be seen in a rational manner

We suggest these misconceptions require a thoughful approach from those leading change.

What Happens when your Organisation Undergoes Change?

People frequently feel overwhelmed when there are major changes within their organisation. They are often uncertain of their future, and the future of their colleagues in the organisation. Consequently the following fear of change reactions may occur.

People generally feel smaller, ie.

Self-conscious – the only one feeling the effects

Missing – opportunities, job, status, security taken away

Alone – nobody understands, the unlucky one

Lethargic- commitment goes, energy levels drop

Limits – each person has limits to the amount of change they’re comfortable with

Enough – when those limits are reached they cry enough and resist further change

Revert – people easily revert back to known behaviours

Because we are all individuals we react differently. Some of the common reactions to change result in the following behaviours at work:

Drop in morale
Drop in work outputs and
Drop in productivity
Drop in Manager’s credibility
Drop in Commitment to the organisation and work
Drop in levels of service
Staff resisting change or conflict and making life difficult. This especially happens when people have been in the organisation for a long time.

Staff “bad mouthing” the organisation/management or behaving in negative ways because they feel angry and/or threatened and want to hit back at the organisation.

Effective leaders of change are aware of these not uncommon individual reactions to change. They plan how to deal with change by acccepting that employee anticipation and fear of change is a significant organisational risk unless people can be encouraged to learn and engage with the change and reflect upon the choices and options available to them.

“The dogmas of the quiet past are inadequate to the stormy present.The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew” Abraham Lincoln

Q.4 Describe the three major classification and categories of Risk management.


Risk management is a structured approach to managing uncertainty related to a threat, a sequence of human activities including: risk assessment, strategies development to manage it, and mitigation of risk using managerial resources.

About Types of Risk Management
Commercial enterprises apply various forms of risk management procedures to handle different risks because they face a variety of risks while carrying out their business operations. Effective handling of risk ensures the successful growth of an organization.
Various types of risk management can be categorized into the following:

·         Operational risk management:

Operational risk management deals with technical failures and human errors

·         Financial risk management:

Financial risk management handles non-payment of clients and increased rate of interest

·         Market risk management:

Deals with different types of market risk, such as interest rate risk, equity risk, commodity risk, and currency risk

Types of Risk Management Techniques

Risk management is a business process in which a business analyzes risk in an effort to miminize the effects of such risk. Organizations must identify risks and assess how dangerous each risk could be to the organization. Taking steps to eliminate risks will reduce the possibility of a financial loss. Risk management should be continuous and revisited at intervals the organization deems appropriate.


Q.5 List and explain the 10 rules which serve as the guidelines for development of high technology.


Guidelines for development of high technology

Some guidelines in the form of rules which help organization to be strong in this area.

Rule1.  Identify the critical technology and make a deliberate choice for indigenous development.

Rule2. Always aim one step higher in performance.

Rule3. Focus on multi use technologies.

Rule4. Spot the competency of divisions and empower them for technology development.

Rule5. Ensure redundancy for critical systems and technologies.

Rule6. Focus efforts through Programme/Projects/Mission oriented approach.

Rule7. Build concurrency into every activity.

Rule8. Build long term partnership with all the stake holders.

Rule9. Focus on Problem Forecasting and Prevention.

Rule10. Ensure continuous and integrated Performance Measurement.


18 responses to “MBA Assignments

  1. Thnak You Very Much

  2. kindly send the assign for sem I

  3. Thank you so much Komal .

  4. thanku its really a big job done by u mostly for the working students….

  5. Thanks for your support, for posting the assignments.

  6. prachanda prajapati

    thanxs a lot

  7. Thanks a lot….I really owe to this site…

  8. Hi

    thanks for the assignments. Can u send me the other question ans. Please send me Operation research Q 5 and Q 6 ans.

  9. Thanks a lot for helping us to prepare the assignment…

  10. lots of thanks

  11. hi dev…. thank u vry much for the assgnments… its really helpful for working students…. can u pls send sem-I assignments also….

  12. hey thanks a lot lot 🙂
    one more hely plz i need 1st sem assignment too plz

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