CLASS 12 BUSINESS STUDIES NOTES/ NATURE AND SIGNIFICANCE OF MANAGEMENT HOTS (HIGHER ORDER THINKING QUESTIONS)-2

Q. 1.   “Management involves creating an internal environment.” Explain.
Answer. 
The internal environment of an organisation refers to its internal conditions, like the quality and quantity of the workforce, the production technology used, the resources available, the rules and regulations framed, etc.,which are essential for the smooth running of the enterprise. The modern approach to management suggests that management of a successful firm requires the creation of an internal environment which is conducive to changes in the external environment. Since a business operates in a dynamic environment, it is essential for its internal environment to be adjusted in accordance with the changes in the external environment. For example, suppose a company manufacturing consumer goods decides to manufacture electrical home appliances with in built transformers, as the technology for the same becomes available. In order to adopt the new production technology it becomes necessary to change the ‘internal environment’ of the company, i.e., to train the work-force accordingly, make arrangements for the infrastructure required for adopting the new technology, etc.

CLASS 12 BUSINESS STUDIES NOTES/ NATURE AND SIGNIFICANCE OF MANAGEMENT HOTS (HIGHER ORDER THINKING QUESTIONS)-1

1. “Management is a set of functions directed towards the efficient and effective utilisation of resources in  the pursuit of organizational goals.” Explain.
Answer.
       Managers at all levels in an organisation, large or small, have to perform a series of functions, viz., planning,organizing, staffing, directing, controlling and coordinating in order to achieve the goals of the organisation. Planning refers to the process of anticipating future demands and conditions and accordingly laying down the organizational goals and suitable course of action. Organizing is the process of bringing together, the desired human, material and financial resources, designing organizational structure and creating authority responsibility relationships among employees at various levels. The managerial function of staffing relates to procurement,training and development of employees to meet the requirements of the organisation. The process of directing involves continuous guiding, supervising, leading and motivating of employees for execution of plans in the desired manner. Controlling ensures that the actual performance conforms to planned performance and timely corrective actions are taken if any deviations occur. Coordination is considered to be the key to management as it is inherent in all functions of management. Coordination is the deliberate effort of the managers to integrate and synchronize the work of various individuals, groups and departments in the pursuit of common goals. Underlying all these managerial functions are the two interrelated concepts of efficiency and effectiveness.According to Peter F Drucker, efficiency means, “doing things right” and effectiveness means, “doing the right thing”. Thus, efficient utilisation of resources means that the resources are being judiciously used and the output level is in conformation to the input level, whereas effectiveness refers to the ability and skill to determine appropriate goals, objectives and decisions which are vital for survival, growth and expansion of an organisation. Therefore, both managerial effectiveness and managerial efficiency go hand in hand as effectiveness without efficiency will only lead to increase in cost. Whereas efficiency without effectiveness will never lead to desired goals.