Industrial Management

CHAPTER – I
BASIC MANAGEMENT CONCEPTS AND INDUSTRIAL ORGANIZATION
1.1. Introduction:
Management is a problem solving process of effectively achieving organized society
objectives through the use of resources in a changing environment. The concept of management
as old as human race itself. Even in our olden age, we have been followed the management
technique. The hunting of animals, where to go and whom to go, etc are the examples of
management. The management technique has adopted before 3000 B.C. for the construction of
Egypt pyramid. It was done by an organized society of more than 100, 000 people. So it is
difficult to find the age of management. Management is a crucial factor in economic and social
development. Economist’s traditional point of view for the development of nation as a function
of savings and capital investment. But savings and capital investment do not produce
management and social development. On the contrary, management produces economic and
social development with its savings and capital investment. For the past one century, the debate
is going on ‘whether management is an art or science?
Is it an art which depends upon skill, is it a science which depends upon analysis. Management is
the oldest of arts and youngest of sciences.
Art: According to J.Paul Getty, management can not be systemized and or practiced according
to a formula. There fore management is an art, particularly a creative art. More over you can not
be trained to become a painter or poet.
Science: science is a systematic knowledge which explains the cause and effect phenomenon
with underlying principles. Management is developed with certain principles, laws and
generalizations which are universal in nature and it can be applied to any business environment.
1.2. Meaning of management:

• Management refers to a group of people who are responsible for guiding and controlling
the organization
• It is a body of knowledge
• Factor of production economic resources as land, labor and capital.
• Process of running an organization (planning, organizing, staffing, directing and
controlling)
1 Prepared by R.Kamatchi, Asst. Prof. / Mech.

1.3. Definition:
It is impossible to give a universal, single comprehensive definition of management.
Because
 It has various aspects, cannot represented by a single definition.
 Discipline is young and there is a lack of clarity of concepts and principles.
 The theorists who gave definition had different areas of interest or training and all
defined management from their perspectives. (Engineering, sociology, psychology,
mathematics etc.)
Therefore it can be defined in the following ways.
• It is the process of planning, organizing, staffing, directing and controlling with the use of
firm’s resources to effectively and economically attain its objectives.
• It is an art of knowing what you want to do in the best and cheapest way.
• It is an art of getting things done through and with people in a formally organized group.
• It is an art of securing the maximum results with minimum efforts.
1.4. Significance of management:

• Management is therefore, essential whenever and wherever human efforts are going to be
undertaken collectively to achieve specific goals. No group activity can succeed without
management.
• Modern enterprise can succeed only when there is a competent leadership in the form of
management.
• Management brings the right of each member to meet the objectives.
1.5. Levels of management:

Levels are the hierarchical arrangement of managerial positions in an organization. There
are 3 major levels of management viz.
Top level management
Middle level management and First level management (operating level management)
a. Top level management:
It includes that of board of directors, executive committee, president and vice – president,
general managers etc. of an organization.

Functions:
• Designing the major strategies
• Establishing broad objectives
• Dealing with external parties such as government, community, business etc. by
representing the organization
• Making over all control of the organization
• Providing effective management structure that ensures integration
• Providing overall leadership and direction.
b. Middle – level management:

Managers in this level are specialists and their activities are limited to a particular area of
operation. It includes divisional heads, department managers, section heads, plant managers,
branch managers etc.
Functions:
• Acting as intermediary between top and operating level management
• Coordinating inputs, productivity and outputs of operating level management.
• Developing specific targets in their areas of responsibility
• Translating long – term plans of top level management into medium range plans.
c. First level management (operating level management):

Management directs a small team of workers and keep a check on their performance.
Functions:
• Assigning employees to achieve tasks
• Issuing instructions at the workplace, following-up, motivating and evaluating workers
and reporting to their supervisors
• Planning daily and weekly activities.
1.6. Basic management Functions:

a. Planning:
• It lays ground work for all other functions
• It identifies goals and alternatives

• Determination of what resources will be needed
• Identification of the number and types of personnel
• Development of the foundation for the organizational environment in which work is to be
accomplished.
The length of time and the scope of planning will vary according to the level in the company.
The top level management planning may cover a period of five or ten years. At lower levels of
management, the concern may have a plan for today’s activities or tomorrow’s work schedule.
A manager’s plans affect and are affected by, the plans of others on their team and the
requirements of government rulings.
b. Organizing:
• Identifying the tasks to the personnel while defining their authority and responsibility
• Delegating this authority to these employees
• Establishing a relationship between authority and responsibility
• Coordinating these activities
c. Staffing:
• It is the function of hiring and retaining a suitable work – force for the concern both at
managerial as well as non-managerial levels.
• It involves the process of recruiting, training, developing, compensating and evaluating
employees and maintaining this workforce with proper incentives and motivations.
• This function is even more critically important since people differ in their intelligence,
knowledge, age and attitude, skills, experience and this complicates the function. Hence
management must understand, in addition to technical and operational competence, the
sociological and psychological structure of the workforce.
d. Directing:
It is concerned with leadership, communication motivation and supervision.
• Leadership: it involves issuing of instructions and guiding the subordinates about
procedures and methods.
• Communication: It must be open in both ways so that the information can be passed on
to the subordinates and the feed back received from them.
• Supervision: Supervising subordinates would give continuous progress reports as well as
assure the supervisors that the directions being properly carried out.

e. Controlling:
The function of control consists of these activities that are under taken to ensure that the
events do not deviate from the pre-arranged plans. The activities consist of establishing standards
of work performance, measuring performance and comparing it.
1.7. Organizing defined:

An organization is a formalized structure of roles and positions. Organization structure is
a frame work that managers device for dividing and co-coordinating the activities of members of
an organization.
The managerial process of organizing involves making decisions about creating a kind of
stable and understandable framework within which they can work together toward organizational
goals.
Organizing is the establishing of effective behavioral relationships among persons so that
they may work together efficiently and gain personal satisfaction in doing selected tasks under
given environmental conditions for the purpose of achieving some goal or objective.
Organizing is the management function that establishes relationships between activity
and authority. It has four distinct activities:
1. It divides the total work load into tasks that can comfortably be performed by individuals
or groups. This is referred to as division of work.
2. It combines the tasks in a logical and efficient manner. The grouping of employees,
activities and tasks is called departmentalization.
3. It designs the structure and delegates the authority to individuals. This linking results in
organizational hierarchy.
4. It builds a good relationship among departments and integrates the activities for its
effectiveness. This process is called co-ordination.
Organizing means arranging activities of an organization in such a way that they
systematically contribute to the enterprises goals.
1.7.1. The benefits of organizing:

▶ A clarified work environment: Everyone should know what to do. The tasks and
responsibilities of all individuals, departments, and major organizations divisions should
have been clarified. The type and limits of authority will have been determined.
▶ A coordinated environment: confusion should be minimized and obstacles to
performance removed. The interrelation of the various work units will have been developed.
Guidelines for interaction among personnel will have been defined.
▶ A formal decision-making structure: Through the organization chart, the formal
superior-subordinate relationships have been developed. This allows the orderly progression
up through the hierarchy for decision making and decision making communications.
▶ Effective communication: Organizing promotes negotiation among individuals in a
group and thus improves the effectiveness and efficiency of communications within the
organization.
1.7.2. Formal and Informal Organisation:

Formal organization is the structure of roles in a formally organized enterprise.
Communication flow is from top to bottom in the hierarchy. Formal principles are established for
effective formal organization. Informal organization is a “network of social and personal
relationships not established or required by the formal organization but arising spontaneously as
people associate with one another.”
1.7.3. Forms of Departmentalisation:

1. Functional departmentalization: The most common format for departmentalization,
combines jobs according to the functions of the organization.
Advantages: Efficiency: consists of experts in a particular field with similar backgrounds
and interests and share expertise. This increases efficiency of performing certain function.
Disadvantage: Organizational goals may be sacrificed in favor of department’s goals as the
functions focus on their goal.
Responsibilities for the overall performance of the organization lie on the shoulders of one
person (top manager)
2 Product departmentalization: this method places all the resources and authority under
one manager to get a product or service produced and marketed. Allows personnel’s to
develop total expertise in product line.

Advantage: It fosters initiative and autonomy. Performance is more easily judged.
Disadvantage: Top management tends to have less control over each divisions day today
activities.
3 Territorial departmentalization:
Geographical area based: Most preferred by large organizations. Large multiunit retail
stores are often organized along territorial lines.
Advantage: Provides a good arrangement for training and developing, because the executive
can demonstrate ability in a certain territory and thus merit promotion to a more important
area.
Disadvantage: Communication problem. Mental distance between policy framers and
policy implementers.
4 The Matrix approach: The matrix organization pattern is a design blending the
functional organization structure with a project team structure.
Advantage: Utilizes the technical resources of an organization by efficiently allocating the
expertise where and when it is needed.
Disadvantage: Power conflict (specialists do serve more than one master), creates a strain
on project members, the project manager and the functional departments (they work directly
for both the functional manager and the project manager).
5 Process Departmentalization: This means is logical when the machines or equipment
used require special skill for operating, or are of a large capacity which eliminates
organizational dividing, or have technical facilities which strongly suggest a concentrated
location.
Advantage: Advantages of specialization acquired at each level of total processes.
Manpower can be utilized effectively.
Disadvantages: Coordination problem, conflicts on resources and schedules.
6 Customer based departmentalization: This organizational form is used when great
emphasis is placed on effectively serving different customer types.
Advantage: attracts the customers by providing services.
Disadvantage: difficulty in coordination between different functions.
1.7.4. Characteristics:
• They are composed of people

• They exist to achieve goals
• Each has some degree of structure that results in a definition and limitations
1.7.5. consequences of poor organization:
Failure to act, Delaying in acting, Wrong action, Lack of quantity of effort, Lack of
quality of effort, Waste of effort, Excessive quantity of effort, Excessive quality of effort
1.8. Working environment:

Lighting:
• An adequate standard of day light (20 lumens / sq.feet) should be provided to the work
place.
• Several windows on one side increase the illumination by 10% to 30%
• To avoid glare some light should be thrown on the ceiling
Heating:
• Heating should be thermostatic and time controlled designed on a block principle to
allow variation between north and south aspects, and capable of local control to meet
individual requirement
• Ventilation should normally be provided by opening windows, but extraction fans will be
warranted in certain positions.
Sound insulation:
• An attempt should be made to reduce the noise at source, by felt pads for machinery,
sound insulated panel etc.
• Soft floor finishes such as cark tiles or carpets can reduce the sound in offices
considerably.
• Tiles and terrazzo for clock room, entrance hall are advised.
Decoration:
• Bright, cheerful surroundings are conductive work.
• Color schemes should be arranged to suit the aspect, the occupants and the equipment of
various rooms.
Other amenity facilities:
• Lavatories

• Rest rooms
• Tea services and special accommodation
1.9. Accident:
An event that takes place all of sudden resulting in something bad is called an accident.
Ex: a house catching fire, electric shock
Effects of an accident:
• Personal effects:
Mentally depression, physically handicapped, loss of earning capacities
• Social effects:
Status may get lost, family humiliation
• Other effects:
Loss of machines, loss of materials, loss of money, capital investment, reputation of
company
Causes of an accident:
• Improper working conditions
• Working methods
• Factors concerning worker
Prevention of accidents:
• Reform of the working conditions
• Provision of safety methods
• Pay attention to individual differences
• Training in right work methods
• Means of removing fatigue
• Proper speed of work
• Safety campaigns and posters
• Motivating safety.

CHAPTER – II
PERSONNEL MANAGEMENT
2.1. Introduction:
Personnel management is called by different names. For examples, in certain public
enterprises, it is known as public administration, while in others, it is described as labour
management, industrial relations, employee relations or man power management. It is concerned
with procurement, development, compensation, integration and maintenance of the personnel of
an organization for the purpose of contributing towards the accomplishment of organization
goals and objectives. In every business entity, personnel management is present in one form or
the other. For example, in a small scale industry, the personnel function is often carried out by
owner. He hires, fires and promotes individuals according to his capacities and needs. But in
larger and more complex firms, the owner seldom has the time to attend to all the personnel
functions, and is often given a separate organizational status.
It is part of the management process, which is primarily concerned with the human
constituents of an organization. The objectives of the business can be realized through the efforts
of its employees. The working efficiency of the employees is dependent upon a number of
conditions, such as
• Employment for the right person
• Attainment of the employee's satisfaction
• It keeps Maintenance of interest and loyalty of workers.
• Personnel management aims at keeping the working force which may lead to fuller co-
operation on the part of the employee.
2.2. Definition:
2.2.1. UK Institute of Personnel Management:
Personnel management is that part of management functions which is primarily
concerned with the human relationships with in the organization.
2.2.2. Professor Michael Jucious:

It is that field of management which has to do with planning, organizing and controlling
various operative functions of procure~t, developing maintaining and utilizing a labour force in
such a way that
• Objectives are attained economically and effectively.
• Objectives of all levels of personnel are served to the highest possible degree.
• Objectives of community are duly considered and served.
2.3. Objectives:
• To improve the service to society through building better employee morale.
• To establish in the minds of employees, share holder, creditor, customer and the public
that the enterprise is rendering the best service of which it is capable and distributing the
benefits derived three from fairly in the light of the relative contribution of each to the
success of the enterprise.
2.4. Scope of personnel management:

Systematic recruiting and maintain of the labour force: ie attracting, screening, testing
and hiring job applicants.
a. Employee compensation:
It is concerned with determining payment rate, incentive system, rating of employee and
performance standards.
b. Job analysis and job description:
Study of work, study requirement of the enterprise and assignment of specifically defined
functions to job and for which employees are to be hired.
c. Employee training:
Measures for breaking in new employees and for maintaining and improving the quality
of work, so that the employees may earn more and productivity may increase.
d. Keeping personnel records: Assembling information about all employees pertinent to their
work, such as training job performance, aptitudeJate, payment, records etc.
e. Personnel welfare:
Business sponsored health and safety programme, feeding and sanitary facilities in the
plant recreational programmes, educational activities etc.

2.5. Functions of personnel management:
It is generally classified in to two categories, as Managerial functions and operative
functions.
I. Managerial functions:
Planning, organizing, directing and controlling are the managerial functions. This has
been exolained in the first chaoter itself.
II. Operative functions:
a. Procurement:
Determination of man power requirements, their recruitment, selection, placement and
orientation etc.
b. Development:
It has to do with the increase of skill, through training etc.
c. Compensation of personnel:
It means determination of adequate and equitable remuneration of personnel for their
contribution to organization objectives for choosing a suitable compensatory policy a number of
decisions are taken into the function.
d. Maintaining good industrial relations:
Personnel management to create the better relationship between management and labour.
Personnel management is unable to make harmonious relationship between the two that will be
harmful to the organization. The industrial unrest ness will take place and a millions of man days
will be lost.
e. Record keeping:
The main function is to Collects and maintain information of all employees. It assists the
management in decision making such as promotions, salary increment, transfer etc.
f. Personnel planning and evaluation:
Evaluation of performance, personnel audit, moral survey and performance appraisal
g. Personnel research and audit:
Motivational techniques and auditing, its effect on the workers of the organization etc.
2.6. Selection of personnel:

It is a process of choosing the right candidate from a pool of applicants. It is established
to achieve a good match between the job requirements and the candidates' skills and motives.The

good match which increase the productivity and quality performance as well as bad match which
give costly to the company due to cost of training, cost of mistake and cost of replacement. Mc
Murray has listed some comprehensive steps for the selection of personnel.
I step: Resume
It includes,
• Familiar with the requirements of the job as well as the qualifications and expectation of
the candidate.
• After looking at the resumes, candidates those qualifications do not adequately match the
requirements of the job are rej ected out right.
II step: Screening Interview
It is concerned with
• Preliminary screening interview, to have an initial assessment of the candidate's abilities
and motives
• This interview gives the general attitudes of the candidate towards organization and what
the candidate can contribute to the company.
III step: Application form
This step involves completion of formal application forms which lists person's
background, education, experience and any special abilities. The information asked for and
provided should be relevant to the selection, factual, legal and personal.
IV step: Reference and seeking opinion
It is concerned with references and seeking opinion from his previous employers or
instructor, if he is a fresh candidate.
V step: Tests
During this step, certain tests will be conducted for the candidate. Type of test would
depend upon the type of job required to be filled. There are four important tests.
• Intelligence tests: It is conducted to test the mental ability, capacity and general
intelligence of the candidate.
• Aptitude tests: It is to measure an individual's capability.
• Performance tests: It is nothing but the ability to do the job.
• Personality tests: It is conducted to test the self confidence, emotional stability behavior
under stress.
VI step: In depth interview

The questions will be asked related to his subject and or field experience.
VII step: Physical health

Establish the applicants' physical health through physical examination conducted by
company physician.
VIII step: Hiring
The process of hiring itself. It is concerned with salary fixation and facility provide to the
candidate.
2.7. Training:
It is designed mainly for non-managerial refers to technical and mechanical skills.
Training is a short term process utilizing the systematic and organized procedure by which non-
managerial can learn the technical knowledge and skills for a desire purpose.
According to Planty, McCord and Efferson, the training
• Must be a continuous process.
• Must be aimed at all levels of employee.
• Must give benefits to both employee and organization.
• Must be planned systematically in order to accomplish the desired results efficiently.
Training must be effective,
• When the employee learn under conditions that are identical to the actual conditions.
• When the trainer who is training the employee is made responsible for the process of the
• candidate.
• When it creates self confidence of employee in the organization and desire to do better.
2.8. Need for training:

Increased productivity: training of employee is directly concerned with productivity of
the organization. Good training leads to increase in productivity.
Improvement in employee morale: It builds up confidence and satisfaction. This in turn,
develops enthusiasm and pride which are indicative of high morale.

Availability for the personnel future needs of the organization: Good training programs
develop the employees and prepare them for future managerial and executive positions.
Improvement in health and safety: good training prevents industrial accidents and create safer
environment. Accidents are generally caused either by deficiencies in machines and equipment
or due to people who are not properly trained to handle and maintain such equipment.
Reduced supervision: A trained employee supervises himself. He accepts responsibility and
expects more freedom and autonomy and less supervision. In addition to this, supervision costs
may be reduced.
Organizational stability: Due to the training of the employee, the organization must be a stable
one.
Personnel growth: It gives a wider awareness and self satisfaction.
2.9. Steps in training programme:

Discover the training need: training needs can be identified by
• Assessing the current and future business conditions.
• Perfonnance of employee with specific emphasis on areas of improvements
Establish the objectives of the training: the objective of training programme must be
established and it should be infonned to all training employee.
Getting ready for the job: type of worker who needs to be trained? Are they new comer?
Or are they old employee who needs to be retrained?
Presentation of operations: the trainer who is going to give training must be able to completely,
patiently and good flow of communications. Moreover maintaining a relationship with
employees. The trainer should not be emotional during the operations.
Evaluating the effectiveness of the training program and follow up: it is concerned with
receiving the feed back after the training programme completed.
2.10. Methods of training:

a. On the job training:
Process chart, lectures, sample problems and demonstrations. It can be continued till the
supervisor satisfies with the employee.
b. Off the job training:

In this method, the traine~ does not involve with the machines and equipment. This type
of training is done in a class room of an organization. Some of the organization has adopted this
technique, since it does not disturb the working conditions.
2.11. Training evaluation:
The personnel manager should accurately assess trainee's job performance two to four
months after completion of training. He has to evaluate in the following ways.
Reaction: Evaluate the trainee's reaction to the programme. Did he like the programme? Did he
think it worth while?
Learning: did the trainee learn the principles, skill and fact that the supervisors or trainer wanted
them to learn?
Behavior: whether the trainee's behavior on the job changed because of training programme or
not.
Results: the result of the training programme can be evaluated by asking the following
questions.
• What final results have been achieved?
• Did he learn how to work on machine?
• Did scrappage costs decrease?
• Was turn over reduced?
2.12. Job -Evaluation:

It is a technique which aids in establishing equitable base-rates of jobs. In other words, it
is one of the starting points for establishing the relative differentiation of base wage rates. The
process of analysis and assessment of jobs to ascertain reliably as a whole, their relative worth
using the assessments as a basis for a balanced wage structure.
It is defined as a method which helps to establish a justified rank order of jobs as a whole.
2.13. Objectives:
• To establish correct wage differentials for all jobs.
• To bring new jobs into their relativity with jobs previously established.
• To help authority, responsibility and promotion.
• To provide a base from which individual performance may be measured.

• To reduce staff grievances and simplify explanations
• To provide a base for orientation and in-service training programme.
2.14. Principles of job evaluation programme:

• Rate the job not the man. Each element should be rated on the basis of what the job itself
requires.
• The elements selected for rating purposes should be easily explainable.
• The elements should be clearly defined and properly selected.
• Any job rating plan must be informed to foreman and employees. The success in selling it
will depend on a clear cut explanation and illustration of the plan.
• Foreman should participate in the rating of jobs in their own departments.
• Maximum co-operation can be obtained from employees when they themselves have an
opportunity to discuss job ratings.
• Any discussion of money value should be avoided when talking to foreman and
employees.
• Too many occupational wages should not be established.
2.15. Methods of job evaluation:

2.15.1. Non -quantitative or non -analytical
It is further classified as
a. Ranking method: this is the simplest method. No effort is needed to break a job down into its
elements. It does not require a written down job description. The aim is to judge the job as a
whole and to determine the relative values by ranking one whole job against another whole job.
b. Ranking by paired comparison: it follows
Step I: reach an agreement on duties, requirements of the job and job title.
Step II: choose men who know all jobs to be rated. A committee instead of one man may be
preferred depending upon situation and availability.
Step III: rank jobs. Most difficult job as rank 1 and cc~~~ri_=:c-:~ -:-:-:::-2;: other by paired
companson.
Step IV: integrate rankings. First rank jobs in each department. Then combine department
rankings into a single set of ranks and make them into one organizational ranking.

Advantages:
• Simple, inexpensive, expeditor, understood and administered
• Some unions prefer it, because it leaves more room for bargaining.
Disadvantages:
• Jobs are ranked on the basis of incomplete information
• No one committee member is likely to be familiar with all the jobs.
c. Grade classification method: A three fold classification, i.e. unskilled, semi skilled and skilled
can be used to classify. Here also jobs are considered as whole.
2.15.2. Quantitative method:
a. Factor comparison method:
It lists five factors which are common for all jobs. They are Skill, mental and educational
requirements, physical requirements, responsibility and working conditions. Job description is
prepared by job analyst. Monetary scale is used for comparison. First a list of key jobs is
selected. The evaluation of these jobs serves a basis for evaluation of all other jobs in the
organization. The monetary scale should be prepared based on the wage survey of the area. The
wage rate for each key job may be broken down and apportioned to factors in the order of
importance.
For example, If the basic wage of machinist is Br. 180, then Br. 80 is allotted to skill, Br.
40 is allotted to mental and educational requirements, Br. 10 is allotted to physical requirements,
Br. 20 is allotted to responsibility, and Br. 30 is allotted to working conditions.
2.16. Advantages of job evaluation:

• It may help in removing inequalities in existing wage structures.
• The information collected in the process of job description and analysis may also be used
for the improvement of selection, transfer and promotion procedures.
• It replaces many accidental factors, occurring in less systematic procedures, establishing
a clear basis for negotiations.
• In the case of new jobs, the method often facilitates fitting them into the existing wage
structure.
2.17. Performance appraisal

It is a systematic way of evaluating worker's performance and his potential for
development. According to Mc Gregor, the formal performance appraisal plans are designed to
meet three needs
• They provide promotions, transfers, salary increments etc.
• They let the subordinate know where he stands and whether any changes are required in
his behavior, attitudes, skill or job knowledge.
• It is used as a base for coaching and counseling of the subordinates
2.19. Performance appraisal methods:
I. Traditional methods:
1. Essay appraisal: This is oldest method and still widely used method. In this method, the raters
(who is rating a person) simply writes a page or so about the strength and weakness of the
candidate and the rater's personal recommendations.
2. Ranking methods: This method is further classified as
a. Straight ranking method: It is the simplest method of separating a most effective employee
from the least efficient employee.
b. Pair comparison method: It is concerned with comparison of one employee performance with
the other employee of the same group. Finally, they will give the rank like A, B, C, etc.
3. Factor comparison method: In this method, the company have their own factors like
leadership, hard work, dependability etc. each factor is ranked. Based on the ranks of the
individual characteristics a 'key man' is created. The key man is considered as the rank 1 and
other rank will be given based on the key man.
4. Field review method: It is a review process where a member of personnel department or from
the central management staff meets the raters in small group and goes over each employee's
rating with them. This method shows whether the rater has shQwn partiality to certain employee
or not. If the raters show partiality, then another rater will be appointed to evaluate.
5. Group appraisal: This method involves rather than a single rater, the appraisal of employee is
done by a group of people. (Generally 3 rater will be involved in this method). Moreyver, it is a
time consuming process.
6. Forced choice method: The raters are forced to choose the statements leaving no grounds to
make his own. These statements are weighted and then scored by judges. The questions may be,
Is the worker regular on the job?
Is he temperament?

Does he follow instruction properly?
II. Modern Method:
1. Assessment centers: In this method, the potential executive candidates from different
departments are brought together into a common assessment centre for 2 -3 days where they are
given similar assignments to what they would be expected to handle at the higher positional level
if they were promoted. The judgement of these activities is pooled and ranked. This continuous
observation of candidates givep a much better and comprehensive idea about their potential.
2. Behaviorally anchored rating scales (BARS): In this method, the requirements for effective
performance are identified as judged by specialists and these requirements are 'anchored' at each
end of a vertical bar. The bar consists of a series of vertical scales each scale identifying each
important dimension of job performance. Each bar is scaled generally from I to 9, where I is the
lowest rating for the most ineffective performance and 9 is for the highest rating for the most
effective performance.
3. Management by objectives (MBO): MBO -is a result oriented process rather than activity
-oriented, and is based on the premise that performance can best be measured by comparison of
actual results to plans or expected results.
2.20. Uses:
• Improving the employee job performance by pinpointing the areas
• Encouraging the employee to express their views
• Predictor for future responsibilities
• Preventing grievances
• Increasing the analytical ability of supervisors
2.21. Characteristics
• It is bias -free
• Relevant
• It should be reliable, dependable, stable and consistent
• It must be able to differentiate between an effective and an ineffective employee
• It must be practical, sound, clear and unambiguous so that all parties concerned
understand all of its implications.

CHAPTER – III
MOTIVATION THEORIES AND LEADERSHIP
3.1 Introduction:
The area of motivation has been receiving a lot of attention both by behavioral scientists
as well as by industrial psychologists. The force of motivation is a dynamic force setting a
person into motion or action. The word motivation is derived from motive which is an active
form of a desire, craving or need, which must be satisfied. All motives are directed towards
goals, needs and desires affect or change your behavior which becomes goal oriented.
According to Encyclopedia of Management, the motivation is defined as, 'the degree of
an organization to pursue some designated goal and implies the determination of the nature
and locus of forces, including the degree of readiness'.
3.2. Motivation process:

According to lucius, the following steps can be adopted in the motivation process.
An analysis of situation: Since needs of different employees differ both in nature as well as
intensity, a composite view of the collective needs of the group is established, with appropriate
recognition of differences in individual needs.
Selecting and applying appropriate motivators: A list of all devices of motivation is drawn
and a selection made of such motivators that motivate different types of people under different
circumstances.. In addition to this, proper timing and extent of motivation is also to be
considered. Individual goals should be given adequate attention with in the frame work of group
goals and the organization goals.
Follow up: The motivators selected are in need providing the desired motivation. It can be
accomplished by getting and evaluating the feed back. To show optimum effect, alternate
motivators are selected and applied.

3.3. Types of motivation:
a. Positive motivation:
It involves recognition of employee efforts and appropriation of employee contribution
towards the organizational goals. It improves the standard of performance, lead to good team
sprit and pride, a sense of co- operation and a feeling of belonging and happiness.
Positive motivators are,
• Praise and credit for work done.
• Delegation of authority and responsibility to subordinates
• Participation of subordinates in the decision making process.
b. Negative or fear motivation:
It is based upon force, fear and threats. The fear of punishment and actual punishment has
resulted in controlling the misbehavior and contributed towards positive performance in many
situations. This is based upon trend and changes in the work force. Punishment creates a hostile
state of mind affecting negatively the sense of loyalty and co-operation, perhaps resulting in poor
performance and lower productivity.
c. Extrinsic motivation:
This kind of motivation is induced by external factors which are primarily finance in
nature. These incentives and rewards have been a state of debate, whether they really motivate
the employees or simply move them to work and perform. Higher pay, fringe benefits like
retirement plans, stock options, health and medical insurance, paid vacation etc.
d. Intrinsic motivation:
These are primarily non-financial rewards such as Praise, esteem, power, status,
participation etc.
3.4. Motivation theories:

a. Herzberg's two factor theory of motivation:
This is an environmental motivation theory which emphasizes factors in the environment
that contribute to the behavior. To believe that people who are generally satisfied with their job
will be more dedicated to their work and perform it well, as compared to those people who are
dissatisfied with their jobs. Herzberg called those two categories of factors as hygiene or
maintanance factors and motivation factors. The factor which prevents dissatisfaction is known

as hygiene factors. The factors which have the positive effect on the job satisfaction are known
as motivation factors.
The word 'Hygiene' is taken from the medical field which means steps to maintain your
health but not necessary to improve it. His conclusion is based on research conducted among 200
engineers and accountants, who were asked the following questions.
What is about your job that you like?
What is about your job that you dislike?
Accordingly, he put the responses into two categories.
Hygiene factors:
• They simply prevent dissatisfaction and maintain status.
• They produce no growth but prevent loss
• The elimination of dissatisfaction does not mean satisfaction and these factors simply
• maintain a 'zero level of motivation'.
Some of the hygiene factors are.
• Wages, salary and other types of employee benefits
• Company policies and administration rules.
• Interpersonal relations with supervisors and subordinates.
• Working conditions and job security
• Supervisors' technical competence as well as the quality of his supervision.
Motivation factors:
The following are the motivational factors which give the positive effect.
The job itself:
To be motivated, the people must like and enjoy their jobs. They are highly committed to
goal achievement and do not mind working late hours to do what is to be done.
Recognition:
Proper recognition of an employee's contribution by the management is highly morale
boosting. It gives a great feeling of growth and self-esteem.
Achievemen t:
A goal achievement gives a great feeling of accomplishment. The goal must be
challenging requiring initiative and creativity. The opportunities must exist for the meaningful

achievement; otherwise workers become sensitized to the environment and begin to find faults
with it.
Responsibility:
It is an obligation to carry out the assigned duties satisfactorily. The higher the level of
these duties, the more responsible you feel and more motivated you are. It is a good feeling to
know that you are considered a person of integrity and intelligence to be given a higher
responsibility.
Growth and Advancement:

Job promotions, higher responsibility, participation in central decision making and
executive benefits are all signs of growth and advancement and add to dedication and
commitment of employees.
3.5. Carrot and stick approach:
It comes from the old story that to make a donkey move one must put a carrot in front of
him with a stick from behind. In any organization, the carrot means money, salary increment,
bonus, promotion etc. similarly, stick means penalty, punishment, fear ~ of job etc.
Too often gets a carrot, regardless of performance, through such practices, as salary increase and
promotion by seniority, exclusive bonus not based on individual performance. So such kind of
person will not be motivated by some kind of carrot. Hence, it is difficult to motivate the people
through material incentives.
It is difficult to motivate white-collar people with such material incentives. Stick in the
form of penalty has been given to people due to poor performance, indifference, dishonesty,
indecisiveness etc.
3.6. Universal theory:

Abraham Maslow developed his model of human motivation in 1943. His theory is based
upon two assumptions. Firstly, human needs ranging from biological needs at the lower level to
psychological needs at the upper extreme. Second, these needs occur in an order of hierarchy so
that lower level needs must be satisfied before higher level needs arise or become motivations.
This model of hierarchical needs explain the human behavior in a more dynamic and realistic

manner. He formulated his theory of hierarchical needs by asking the same question. 'What is it
that makes people behave the way they do?'.
Psychological needs: Food, water, shelter and desire are the basic needs of human. When these
needs begin to be fulfilled other level of needs become important and start acting as motivators.
Safety needs: Once psychological needs are gratified, the safety or security needs become
predominant. Safety needs are really provisions against deprivation in the future. It involves a
sense of protection against danger and threats. Safety and security needs dewell upon job
security, life and medical insurance and other protective measures to safeguard.
Love and social needs: Once the safety needs are fulfilled, then a sense of belonging and
acceptance becomes predominant in motivating behavior. These needs are for love, friendship
and social interaction. We look for an environment where we are understood, respected and
wanted.
Esteem needs: Recognition from others which include a feeling of growth and self confidence in
the individual. It is an urge for achievement for self-respect and respect from others.
Self-actualization needs: It is the need to develop fully and to realize one's capacities and
potential to the fullest extent possible. It is activated as a motivator when all other needs have
been reasonably fulfilled. A self-actualized person is creative, independent, content and
spontaneous.
3.7. Leadership:
Leadership is important and necessary for achieving individual, group and organizational
performance. It is an integral part of management and plays a vital role in managerial operations.
If there is any single factor that differentiates between successful and unsuccessful organizations,
it would be considered as dynamic and effective leadership.
George Terry points out that
'Of everyone hundred new business establishments started approximately 50 or one
half go out of business with in two years. By the end of 5 years, only one third of the original
one hundred will still be in business'. Perhaps it would be a valid assumption to state that the
major cause of these failures would be ineffective leadership.
Definition:
• Leadership is the function of management involving the process of influencing people so
that they will contribute to organization and group goals.

• Leadership is the activity of influencing people to strive willingly for mutual objectives.
• It is the function of(L) = F (f, g, w, s)
f -Followers, g- goals, w -measure of willingness on the part of subordinates, s- a given
situation.
3.8. Types of leadership:

3.8.1. Formal leadership: It occurs when a person is appointed or elected as an authority figure.
For example, a formally elected leader of a country or state acquires the authority of leadership
and giving direction to the country or state.
3.8.2. Informal leadership: It emerges when a person uses interpersonal influence in a group
without designated authority or power. The leaders emerge in certain situations, because of their
charm, intelligence, skills, and to whom other people turn to for advice, direction and guidance.
3.9. Power and authority in leadership:
Leaders use power and authority. Power is the potential ability to affect the behavior of
others while authority is power created and granted by the organization. Legitimate power is
authority. Influence exists when a person consciously or unconsciously exercises power to affect
the behavior or attitudes of some one else.
a. Legitimate power: It is granted through organizational hierarchy, so the power that
occupying each position confers is part of the way that position is defined. All the managers have
legitimate power over their subordinates.
b. Reward power: It is power to give rewards. Rewards that may be under the control of an
individual manager may include salary increase, bonus, promotion, recommendations etc.
c. Coercive power: It is the power to force compliance via psychological, emotional or physical
threat. In some isolated settings, coercion can take the form of physical punishment. In most of
the organizations, it is limited to verbal reprimands, written reprimands, fines, demotion and
termination.
d. Referent power: It is based on identification, imitation of others. The followers might choose
to imitate a leader with referent power by wearing the same kind of clothes, working the same
hours or espousing the management philosophy.
e. Expert power: It is derived from expertise. It depends on the person, a manager who knows
how to deal with an eccentric but important customer.

3.10. Leadership styles: A style of leadership is a "relatively enduring set of behaviors which is
a characteristic of the individual, regardless of the situation." It can be classified according to the
philosophy of the leaders as
3.10.1. Autocratic or dictatorial leadership:
The autocratic leader believes that his leadership is based upon the authority conferred
upon him by some source, such as his position, knowledge, strength or the power to punish and
reward. Autocratic leadership keeps the decision making authority and control in their own hands
and assume full responsibility for all actions. They expect workers to follow their orders and
tolerate no deviation from their orders.
Advantages:
• Autocratic leadership is useful when the subordinates are new on the job and have had no
experience in the managerial decision making process.
• It can increase efficiency of the organisation.
• It is useful when the chain of command and the decision of worker is clear and
understood by all.
Disadvantages:
• One way communication without feed back leads to misunderstanding
• An autocratic leader makes his own decisions which can be very dangerous.
• It is unsuitable when the workforce is knowledgeable about their jobs.
3.10.2. Participative or democratic leadership:
This type of leadership is effective when the work force is experienced and dedicated and
is able to work independently with least directives. The subordinates are consulted and their feed
back is taken into decision making process. The group members are encouraged to demonstrate
initiative and creativity and take intelligent interest in setting plans and have maximum
participation in decision making. This ensures better management -labour relations, higher
morale and greater job satisfaction.
Advantages:
• Active participation in the management by labour assures rising productivity and
satisfaction.
• This leadership includes confidence, cooperation and loyalty among workers.

• Workers develop a greater sense of self-esteem, due to importance given to their ideas
and their contribution.
• It results in higher employee morale.
Disadvantages:
• It requires some favorable conditions in that the labour must be literate, informed and
organized. This is not always possible.
• Some group members may feel if their ideas are not accepted for action. This may create
a feeling of frustration and ill will.
• It is a very time consuming process.
• Some managers may be uncomfortable with this approach because they may fear an
erosion of their power-base and their control over labour.
3.10.3. Laissez-faire or free -reign leadership:

In this style of leadership, leader is just like a figure head and does not give any direction.
Leader participation is very little and instead of leading and directing, he becomes one of the
members. He acts as liaison between the group and the outside elements. He does not attempt to
regulate or control and there is a group in decision making. This type of leadership is highly
effective when the group members are highly intelligent and are fully aware of their roles and
responsibilities.
Advantages:
• It creates an environment of freedom, individuality as well as the team spirit.
• It is highly creative, with a free and informal work environment.
• It is very useful where people are highly motivated and achievement oriented.
Disadvantages:
• Insecurity and frustration may develop due to lack of specific decision making authority
and guidance.
• Team spirit may suffer due to possible presence of some uncooperative members.
3.11. Theories of leadership:

3.11.1. Traits theory:

Traits mean that characteristic or peculiarity or feature of a person. The existence of these
traits becomes a measure of leadership.It emphasizes that leaders are born not made. This theory
proposes that leadership is a function of intelligence, maturity, head for self-actualization, self-
assurance etc. A person who becomes a leader in one situation may not become one in another
situation. There is no single personality trait would specify a leader and be applicable in all
situations. The trait theory of leadership has suffered from a lack of conclusiveness and over
simp lifications. Some of the weakness and failures of the trait theory are
• All the traits are not identical with regard to the essential characteristics of a leader.
• Some traits can be acquired by training and may not be inherited.
• Traits which are most important and which are less important to identify a successful
leader.
• It ignores environmental factors, which may differ from situation to situation.
3.11.2. Contigency Theory:
Contigency view indicates that the best way to lead varies with forces that exist in
specific situations. The situational approach to leadership is considerably more complex than
others. Contemporary managers are more and more prone to believe that the practice of
leadership is too complex to be represented by unique traits or behaviours.
According to this theory, effective leadership depends on the interaction of the leaders’
personal characteristics, leaders’ behaviour and factors in the leadership situation. There are
situational factors or dimensions which are finite in number and vary according to the leaders’
personality, the requirements of the task, the expectations, needs, attitudes of the followers and
the environment in which all are operating. The leaders is a person who recongnizes the desires
and does those things or undertakes those programs, designated to meet them. Leadership ability
is also to be heavily affected by such situational factors as their jobs, the organisational
environment in which they operate and the characteristic of people they were assigned to lead.
3.11.3. Two dimensional theory:
Rather than focusing on the characteristics of effective leaders, an alternative is to focus
on their behaviour. The question then becomes, ‘what do effective leaders do that ineffective
leaders do not do?’. For example, are effective leaders democratic rather than autocratic?. Are
effective leaders permissive rather than directive?. Are effective leaders person oriented rather
than task oriented?.

Generally, such terms refer to whether the leaders’ behaviours reflect primary concern for the
work or the people who are doing work. Accordingly it is classified into two factors.
Task oriented leadership:
It has been said that the essence of leadership is getting workdone through other people.
Example: scientific management advises managers to: plan in detail, state standards interms of
quality and quantity, instruct the worker clearly, supervise closely, pay according to quantity and
quality of work.
Person oriented leadership:
This idea is an outgrowth of the behavioural approach to management particulary the
human relations branch. Rensis Likert and his associates believe that the most effective leaders
focus on the human aspects of their groups. They attempt to build effective team work through
supportive, considerate, employee-centered behaviour.
CHAPTER – IV
MATERIAL, MAINTANANCE AND MACHINE MANAGEMENT
Material Management
4.1 Introduction and Definition
Material management is one of the basic functions of every business. Along with other
functions of marketing, engineering, finance and manufacturing it has an equal contribution to
make the triple objective of survival, stability and growth in any healthy business. The economic
success of any manufacturing company has a direct relationship with the efficacy of its material
management function.
Material management is a concept that integrates all the activities of planning,
scheduling and controlling materials from design through production and including delivery
to the customer. It applies the functions of planning, organizing, integrating and measuring to
the volume and flow of material.
4.2 Objectives of Material Management

I. Primary objectives
a. Low prices:

This is the most obvious material objective and certainly one of the most important. If the
material department reduces the price of the items it buys, operating costs are enhanced. The
objective is important for all purchases of materials and services including transportation.
b. High inventory turnover:
When the inventories are low in relation to sales, less capital is tied up in inventories.
This in turn increases the efficiency with which the company's capital is utilized, so that return
on investment is higher.
c. Continuity of supply:
When there are disruptions in the continuity of suppl,excess costs are inevitable
production costs go up, excess expediting and transportation costs are rigid and must be incurred
even when production stops because of lack of materials.
d. Consistency of quality:
To maintain consistency of quality of materials, at the lowest possible overall cost is
another important objective of materials department.
e. Low payroll costs:
The lower pay roll costs of material department being other factors equal, the higher will
be profits.
II. Secondary objectives
a. Favorable reciprocal relation:
Sound reciprocity involves a balancing of the advantages and disadvantages of using
one's buying power as an instrument for getting sales.
b. New material and products:
Materials department can help a lot in development of new materials and new products.
Its personnel deal regularly with suppliers responsible for the new 4evelopment. Whenever they
learn of anything of interest, they can call it to the attention of interested parties in
manufacturing, engineering or other department.
c. Economic make or buy:
Make or buy decisions are often sparked by materials department since they are the group
most intimately concerned with selection of supply sources. The materials management
department in its regular reviews of cost and availability of materials, often will spark the need
for new make or buy decisions and should refer them to the committee decisions.
d. Standardization:

The fewer the items that need to be controlled and the suppliers to be dealt, more efficient
the materials management process. Thus it is to selfish interest of materials manageme'nt
personnel to promote standardization and simplification of specifications.
e. Product improvement:
The economic knowledge of materials management can supplement the t.'chnical skills of
the engineers, on programme to boost profits through production change. Material management
personnel can help engineers to achieve their design objectives more economically by suggesting
materials or components that will do better or equivalent jobs at lower cost.
f. Interdepartmental harmony:
It helps in quick disposal of cases pertaining to procurement receipts, inspection or
dispatch of materials.
g. Forecasts: To manage materials well, one must learn some concept of future out looks for
prices, costs and general business activities.
4.3 Functions of Material Management

a. Materials planning:
This function involves the setting up of consumption standards for working out the
requirements for all materials for any given manufacturing programme; deciding whether to
make or buy. taking into consideration real economics manufacturing capacity, availability from
outside sources, dependability of suppliers and various other factors etc.
b. Scheduling:
This refers to the scheduling of the procurement of materials in order to meet the
requirements of manufacturing procurement lead times, manufacturing cycle times, scarcity of
materials, economic lot size etc. This also involves the follow up of actual deliveries against the
schedules and taking special action for expediting in case of any shortfall.
c. Inventory control:
Inventory is one of the management functions' for maintaining the goods for the future. It
may raw material, semi finished goods, finished goods etc. This also involves maintaining of
central stock records, based on accurate reporting of receipts, issues and rejections, monitoring
items reaching critical levels for.
d. Purchasing:

This refers to the locating dfiif development of sources of supply, market research for
purchasing, negotiating prices, calling for tenders, selection of suppliers, entering into rate
contract and periodical review of the same. In addition to this, it concerns performance
evaluation of Isuppliers, preparation of purchase budgets in conjunction with material planning
and inventory control sections and so on.
e. Ware housing and material handling:
This involves receiving the materials, unboxing and moving them to stores after
incoming inspection, returning or other wise disposing of rejected materials, proper and adequate
storage facilities to ensure minimum of re handling, periodic inspection of materials lying in
stores, ensuring receipts and issues against proper documentation and immediate reporting of
items reaching etc.
f. Stores department:
This function involves stores layout, improvement of storage system, stores control in
terms of receipt and issues of materials.
g. Coordination: This involves maintenance of close co-ordination with other departments of the
organisation-engineering, manufacturing accounts, production planning, value analysis cell etc.
with a view to achieve company objective and cost reduction.
Maintenance Management
Machine, building and other service facilities are subject to deterioration due to their use
and exposure to environmental conditions. In industry, there is no choice but to attend to them
from time to time to repair and recondition them so as to elongate their life to the extent.
4.4 Objectives of Maintanance Management

• To keep the factory plants, equipments, tools etc in an optimum working condition.
• To ensure time schedule of delivery to customer.
• To keep the downtime of the machines to the minimum.
• To improve productivity of existing machine tools.
• To keep the production cycle with in the stipulated range.
• To modify the machine tools to meet the augmented need for production
4.5 Requirements of Maintenance Management

• Good supervision and administration of maintenance personnel
• Proper control of work
• Correct and clear instructions will be given to crew and operators
• Operations should be well trained
• Proper maintenance record should be maintained
• Adequate stock of spares
• Surroundings should be dust free and clean
• Manufacturers of machine tool should be consulted as and when required.
4.6 Types of Maintenance

a. Preventive maintenance: It refers to only a part of maintenance programme. Lubrication and
inspection are the two constituents of preventive maintenance programme. Lubrication ensures
long life and safe working of the equipment without mishaps. ritspection tries to detect faults in a
equipment.
b. Scheduled maintenance:
• Scheduled maintenance system provides for inspection, overhauling lubrication and
servicing of certain machine parts at predetermined dates.
• Predetermination of work ensures comparatively better allocation of man power keeping
• It can not ensure completion of work in time because the nature and details of work
required to be done remain unknown.
c. Planned maintenance:
• It visualizes the work in a machine or job.
• Estimates time, material and cost involved for the maintenance
• It can be done based on the priority of machine .
• Planned maintenance provides for a system of feed back of information for necessary
• changes in the original plan.
d. Break down maintenance:
• It allows a machine or any other facility to run till it actually breaks down to be then put
back into commissioning.
• It leads to disruption of production plans

• It increases over time payment and involves prolonged down time due to non-availability
of manpower and spare parts.
4.7 Functions of Maintanance Management

a. Inspections or check ups:
Inspection can be done with the helps of committee people called “crew". These crews
carryout both the internal and external inspection. External inspection means to watch vibration,
noise, heat, smoke etc. whereas internal inspection means to inspect the internal parts, such as
gears, bushes, bearings, tolerances etc. The frequency of inspection should be decided very
carefully, as too less inspection may cause break down, as defects could not be traced out and
rectified immediately; while too much inspection means wastage of machine time and labour
productivity.
b. Lubricants: Mechanical components like gears, bearings, bushes and other friction surfaces
etc. give good performance for long periods, when they are systematically lubricated. Systematic
lubrication means the application of right type of lubricant at the right time, at right place and in
right quantity.
c.Planning and scheduling:
Every preventive maintenance work should be pre-planned in detail on the basis of the
analysis done on the past records. Scheduling may be daily, weekly, monthly, half yearly or
yearly attention.
d. Records and analysis:
Good record keeping is essential for good maintenance, as it helps in for casting
maintenance. Operation manual, maintenance instruction manual, history cards and history
registers, spare procurement register, inspection register, etc. are maintained for this purposes.
e. Training of maintenance:
For the success of maintenance a sound training is essential for the maintenance
personnel. Hence the technicians and supervisors are trained to carry out maintenance, inspection
and repairs in a systematic way.
f. Storage of spare parts:
Some times machine remains idle for want of spare parts for considerable time and thus
it, affects considerable loss of production. Hence it is essential to keep the spare parts so as to
avoid loss of production.

4.8 Evaluation of Maintenance Performance
a. Effectiveness:
It is the ratio between the down time (hrs) to the Available time (hrs). Down time is the
total time of stoppage of machine for scheduled and unscheduled maintenance work.
Available time = working days X hrs / day X No. of machines
b. Frequency of break down
It is the ratio of No.of breakdown to the Available machine hrs.
c. Effectiveness of Planning
It is the ratio of labour hrs on scheduled maintenance to the total labour hrs spent on
maintenance
4.9 Advantages of Maintanance Management

• Reduction in production down time
• Lesser over time pay for maintenance personnel
• Lesser number of stand by equipments are needed
• Less expenditure on repairs
• Greater safety for employees
Machine Management
No live machinery and equipment can keep the advance of technology without
continuous renewal and transformation of its production facilities. If any existing equipment fails
to meet this challenge, it must be displaced, regardless of its age and condition.
4.10 Causes of Machine Management or Need for Machine Management
a. Due to natural wear and tear:
Machinery and equipment wear out, corrode and decay as a result of age and usage. Often this
increases maintenance cost and decreases the quality and reliability of performance.
b. Change in service requirements:
The existing equipment may be inadequate to meet the service requirements such as quality,
productivity etc.
c. Technological obsolescence:

Improved alternatives available in the market due to technological progress made by equipment
manufacturers may warrant the replacement on the ground of economy.
Points to be remembered, when the organisations go for Machine replacement
• Rate of production, capacity, maintanance cost, operating cost, space requirment of new
machine in relation to old machine.
• Accuracy and quality of production by new machine
• Skill requirment of operator
• Service life of the new machine
• Facilities and extra attachments provided to new machine
• Economic viability of new machine.
Functions of Machine Management
Refer Maintanance Management functions.
CHAPTER –V
SALES FORECASTING TECHNIQUES, QUALITY CONTROL AND
NETWORK PLANNING
2.1. Introduction:
Business action taken today must be based on yesterday’s plan and tomorrow’s
expectations. Plans for future can’t be made with out forecasting events and their relationships.
And not only may forecasting be made for a given type of activity independently, the forecast of
the one type of event may also be based on other forecasts.
Definition: A sales forecast is an estimate of the amount of sales for a specified period under a
proposed marketing plan.
‘American marketing Association’: An estimate of sales in dollars or typical units for a specified
future period under a proposed marketing plan and under an assumed set of economic and other
forces outside the unit for which the forecast is made.
2.2. Selection of a forecasting method:

 Availability and accuracy of historical data.
 Degree of accuracy expected from production.
 Cost of developing the forecast.
 Length of the prediction period.

 Time available to make analysis.
 Complexity of factors affecting future operations.
2.3. Method of sales forecasting:

I. Forecasting for new product:
• Direct survey method.
• Indirect survey method.
• Comparing with established product.
• Limited Market trial.
1. Direct survey method:
In this method, the customers are approached and are asked what they intended to buy,
generally sampling technique is adopted for survey purposes as it is impossible to approach all
individual customers. Generally in the survey various aspects related to political changes, style
changes, economic changes, habit etc are incorporated.
2. Indirect survey method:
In this method, the attitude and behavior of the customer is predicted through sales man,
retailers, whole salers etc.
3. Comparing with established products:
At times the product under consideration is comparable to an existing product, so sales
figures can be compared.
4. Limited market trail:
To predict the acceptance of the product by potential customers, sometimes limited selling
technique is also adopted.
II. Forecasting for established product:

• Related information method
• Market research
• Jury of executive opinion method
• Sales force composite method.
• Projection method

1. Related information method:
In this method, a predictor which varies directly with the sales volume is found, for
example, the actual birth rates might be used to predict the sales of baby foods or well
established predictions of births might be used.
2. Market research:
Through critical analysis of the marketing forces, changing patterns of socio – economic
pressures, political changes etc. we can predict the future demands of the products.
3. Jury of executive opinion method:
In this method opinions of experts are invited about the future sales. It does not involve
huge volume of statistical data, or complicated calculations, it is simple and fast. However, it
suffers the defect that neither it is scientific nor we can trace the inaccuracies in the forecasts.
4. Sales force composite method:

Views of salesmen, traders, middlemen are grouped, and estimates are made accordingly.
It reflects market trend. However, it is not scientific and suffers the defects of prejudices and
biased opinions.
5. Projection method:
O = T*C*S*I
O – Observed value T – Trend
C – Cyclic variation S – Seasonal variations I – Irregular variations.
Long term sales forecasting:

When sales forecasts are made more than five years then they are known as long term
sales forecasts, which sales forecasts made from one year to five years, are known as

intermediate sales forecasts. It is essential when a firm is planning construction of costly
facilities, office buildings, store buildings etc.
I. Free hand method or method of inspection:
Drawing a free hand curve keeping as far as possible the troughs and peaks of the original
graph, at equal distance. This method is simple and easy to apply and may be superior to other
methods when performed by a person who possesses mature judgment and through knowledge of
a firms operation and of general business conditions.
Limitations:
 Different persons may draw different trend lines from the same data.
 The trend can be affected by the personal prejudice.
II. Selected point method: The common practice is to select the values of the years which are
considered to be most representative or normal. This is not correct method of approximation
selection of determining points is open to objection and difference of opinion.
III. Semi average method: According to this method, the original data are divided into two
equal parts and the values of each part are then summed up and averaged. The average of each
part is centered in the period of the time of the part from which it has been calculated and then
plotted on the graph. A straight line is then drawn to pass through the plotted points. This line
constituted the semi average trend line. When the numbers of years are added, the middle year is
not considered while dividing the data into two equal parts and obtaining average.
Limitations:
 It assumes a straight line relationship between plotted points.
 It is associated with the defects of arithmetic averages.
IV. Moving average method: A moving average forecast is obtained by summing the data point
over a desired number of past periods increasing the smoothening effect but decreases the
sensitivity of forecasts to more recent data.
Advantages:
 Given a very good picture of the general long term movement in data, if the data contains
uniform cycle.

 It is simpler as compared with the method of least square
 It is a flexible method of trend measurement.
 This method is not affected by the personal prejudice and bias of the computer.
Disadvantages:
 It is sensitive to freakish movement in the data.
 It does not result in a mathematical equation which may be used for forecasting.
 There is a tendency to cut the corners which results in the less of data at the ends.
 Incase of the sharp turn in the original graph, the moving average trends to reduce the
curvature.
V. Method of least squares: The method of least square is a mathematical device which places
a line through a series plotted points in such a way that squares of deviations of the actual points
above and below the trend line is at minimum. This method gives us what is known as the line of
best fit. In other words, if sum up the positive and negative deviations on either side of the line of
best fit the sum will be zero. This being so sum of the squares of these deviations obtained will
be the least as compared to the sums of the squares of the deviations obtained by using other
lines. It is on account of this fact that this method is known as the method of least squares.
Advantages:
• Free personal prejudice and bias.
• Trend values can be obtained for all the years.
• This method gives the most satisfactory results.
Disadvantages:
• It lacks flexibility of trend fitting. If one more year is added the entire calculations have
to be done again.
Method:
A straight line trend fitted by the method of least squares will be of the general form.
Y=a+bx
Where Y is the dependent variable, such as sales Dollars, sales volume etc.
a and b are constants.
a=ε Y/N
b = ε xy / ε x2

VI. Logarithmic straight line or Exponential Method of sales trend measurement:
Sometimes a smooth curve provides a better fit for data than does a staright line. A
smooth curve implies a uniform percentage growth or decay instead of the constant increment
exemplified by a straight line. The equation for a curve may take the exponential form
y = a bx
Which indicates that y changes at the constant rate b each period.
We can determine the values for a and b by the least square method if we convert the exponential
equation to its logarithmic form.
log y = log a + x log b
Then
log a = ε (log y) / N
log b = ε (x log y) / ε x2
QUALITY CONTROL
Introduction:
No production process is good enough to produce all items of product exactly alike.
Some variability is unavoidable. The amount of basic variability will depend on production
process such as machine, materials and operations. We all think of quality, we all insist on
quality. When we go to the market to buy any thing we all look for good quality at a reasonable
price. Let us say, if a factory produces, says the cars, which give a lot of trouble and do not run
properly then the car is not fit for use in the real sense or you say the quality of the car is poor.
So, whether it is a product or a service it should be fit for use or should be of good quality.
Generally, Inspection is the process of sorting the good from bad one. But quality control and
inspection are different.
Quality: Product quality is the degree to which the product conforms to the design or
specifications. To closer this conformance, the higher the degree of quality. Conversely, if the
product deviates from design specification, then the output is of poor quality.
Juran defines: The product quality is the degree to which the product satisfies the wants of a
customer.

Quality control: It is defined as the prevention of defects at the very source relies on effective
feed back system and corrective action procedure.
The purpose of quality control system is to measure and regulate the degree to which a product
or service meets the specified standards of the customer.
The systematic control of variables which affect the quality performance of the produced item,
these variables which result from the application of men, machine and operations only when
these are regulated to these extent so that their input does not significantly deviate unnecessarily
from the excellent of the manufacturing process as reflected in the quality of the finished
product, can the control of quality be said to exist.
The European organization for quality control defines that ‘quality of a product is the degree to
which it meets the requirement of the customer’.
Objectives:
• Establish acceptable standards of performance of the product.
• Establish the manufacturing process and suggest, if any changes or modifications are
necessary to maintain the quality or improve it.
• Indicative of any variations in raw material that form the input as well as in production
process.
• Provide assurances to the customer about the proper performance of the product in the
form of guarantees and warrantees.
Benefits of quality control:

• Cost of inspection is tremendously reduced. Since it is not necessary to inspect every
item or take large samples.
• It minimizes the waste of time and the waste of materials.
• It gives a feeling of good will and service.
• Low cost of production due to reduction in the quantities of scrap and rejected parts.
• Since quality control minimizes the rejection, there will be a fewer returns and order
cancellations.
• The finished product more uniform in quality, more reliable in service and its
performance is predictable.

Quality control and statistical quality control:
Quality control is nothing but checking the items produced with a present standard of quality.
Statistical quality control: Statistical method based upon mathematical theory it probability to
control quality with the object of establishing quality standards and maintaining them in most
economical manner.
Statistical aids in quality control:
• Frequency distribution
• Probability theory
• Control charts and special Methods
Frequency distribution:
It is a fundamental concept in quality control. It provides a basis for improvement of
quality. Frequency distribution may be graphically represented in the form of a histogram. If the
class width is low, it becomes frequency curve. This frequency curve is expected to conform to
certain well known patterns. For most measurement data, the normal pattern will apply. It is bell
shaped. i.e. it has a single peak with symmetric flanks. If the histogram drawn departs
significantly from the normal pattern, there is a reason to suspect that the process has not been
stable.
The frequency distribution thus aids in
• Knowing whether process in control.
• The actual aimed – at – value of the process.
• The extent of natural variation of the process.
• Process capability.
Probability theory:
Probability is defined as the proportion of the number of occurrences of a certain event to
the total number of trails occurring in a given situation.
Mathematically: If there are ‘n’ occurrences of a particular event (m) out of a number of ‘N’
trials, then the probability(Pm) of that event occurring is: Pm = n/N.
Control charts:
An important tool in statistical quality control is control chart. The control chart tells
when to leave a process alone and thus prevents unnecessary frequent adjustments that tend to
increase the variability of the process rather than decrease it. The quality of the product should
be thought in terms of functions of specification, production and inspection. Control chart is one

of the tools which may influence decisions related to functions of specifications, production and
inspection.
CHAPTER – VI
PRINCIPLES OF ACCOUNTING
Introduction
World’s most of the work is done through – organization (A group of people who joined
together to achieve one or more objectives). Organizations are classified into two categories i.e.
profit and non-profit organizations. All private sector companies are profit oriented. The
companies like government organizations, social service activities, and Red Cross societies are
non-profit organizations. An organization uses resources – material, machine, man building etc.
and these resources need to be financed i.e. this to be paid. To work effectively, the people in an
organization need information about the amounts of these resources, the means of financing
them. Parties outside the organization need the same information to make judgments about the
organization. Therefore, accounting is a system that provides such information.
Definition
The process of identifying, measuring, communicating economic information to permit
informed judgments and decisions by the user of the information.

Accounting is a ‘language of business’. The task of learning accounting, very similar to
the task of learning a new language, is complicated by the fact that many words used in the same
thing as the identical words mean in every day, non accounting usage.
Type of information
Information is classified into two categories i.e. non quantitative and quantitative
information. Non quantitative information is not related to numerical values. It concerns with
visual aid, television, radio, news paper etc. quantitative information is related to numerical
values. This quantitative information is further classified into accounting and non accounting
information.
Accounting information is classified into
1. Operating information
2. Financial accounting information
3. Management accounting information
1. Operating information
It provides the basic data for both management accounting and financial accounting. It
has large quantity of information. A considerable amount of operating information is required to
conduct an organization’s day –to-day activities. Ex: salary, deductions, pay roll records, stock
room details – aware of spare parts, amount owned by the company’s customers need to be
known.
2. Financial accounting information
It is intended both for managers and for the use of parties external to the organization,
including shareholders, bankers and other creditors, government agencies etc. If the company
wants to borrow money, the bank or other lender wants information that will show that the
company is sound and that there is a high probability that the loan will be repaid.
3. Management accounting information
The accounting information specially prepared to aid manager is called management
accounting information. It consists of Planning, Implementation and Control.
Accounting principles

Accounting principles are built on a foundation of a few basic concepts. These concepts are
1. Money measurement, 2. Entity, 3.Going concern, 4. Cost, 5. Dual aspect,
6. Accounting period, 7. Conservatism, 8. Realization, 9. Matching, 10. Consistency,
11.Materiality
Money measurement
• In financial accounting, a record is made only of information that can be expressed in
monetary terms.
• Money provides a common denominator by means of which heterogeneous fact about an
entity can be expressed as numbers that can be added and subtracted.
• Money is expressed in terms of its value at the time an event is recorded in the accounts.
It has some drawbacks
Accounting does not show the health of owner, sales manager not in speaking term with
production manager, a strike begins and a competitor has placed a better product on the market.
Accounting entity / business entity
• A business entity is an organization of persons to accomplish an economic goal.
• This concept starts with the fact that the business unit is a separate entity with its
own identity.
• It is defined as these undertakings under the control of a single management. This
may include a sole – proprietor, a partnership firm, a company or a non-profit making
organization.
This concept is applied to all forms of business organization for the following reasons
• To ensure the proper use of funds provided by the owners.
• To hold title to property in the name of firm
• To enter into transactions with outsiders in the name of firm.
• It gives solution to the problem of separating out the business transaction from the
personal transactions of the owner.
Going – Concern
• It is not possible to determine in advance the life span of a business unit and hence an
assumption must be made.

• This concept assumes that the business unit will continue operating under the same
economic conditions and in the same general environment. But it does not assume that
the business unit will be profitable as long as exists.
• This concept relates to the future which is uncertain. Therefore many factors can be used
to determine whether a business unit is a going concern or not. They conclude the
following
Liquidity - the business unit must have sufficient liquid assets to pay its current liabilities
at present or in the future.
Capital structure - the going concern unit must have a sound capital structure (funds for
long term) to overcome any short and long term difficulties.
Market - a business enterprise cannot continue as a going concern without a continuing
demand for the goods it deals in and or the services it supplies.
Management ability - a business enterprise should be managed efficiently and
effectively to produce a competitive product and to see that the objectives of the enterprise are
achieved. (Plans, procedure and practices etc)
Accounting period
• It is the period for which a business unit prepares its accounts. This concept arises from
going concern concept.
• This concept requires that the life span of the business unit should be segregated into
equal parts. Therefore, this concept is the consistency of accounting periods.
• According to this concept, a profit and loss account and a balance sheet shold be prepared
at regular intervals to ascertain profit and loss and financial position of the business unit.
Longest accounting period is one year.
• The main difficulty is that what revenues and what expenses are to be taken into
consideration for one accounting period.
Duality
• This concept expresses the relationship that exists among assets, liabilities and the capital
in the form of an accounting equation which is expressed as
Assets – liabilities = capital

• This concept is built around the fact that every time something is given, some one else
receives it. The accounting equation is the basis for double entry systems of accounting.
• It says that, there is always a two-sided effect.
Historical cost
This concept is an idea about the basis on which assets should be valued in the amount
that way paid for them. This concept provides uniformity in accounting records under conditions
of stable prices.
Conservatism
Managers are human beings. Like most humans, they would like to give a favorable
report on how well the entity for which they are responsible has performed. The idea behind
these principles is that recognition of increases in an entity’s retained earnings (i.e. revenues)
requires better evidence than does recognition of decreases (i.e. expenses). This is the
conservatism concept. The conservatism concept has two aspects
• Recognize revenues (i.e. increases in retained earnings) only when they are reasonably
certain.
• Recognize expenses (i.e. decreases in retained earnings) as soon as they are reasonably
possible.
There are obvious problems in deciding what is meant by “reasonably certain” and “reasonably
possible” in various situations, and accounting principles give guidance for many specific
problems. For example, the principle that revenue is recognized in the period in which goods are
delivered applies to most sales transactions, because this is the earliest period in which it is
reasonably certain that revenue has been earned.
Revenue recognition / realization

• According to this concept, revenue should be brought into account only when it is
actually realized.
• In determining profits, credit sales are also taken into account. However, the customers
may not pay their dues or may return the goods, so that actual income may be less than
estimated.

• In principle, revenue can be recognized at the point of sale or when cash is collected or at
any intermediate point.
Matching
• This concept requires proper allocation of costs into different accounting period so that
relevant incomes and expenses are matched.
• According to this concept, the expenses for an accounting period are matched against
related incomes, rather than comparing cash received and cash payments.
• Therefore, it is necessary that the accounting system periodically should match the
revenues earned against expenses incurred.
Materiality
• Materiality means that the time and money should not be wasted. Transaction is recorded
on the basis of its relative importance and its relevance
• Accountants do not record these transactions which are insignificant and recording these
would create problems than solutions. Instead, it is written as expenses when it was
prepared.
Consistency
• It is the conformity from period to period with unchanging policies and procedures.
Accounting principles are not static or unchanging.
• Though consistency is important for good accounting practice, this does not mean that
changes cannot be made in a business unit’s accounts.

CHAPTER – VII
COST ANALYSIS
4.1. Introduction
The word 'cost' has different meanings in different situations. The accounting cost
concept or the historical cost concept is not useful for any business decision making. The
decision making concepts of cost aim at projecting what will happen in the alternative course of
action. Business decisions plans for the future and require choices among different plans. A
managerial economist must have a proper understanding of the different cost concepts which are
essential for clear business thinking.
4.2. Various concepts of costs / Elements of costs:

a. Outlay cost:

This cost is also called as absolute or actual cost. Outlay costs are those expenses which
are actually incurred by the firm. These are the payments made for labour, material, plant,
building, machine, traveling etc. These are those expense items appearing in the books of
account.
b. Opportunity cost:
Opportunity costs means the cost of forgone or opportunity. It is useful for taking both
short run and long run decisions. It arises when there is an alternative. It does not appear on the
financial accounts.
c. Explicit and implicit costs:
These are the actual or business costs that appear in the books of accounts. It is the
payment made by the employer for those factors of production hired by him from outside. It
includes wages and salary paid, payment for raw materials, interest on borrowed capital funds,
taxes paid to the government etc. It is also called as Out of pocket cost.
Implicit costs are the costs of the factor units that are owned by the employer himself. It
does not appear in the books of accounts. The two normal implicit costs are depreciation and
return on capital contributed by share holders. Implicit costs are not considered for finding out
the loss or gain of the business. But it helps a lot in the business decisions. It is also called as
book cost.
d. Historical costs:
It is the original cost of an asset. It shows the cost of an asset as the original price paid for
the asset acquired in the past. For example, during the period of substantial change in the price
level, historical valuation gives a poor projection of the future cost intended for managerial
decision.
e. Short run and long run costs:
Short run is a period during which the physical capacity of the firm remains fixed. An
increase in output during this period is possible only by using the existing physical capacity more
intensively. It is also called as variable costs. Short run cost concept helps the manager to take
decisions when a firm has to decide whether to produce more or to produce less with existing
plant.
Long run is a period during which it is possible to change the firms' physical capacity. All
inputs are variable in the long run which vary with outputs.

f. Incremental and sunk costs:
It is the additional cost due to change in the level or nature of business activity. The
change may be caused by adding a new product, new machinery, replacing a machine by a better
one etc.
Sunk costs are those which are not altered by any change. They are the costs incurred in
the past. This cost is the result of past decision and can't be changed by future decisions.
g. Business and full costs:
A firm's business cost means the total money expenses recorded in the books of account.
This includes the depreciation provided on plant and equipment. Full cost of a firm includes not
only the business costs but also opportunity cost of firm and
normal profits.
h. Total cost:
It is the total cash payments made for the inputs needed for production. It is the sum of
the fixed and variable costs.
i. Average cost:
It is total cost per unit of output.
j. Marginal cost:
Marginal cost is the additional cost incurred to produce an additional unit of output or it
is the cost of the marginal unit produced.
4.3. Break -even analysis:
The basic objective of a firm is to maximize profit. Up to certain level of production the
firm's total revenue may not be sufficient to cover its total cost of production. The firm is
interested to know the profit and loss areas of its operation. It is an analytical technique used to
study the relationship between total costs, total revenues and total profits.
It helps to determine the probable profit at any level of production. A business is said to
break even when its total revenue (TR) is equal to its total costs. Break even is the point of no
profit, no loss. When TR exceeds TC the firm is making profit and when TC exceeds TR the firm
is incurring loss. It is the output level at which AR (Average Revenue) = AC (Average cost). The
break -even point can be calculated either analytically or graphically.
4.3.1. Analytical method:

Total Fixed Expenses
1. Break – even points in units = Selling Price per unit - Marg inal cos t per unit
2. Break -even point in sales value

Total Fixed Expenses
= Selling Price per unit - Marg inal cos t per unit × selling price per unit
Or
Total fixed cos t TFC × S
= Total sales −Total var iable cos t ×Total sales = S −TVC
3. Contribution:
It is the difference between selling price and marginal cost.
Contribution = Selling Price -Marginal cost = Fixed Cost + Profit.
contributi on
4. Profit -Volume ratio (P/V ratio) = ×100
sales
fixed cos t
5. Break -even sales = p / v ratio
FC + Desired Profit
6. To earn desired amount of profit in units =
P / V Ratio
4.3.2 Graphical Method

The break even analysis can be represented by graphically also. The break even chart is
the graphic representation shows the varying costs along with varying sales revenue. It indicates
the break even point and also the estimated profit or loss at different levels of production. A
break even chart can be drawn with the data as per the following table.
Output Total revenue Average TFC TVC TC AC

(Price per unit: 5 Br) revenue
0 0 0 50 0 50 0
10 50 5 50 40 90 9
20 100 5 50 80 130 6.5
30 150 5 50 120 170 5.7
40 200 5 50 160 210 5.2
50 250 5 50 200 250 5
60 300 5 50 240 290 4.8
70 350 5 50 280 330 4.7
Y
TR

TC,
TR θ TC
θ - Angle made by Total cost and

variable cost
TFC
X (Unit of Output)
An out put level of 50 units TR is equal to TC; it is the break even point. It can be drawn
in the chart. The OX axis shows the units of output and OY axis shows the costs and revenue.
Fixed cost (TFC) line is parallel to OX axis. This shows that the fixed cost is the same Br .50
even when the production is zero unit or ten units or hundred units. The variable cost line is
drawn over the fixed cost line starting from Br.50 in the OY axis. As this is drawn over the fixed
cost line this is also called total cost line (TC).
TR line starts from zero and goes upwards showing the increase in revenue with the
increase in sales. The firm breaks even at the point where the TC line and the TR line intersects
i.e. the point B. At this point the firm is not making any profit or loss. Any sales above the point
B will bring in profit and sales below this point will result only in loss.
The line TR intersects the TC line at point B where the out put is equal to 50 units. At an
out put of 50 units the firms total cost equals its total revenue. Below the break even point, total
cost exceeds total revenue representing a loss area. Beyond 50 untis total revenue exceeds total
cost, representing a profit area.
Margin of safety:
The margin of safety is the difference between the actual sales and the sales at the break
even point.
Angle of incidence:

This is the angle formed by the sales line and the total cost line at the break even point.
The angle of incidence shows the rate at which profit is being earned. Large angle of incidence
indicates a high rate of profit, a small angle indicates a low rate of profit. A large angle with a
high margin of safety indicates a very favourable position.
4.4. Limitations:
• The line TC and TR will be straight lines and will intersect only at one point dividing the
whole output into two parts -profitable and non -profitable -is not the reality, at certain
stages of production TC may exceed TR thus resulting in more than one break even point.
• It can be applied to only single product system.
• It is not useful where historical data cannot be used for estimating future cost and price.
4.5. Uses of break -even analysis:

• It helps the forecasting of cost and profit.
• It helps to fix the sales volume required to cover a given return on capital employed.
• It helps to detennine cost and revenue at various levels of output.
• Infonnation provided by the break even chart can be understood by management more
• easily.
• It helps to study the impact of increase or decrease in fixed and variable costs on profits.
4.6. Areas of cost control:

4.6.1. Material
• Discount must be availed fonn the suppliers.
• Fright charges to be incurred must also be taken into consideration.
• Possibility of making certain parts in stead of buying at higher prices.
• Possibility of using cheaper substitutes for raw materials must be explored.
• The rates of wastages in storing, handling and processing must be reduced.
• The efforts of the research and development wing may bring out suggestion to reduce
• material cost.
• Effective inventory control help to reduce the cost of carrying inventories ranging from
20 to 25% of the cost of materials.
4.6.2. Labour

• It can be reduced by increasing the labour efficiency, by increasing labour productivity
and or by shifting to automation wherever possible.
• Work study may help to reduce idle time and over time.
• Improved production design layout and working conditions.
4.6.3. Overheads
• Proper selection of equipment, its effective utilization and proper maintenance will help
to reduce factory over head expenses.
• Effective utilization of space, reduction power costs, lighting costs etc. also help to
reduce factory cost.
• Waste and spoilage can be reduced by giving proper training to the staff and by keeping
constant check on it.
• Selling costs can be reduced by improved supervision and training of sales man.

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CHAPTER – I

BASIC MANAGEMENT CONCEPTS AND INDUSTRIAL ORGANIZATION

1.2. Meaning of management:

1 Prepared by R.Kamatchi, Asst. Prof. / Mech.

1.4. Significance of management:

1.5. Levels of management:

2 Prepared by R.Kamatchi, Asst. Prof. / Mech.

b. Middle – level management:

c. First level management (operating level management):

1.6. Basic management Functions:

3 Prepared by R.Kamatchi, Asst. Prof. / Mech.

4 Prepared by R.Kamatchi, Asst. Prof. / Mech.

1.7. Organizing defined:

1.7.1. The benefits of organizing:

5 Prepared by R.Kamatchi, Asst. Prof. / Mech.

1.7.2. Formal and Informal Organisation:

1.7.3. Forms of Departmentalisation:

6 Prepared by R.Kamatchi, Asst. Prof. / Mech.

7 Prepared by R.Kamatchi, Asst. Prof. / Mech.

1.8. Working environment:

8 Prepared by R.Kamatchi, Asst. Prof. / Mech.

9 Prepared by R.Kamatchi, Asst. Prof. / Mech.

10 Prepared by R.Kamatchi, Asst. Prof. / Mech.

2.4. Scope of personnel management:

11 Prepared by R.Kamatchi, Asst. Prof. / Mech.

2.6. Selection of personnel:

12 Prepared by R.Kamatchi, Asst. Prof. / Mech.

13 Prepared by R.Kamatchi, Asst. Prof. / Mech.

VII step: Physical health

2.8. Need for training:

14 Prepared by R.Kamatchi, Asst. Prof. / Mech.

2.9. Steps in training programme:

2.10. Methods of training:

15 Prepared by R.Kamatchi, Asst. Prof. / Mech.

2.12. Job -Evaluation:

16 Prepared by R.Kamatchi, Asst. Prof. / Mech.

2.14. Principles of job evaluation programme:

2.15. Methods of job evaluation:

17 Prepared by R.Kamatchi, Asst. Prof. / Mech.

2.16. Advantages of job evaluation:

2.17. Performance appraisal

18 Prepared by R.Kamatchi, Asst. Prof. / Mech.

19 Prepared by R.Kamatchi, Asst. Prof. / Mech.

20 Prepared by R.Kamatchi, Asst. Prof. / Mech.

3.2. Motivation process:

21 Prepared by R.Kamatchi, Asst. Prof. / Mech.

3.4. Motivation theories:

22 Prepared by R.Kamatchi, Asst. Prof. / Mech.

23 Prepared by R.Kamatchi, Asst. Prof. / Mech.

Growth and Advancement:

3.6. Universal theory:

24 Prepared by R.Kamatchi, Asst. Prof. / Mech.

25 Prepared by R.Kamatchi, Asst. Prof. / Mech.

3.8. Types of leadership:

26 Prepared by R.Kamatchi, Asst. Prof. / Mech.

27 Prepared by R.Kamatchi, Asst. Prof. / Mech.

3.10.3. Laissez-faire or free -reign leadership:

3.11. Theories of leadership:

28 Prepared by R.Kamatchi, Asst. Prof. / Mech.

29 Prepared by R.Kamatchi, Asst. Prof. / Mech.

4.2 Objectives of Material Management

30 Prepared by R.Kamatchi, Asst. Prof. / Mech.

31 Prepared by R.Kamatchi, Asst. Prof. / Mech.