Essential Elements in Business Forecasting: Research Redfield identifies four essential elements for business forecasting. Against the backdrop of information collected, an estimate of future business prospects is made by the management.
The trends are projected by the management after a detailed and close scrutiny of the information. Comparing the actual with the estimated results is a continuous process. The forecast provides the measurement apparatus and helps in tracking down reasons for major differences resulting in unanticipated gains or losses. The last element is refining the forecast process. As time progresses, managers should be able to adjust the forecasting techniques to meet the changing needs of business.
Techniques of Forecasting According to L. Silk, three commonly used business forecasting techniques are 1 Deterministic Techniques; 2 Symptomatic Techniques; and 3 Systematic Techniques. Principles and Practices of Management ADL 01 Deterministic Techniques assume that there is a close causal connection between present and future. These techniques are used to forecast certain elements such as capital spending, consumer expenditure and general business conditions.
The principle techniques used here are latest information, knowledge of programs or limits, spotting the beginning of a lengthy process and diagnosing peoples expectation. Based on the significant changes in the business activity over a period of time and based on the information collected, future trends are predicted. Systematic approach in forecasting are derived from the economic theory. The cause and effect relations among different economic factors which hold relevance for past, present and future are ascertained and forecast are then constructed.
Generally, there are two approaches used in this type of forecasting. They are intuitive approach in which the analysts uses his judgment and experience in summarizing the information collected and draws inferences in constructing various forecasts.
The econometric approach of forecast uses econometric models to tackle a forecasting problem. These models express the relationship among a number of variables associated with the changes in sales volume in mathematical terms through computers, a predictive model is developed from a theory or set of theories that will determine general business activity.
It is more effective as a method to predict future as it is fully supported by quantitative techniques. Economic forecasting methods The basic aim of economic forecasting is to predict business fluctuations. There are numerous indicators employed to measure economic activity in a nation.
Gross national product GNP is the most important indicator. GNP is the value of goods and services produced in the country in a year. It is used to forecast industry growth, population trends, national income, etc, where changes take place slowly. Extrapolation ignores factors like sudden changes in consumer tastes and preferences, technical innovations, change in political climate, etc.
Lead and lag method: In this method, the historic behaviour of various indicators is studied. The purpose is to find out whether the indicating factor has regularly moved in advance of the general business trend, or has moved simultaneously with it or has lagged behind it. Econometrics: This is a mathematical approach in which the main variables are joined together in a series of equation. Sales forecasting methods Sales forecast is a projection of the expected sales.
It provides information such as how many goods an industry should sell, to whom, at which place, and by what methods etc. Grassroots method: In this method a survey of the sales force is undertaken, their own assessment of sales effected and pooled together by the company are put to analysis on the basis of which the sales forecasts are developed later on.
The estimates of company sales force regarding the future prospect of company products are taken into account while constructing the sales forecast. However, this is not reliable method because quite often consumers contradict themselves, and to remove these limitations if a large sample is selected the benefits may not be commensurate with the costs involved.
Quantitative method: Methods like trend projection, econometric models are used to construct sales forecasts these days. Define planning. What is the necessity of planning in modern organizations? Planning is an all pervasive and continuous function of management- discuss. Elaborate steps in planning process. Planning and forecasting are intertwined-comment your views. What do you mean by forecasting?
Discuss its types. What are the essential features of a good plan? Goals b. Leadership c. Governance d. Sales 2. Sales b. Market growth c. GDP d. National income 3. Strategic plans c. Procedural planning d. TQM b. PCMM c. Controlling d. A ……………. Procedure b. Standard c. Rule d. Regulation 6. Top down approach b. Horizontal planning c. Bottom up approach d. Judgmental planning 7. Planning is the …………. Supportive b. Complementary c. Primary d. Secondary 8. Interpolation c. Judgmental d.
Technical 9. Systematic approach in forecasting are derived from the a. Economic theory b. Inferences c. Mathematical theory d. All the above Planning provides direction to ……………….. Managers and non-mangers b. Managers only c. Top management d.
Operations Answer key 1. Introduction -Organizing ii. Authority and delegation of authority The term organization is used in many different ways. It is generally understood as a form or into a whole consisting of interdependent or coordinated parts or to systematically arranging several elements into a purposeful sequential or spatial or both order or structure or to assemble required resources to attain organizational objectives.
Organizing is the process by which employees, facilities and tasks are related to each other, with a view to achieve goals. It is the way work is allocated among people.
It helps in prescribing formal relationships among people and resources, to achieve goals or desired objectives. It also defines responsibility and authority in the process of allocating tasks among employees. Responsibility is the obligation of a subordinate to perform the duty, as required by the superior and authority is the formal legitimate right of a manger to make decisions, issue orders, and allocate resources to achieve goals.
The process of organizing is discussed in detail later. Organizations can be formally created or they can be informal. Defining Organization as a structure According to the theorists of classical school of thoughts, structure is essential for achieving goals.
It helps managers in understanding the tasks and activities, how it is to be done. The writing of job descriptions, creating various positions and assigning reporting relationships helps managers to materialize the goals planned. The whole structure takes the form of a pyramid. Through this framework individual efforts are coordinated. It is nothing but a chart of relationships. It is both formal and informal network of superior-sub ordinate relationships.
Organization as a structure has the following features: Organizational structure is a network of relationships in which the work is divided into units and departments. This division of work is helping in bringing specialization in various activities of concern. This is helping in defining the jobs properly which clarifies the role of every person. Organization is a means of creating co- ordination among different departments of the enterprise.
It creates clear cut relationships among positions and ensures mutual co- operation among individuals. Harmony of work is brought by higher level managers exercising their authority over interconnected activities of lower level manager. For smooth running of an organization, the co- ordination between authority- responsibilities is very important.
There should be co- ordination between different relationships. Clarity should be made for having an ultimate responsibility attached to every authority. Organization structure is helpful in defining the jobs positions. The roles to be performed by different managers are clarified. Specialization is achieved through division of work. This all leads to efficient and effective administration. Where the roles and activities to be performed are clear and every person gets independence in his working, this provides enough space to a manager to develop his talents and flourish his knowledge.
A manager gets ready for taking independent decisions which can be a road or path to adoption of new techniques of production. This scope for bringing new changes into the running of an enterprise is possible only through a set of organizational structure. Process of Organizing The following are the steps in organizing function.
Identifying the work We organize to achieve objectives. It is therefore necessary to understand the total work identified to reach the goal. The work must be systematically classified to each person in the organization through a separate and distinctive task.
This enables managers to concentrate on important tasks. It would also avoid overlapping of activities. Hence efforts would be channelized in the right way. Generally closely related activities are group together. Departments and divisions are created based on this for manager to gain direction. Establishing the relationships To secure clear compliance of organizational directives, formal relationships are specified. It helps individuals to know what must be done, how must be done, to whom matters must be referred and how particular jobs relate to each other.
Delegating authority Authority is the key to the management job. Without authority a, manager ceases to be a manager for he cannot get his wishes carried out. Creating an organization by dividing the work into departments and positions will not be sufficient to get the results.
Authority is the capacity of a superior to make decision affecting the behavior of subordinates. It is the right to take action and utilize organizational resources. Providing coordinating and controlling To ensure a harmonious and smooth working of an organisation with a number of its divisions, department or its units, the activities in all the areas are required to be pulled together, unified and blended so as to give them a commonness and purpose.
Principles of organizing A principle is a basic statement that provides understanding and guidance to practice. The important principles of organization according to Koontz can be summarized as follows: 1. The Purpose of organizing: The process of organization should facilitate the achievement of objectives in efficient way. Principle of unity of objectives An organization structure is effective if it as a whole, and every part of it, make possible accomplishment of individuals in contributing toward the attainment of enterprise objectives.
Principle of organizational efficiency An organization structure is efficient if it is structured to make possible accomplishment of enterprise objectives by people with minimum costs. The cause of Organizing: The span is the major cause to execute through, by mangers. Span of management Principle There is a limit at each managerial position on the number of persons an individual can effectively manage. But this number is not a fixed number and it will vary in accordance with underlying variables of the situation from routine to simple task.
Principles in Developing the Structure of Organization: Every manager must delegate some task or duties to subordinates, since management means getting work done through others. Organization becomes operational through delegation only. Delegation is a process by which a manager assigns a portion of his total work load to others.
The scalar Principle The more clear the line of authority from the ultimate authority for management in an enterprise to every subordinate position, the more effective will be decision making and organization communication at various levels in the organization. Principle of delegation Authority is a tool for managing to contribute to enterprise objectives.
Hence authority delegated to an individual manager should be adequate to assure his ability to accomplish results expected of him. Principle of unity of command The more completely an individual has a reporting relationship to a single superior, the less the problem of conflict in instructions and the greater the feeling of personal responsibility. Authority level Principle Maintenance of authority delegation requires that decisions within the authority competence of an individual manager be made by him and not be referred upward in the organization.
Principle of division of work It reflects the classification of the tasks and activities required for achievement of objectives and assists their coordination through creating a system of interrelated roles; and the more these roles are designed to fit the capabilities and motivations of people available to fill them, the more effective and efficient an organization structure will be.
Principle of functional definition The more a position or a department has clear definition of results expected, activities to be undertaken, organization authority delegated, and authority and informational relationships with other positions, the more adequately individual responsible can contribute toward accomplishing enterprise objectives.
Principles in the Process of organizing: If the following principles are applied the process of organizing becomes easy: a. Principle of flexibility The task of managers is to provide for attaining objectives in the face of changing environments. The more provisions are made for building organization flexibility, the more adequately organization structure can fulfill its purpose.
Principle of leadership facilitation The more an organization structure an authority delegation within it make possible for various managers to design and maintain an environment for performance, the more it will facilitate leadership abilities of managers. Departmentation Introduction Departmentation is a means of dividing a large and complex organization into smaller, flexible administrative units. It is the organization-wide division of work into various manageable units or departments.
It refers to horizontal differentiation in an organization. Departmentation is essential because of the following reasons: Departmentation permits an organization to take advantage of specialization.
Departmentation enables each person to know the particular part which he is expected to play in the total activities of the company. Departmentation facilitates communication, coordination and control contributing to the overall organizational success. Departmentation provides an adequate platform around which the loyalties of organizational members may be built. It enables a manager to locate the sources of information, skills and competence to take certain vital managerial decisions.
Bases of Departmentation There are several key ways in which an organization may decide to divide the work. The functional structure is the most widely used form because of its simple logic and common sense appeal. Here activities are grouped together by common function. Each functional unit has a dissimilar set of duties and responsibilities. Features of Functional Structure: a. Specialization by function. Sub-goal emphasis. Growth is always pyramidal. Line staff division. Functional relationship.
Centralization and decentralization. Span of control. The product structure is organized according to organizational output. The structure is divided into several fairly autonomous units. Divisionalisation prevents neglect of certain product and overemphasis on some. Accountability is made clear. If a product fails the department and the manger is held responsible. We often notice the doctors, nurses and railway employee changing shifts on the basis of day, evening and night.
When companies distribute products on the basis of territory, this way of divisioning helps organization to co ordinate activities to all regions from the headquarters. It helps in exploiting local advantages. It also reduces transport costs too.
It is a permanent organization designed to achieve specific results by using teams of specialists from different functional areas in the organization. The entire superstructure is both product and function-based.
According to this principle, a manager should be able to handle what number of employees under him should be decided. This decision can be taken by choosing either from a wide or narrow span. There are two types of span of control:- a. Wide span of control- It is one in which a manager can supervise and control effectively a large group of persons at one time. Narrow span of control- According to this span, the work and authority is divided amongst many subordinates and a manager doesn't supervises and control a very big group of people under him.
The manager according to a narrow span supervises a selected number of employees at one time. Authority Introduction Authority is the key to the management job. What is Authority? It has the following features: Legitimate right: Authority enables a position holder to regulate the behavior of his subordinates in a legitimate manner. Right to decide: Authority allows the positions holder to decide things. He has the right to enforce decision also.
According to Fayol, authority is the right to give orders and the power to exact obedience. Relationship between two persons: Authority draws curtains between two individuals. It speaks about the relationship between two persons: one superior and the other subordinate.
Positional: Authority is positional. It rests in the chair. With the change in position, the authority of the individual also changes.
Result-oriented: Authority is linked with the objectives of an organization. It is used to achieve the organizational goals. Factors Affecting Limits of authority of a Manager External Factors Government rules and regulations Collective bargaining and agreements Dealer, supplier and customer agreements Social beliefs, codes, habits and customs Internal Factors Corporate by-laws and organizational chart Budgets Policies, rules and procedures.
Positions descriptions Types of Authority Traditional authority: Traditional authority is based on the sacredness of the social order. Charismatic authority: This authority rests on the magical, mystical quality of individual leaders. Principles and Practices of Management ADL 01 Technical authority: This is based on the technical competence and expertise of an individual.
Legal authority: This authority originates in the formal structure of the organization. Superior issue orders and subordinates obey them because this is the way the organization is established. External authority: This authority comes from source outside the organization.
Informal authority: Formal authority is granted to people in the organization deliberately to meet certain goals. Line authority: In line authority, a superior exercises direct command over a subordinate. Staff authority: Staff authority is advisory in nature. A staff officer has the authority of ideas only. Functional authority: Functional authority is a limited form of line authority given to functional experts over certain specialized activities under the normal supervision of managers belonging to other departments.
Official authority: As against personal authority which is derived from personal qualities such as intelligence, experience, expertise, etc. Process of Delegation of Authority Delegation process involves four distinct stages. The process of delegation moves through these stages. The following figure shows the stages in the process of delegation of authority. Principles and Practices of Management ADL 01 Four Stages in the Delegation of Authority A Assignment of duties to subordinates Before delegating, the delegator has to decide precisely the duties which are to be delegated to the subordinate or a group of subordinates.
The authority is delegated accordingly and the subordinate is told what is expected from him. The usual practice is to list the functions to be performed by the subordinate. If necessary, targets to be achieved by the subordinate are also spelt out. Subordinates may be assigned tasks either in terms of activities or results.
The manager delegator must communicate clearly his expectations. Competent and responsible employees may be given general guidelines about what needs to be accomplished. Their less competent and responsible counter-parts need more specific guidelines. In brief, in the first stage of delegation process, duties are assigned to the subordinate.
B Transfer of authority to perform the duty In the second stage of delegation process, the authority is granted by the delegator to his subordinate delegate. Authority must be delegated strictly to perform the assigned duty. In brief, the transfer of authority should be adequate considering the duties assigned to the subordinate.
If the delegates refuse, the delegator has to make fresh plan of delegation or may consider some other subordinate who is capable and is willing to accept the assignment. On the other hand, the process of delegation will move to the fourth and the last stage, if the first delegates accept the assignment of work accompanying the authority. When subordinate accepts a task and the authority is given, an obligation is created.
He has to perform the assigned task by using the authority granted to him. He is held answerable to a superior for the satisfactory performance of that work assigned. Nature of Delegation Every manager must delegate some task or duties to subordinates, since management means getting work done through others. Some of the important features of delegation may be listed thus: Two-sided relationship: Delegation is a two-sided relationship.
It is a demanding function; it requires sacrifices from both the assignor and the assignee. Principles and Practices of Management ADL 01 Act of trust: Delegation is an act of trust, an expression of confidence that the individual to whom duties are assigned will discharge them in manner which satisfies the intention of the assignor.
Freedom to think and act: Delegation is a state of mind. Delegation means freedom of action sufficient to get the task accomplished. Dependency relationship: Unfortunately, delegation creates a relationship of dependency between superior and the subordinate.
A challenging task: Delegation of authority is a courageous act. The fear of being ultimately responsible compels many managers to indulge in under-delegation. The obligation of a subordinate to perform the assigned duty as required by the superior. It opens a new chapter in superior subordinate relationships. Principles of Delegation Principle of delegation by results: This principle suggests that work and authority should be delegated to the lowest organizational level commensurate with the ability of subordinates to perform.
Principles and Practices of Management ADL 01 Principle of functional definition: Effective coordination demands a clear definition, preferably in writing, of authority and responsibility for all decision and work. Clear definition of results expected, activities to be undertaken organization authority delegated and relationships created are vital. Scalar principle: The scalar principle states that authority and responsibility should flow in clear and unbroken line from top to the bottom of the organization.
Authority level principle: This principle demands that once a subordinate is assigned some work and is given authority to do it, he should be allowed to use his judgment and decision-making capacities in finding an appropriate way to show performance. Principle of unity of command: The unity of command principle states that for any given activity an employee should be made accountable to only one superior. Principle of parity of authority and responsibility: Effective delegation requires that the authority to utilize resources be equal to the responsibility assigned to the subordinate.
If a person is going to be responsible for an activity, the person should be given the necessary authority to carry out that activity. Principle of absoluteness of responsibility: Delegator is not a sage. Delegation, in no way implies abdication. The process of delegation does not relieve the superior of any of his authority, responsibility and accountability.
Advantages of Delegation Superior related advantages Subordinate related advantages Improves behavioral climate Advantages to organization How to Delegate Effectively? A person to whom work is being delegated wants to know why he is being asked to it. Define responsibility and authority: It is always better to put it in writing the authority, responsibility and relationships of each executive in the organization.
Motivate subordinates: Motivation is the moving force in delegation. The effective manager should be able to motivate the subordinates and get things done. Require completed work: The superior should put the subordinate completely on his own once authority is delegated, and refuse him access until the subordinate has completed the job.
Provide training: The superior should teach subordinates how to improve their job performance. Establish adequate Controls: Establish adequate standards against which the subordinate can measure and evaluate his own performance. Self-control is more effective than a system of external control imposed. Define organizations and discuss how managers perform in organizations?
Describe the principles of organizations. Explain authority and delegation of authority in detail. What are various sources of authority? Elaborately discuss the various bases of Departmentation. The official structures and systems consciously designed by organizational members to accomplish organizational goals a. Formal organization b. Informal organization c. Classical organization d. All the above 2. The term organization structure describes the ………….
Framework a. Social b. Organizational c. Functional d. Regional 3. One of the following is not a process of organizing…………… a. Leading b. Division of work c. Establishing the relationships d. Delegating authority 4. Departmentation b.
Grouping d. Specification 5. Team b. Matrix c. Vertical d. Virtual 6. According to …………….. Principle, a manager should be able to handle what number of employees under him should be decided. Authority c. Delegation d. Span 7. Responsibility b. None 8. Delegation process involves ………….. Authority principle c. Scalar chain d. Delegation b. Coordination d.
Organizing Answer key 1. Promotion and transfer Meaning of Staffing Staffing is the process of matching the jobs with the capable people. It is concerned with attracting, developing and evaluating individuals at work. It involves the determination of what personnel are needed in what quantity and of what quality. Among the various factors of production which are used in an organization, human factor is the most important. Broadly speaking, staffing is concerned with the management of human beings in an organization.
For an organization to achieve its goal, it must perform the important function of staffing in its business processes. Nature of Staffing Function 1. Staffing is an important managerial function- Staffing function is the most important managerial act along with planning, organizing, directing and controlling.
The operations of these four functions depend upon the manpower which is available through staffing function. Staffing is a pervasive activity- As staffing function is carried out by all mangers and in all types of concerns where business activities are carried out. Staffing is a continuous activity- This is because staffing function continues throughout the life of an organization due to the transfers and promotions that take place. The basis of staffing function is efficient management of personnels- Human resources can be efficiently managed by a system or proper procedure, that is, recruitment, selection, placement, training and development, providing remuneration, etc.
Staffing helps in placing right men at the right job. It can be done effectively through proper recruitment procedures and then finally selecting the most suitable candidate as per the job requirements. Staffing is performed by all managers depending upon the nature of business, size of the company, qualifications and skills of managers, etc. In small companies, the top management generally performs this function. In medium and small scale enterprise, it is performed especially by the personnel department of that concern.
Elements of staffing process The following elements are involved in staffing process: Human Resource Planning or Manpower Planning Job Analysis Recruitment and selection Training and Development Performance Appraisals These topics will be covered in detail in the following section.
Human Resource Planning or Manpower Planning The first step in the staffing process is to estimate the requirement of employees. Essentially this is the process of getting the right number of qualified people into the right job at the right time.
It is a forward looking function. It is only after this that HRM department can begin with the process of recruitment and selection. If organizations overdo the size of their workforce it will carry surplus or underutilized staff. Sharing is caring More. Vishva shah 9 Sep Reply. Ziaullah 15 Feb Reply.
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