Management Code 17 Notes Unit 1 (UGC NET Paper 2)

Extra Points

i. George C. Homans has suggested a model for comparative study of formal and informal organisations. The model is based on three types of concepts – activities, interactions and sentiments. Homans was influenced by Pareto.

ii. R.C. Davis covers the area in three functions:
(a) Planning
(b) Organizing
(c) Controlling

iii. According to Henri Fayol Management has five-fold functions:
(a) Forecasting and planning
(b) Organizing
(c) Commanding (directing)
(d) Coordinating
(e) Controlling

iv. George R. Terry has described four-fold functions of management – planning, organizing, actuating and controlling. He has combined the two functions, commanding and coordinating, into one and calls it actuating.

v. Brech E.F.L. has described four functions of management : (a) Planning (b)Coordinating (c) Controlling (d) motivating.

vi. Koontz and O’Donnel think that coordination is not a separate function but it is the essence of management.

vii. Henri Fayol, L.A. Allen, Strong, G.R. Terry and some others are of the opinion that there is no difference between management and administration and that these two terms are used interchangeably.

viii. The terminology conflict between administration and management was raised by Oilver Sheldon in 1924.

ix. According to Newman, Koontz and O’Donnel, Dale and McFarland, there is no difference between these two terms and administration and management are synonymous.

x. Sir Robert Owen (1771-1858). Sir Robert Owen was a pioneer in the field of human resource management. He believed that returns from investment in human resources would be far superior to investment in machinery and equipment. His ideas and philosophy could be considered as a prelude to the development of the behavioural approach to management. He introduced new ideas of human relations, for example, shorter working hours, housing facilities, education of children, provision of canteen, rest or pause, training of workers and hygiene. He also suggested that proper treatment of workers pays dividends and is an essential part of every manager’s job.

xi. Charles Babbage (1792-1871). Charles Babbage was a professor of mathematics at Cambridge University from 1828 to 1839. He developed the idea of profit-sharing and participative decisionmaking. He was a pioneer of operations research and advocated the use of quantitative methods and industrial engineering techniques in improving manufacturing.

xii. Frank Gilbreth (1868-1924) and Lillian Gilbreth (1878-1972). The concept of scientific management was further carried on by Frank and Lillian Gilbreth. They contributed specially to motion study. Lillian helped define scientific management by arguing that scientific studies of management must focus on both analysis and synthesis. With analysis, a task is broken down into its essential parts or elements. With synthesis, the task is reconstituted to include only those elements necessary for efficient work. They identified 18 elemental motions known as ‘Therbligs’ and ‘chrono cycle graphs’ for motion study. These motions are search, find, select, grasp, hold, transport load, position, assemble, use, disassemble, inspect, pre-position, release load, transport empty, rest, unavoidable delay, avoidable delay and plan. Lillian’s work. The Psychology of Management, was one of the earliest works concerning the human factor in organization.

xiii. Henri L. Gantt (1861-1919). Henri L. Gantt worked out the ‘Task and Bonus Plan’. In 1913, he made his best contribution charting the production schedules using a visual-diagrammatic tool which became popularly known as the ‘Gantt Chart’. The Gantt Chart is a forerunnerof today’s Critical Path Method (CPM) and Programme Evaluation and Review Technique (PERT).

xiv. Max Weber (1864-1920). The German sociologist Max Weber developed a theory of bureaucratic management that stressed the need for hierarchy governed by clearly defined regulations and line of authority. Weber observed three types of power in organization: traditional, charismatic and rational-legal or bureaucratic. He considered the ideal organization to be a bureaucracy whose activities and objectives are rationally thought out and whose division of labour is explicitly spelled out.

xv. Mary Parker Follett (1868-1933). Modem management theory owes a lot to a nearly forgotten woman writer. Mar/ Parker Follett. Follett built the basic framework of the classical school. In addition. she introduced many new elements in the area of the human relation and organization’s structure. She defined management as ‘The art of getting things done through people*.

xvi. She was a great believer in the power of group and strongly against the artificial distinction be it managers or subordinates. Follett’s ‘holistic’ model of control took into account not just individuals and groups, but efforts other than environmental factors, such as politics, economics and biology. She advocated for a human relations emphasis equal to a mechanical or operational emphasis in management.

xvii. Her work contrasted with the ‘scientific management’ of Taylor and evolved by Frank and Lillian Gilbreth. which stressed time and motion studies.

xviii. Follett emphasized the interactions of management and workers. She looked at management and leadership holistically, presaging modem systems approaches. She identified a leader as ‘someone who sees the whole rather than the particular’. She also integrated the idea of organizational conflict into management theory and is referred to as ‘Mother of Conflict Resolution’.

xix. Experts identify five basic forms of power:
(a) Power to reward
(b) Power to punish
(c) Legitimate power
(d) Power expertise
(e) Referent power

The first three powers emanate from official and social status and the last from personal qualities.

xx. Hicks’ Consumer Surplus
• Hicks’ concept of consumer surplus is superior to Marshall’s concept in that it is not based on the restrictive assumptions of cardinal utility and a constant marginal utility of money as in Marshall’s analysis.
• Consumer surplus = Amount that the consumer is willing to pay for Ox units of good x – Amount that the consumer pays for Ox units of good x.
• The vertical distance between the two indifference curves is the consumer surplus.

xxi. Deflation is a period characterised by abnormal falling of the prices of securities and representative staple commodities, contraction of bank loans and decrease in bank clearings, bank deposits, volume of currency, production, and employment. It is the opposite of inflation. The state of deflation can also be seen with the downward phase of the business cycle, when every fall in income on expenditure depresses the output, employment and price level to progressively lower levels. Deflation is present when the volume of purchasing power or supply of money runs behind the output of goods and services and there is a tendency for the prices to fall. This results in a rise in the value of money.

xxii. Prof. Machlup describes two basic model sequences of consumer-price inflation as follows:
(a) Demand-pull Inflation: Automatic expansions of demand (government spending, consumer spending) are followed by responsive (competitive) price and wage increases.
(b) Cost-push Inflation: Aggressive increases of wage rates and/ or material prices are followed by induced and/or supportive (compensatory) demand expansions.
Cost-push models are relatively simple as long as they contain only a single impulse – either wage or price increases – with all sequential changes in the nature of adjustments.
(b-1) ‘Pure’ Wage-push Inflation: Aggressive increases of wage rate are followed by induced and/or supportive demand expansions and by responsive increases of material prices and other wage rates.
(b-2) ‘Pure’ Price-push Inflation: Aggressive increases of material prices are followed by induced and/or supportive demand expansions and by responsive increases of other material prices and wage rate.

xxiii. Prof. Machlup has mentioned three kinds of demand expansion: autonomous, induced and supportive and three kinds of cost increase: responsive, defensive and aggressive.

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