Sir Mubashir Waseem - FOM Notes

Fundamentals of Management
Mubashir Wasim (MSc.

Economics-Banking &
Finance, MBA
Marketing, MS
Business Management,
MS-IT)
Lecture#1
Lecture Contents Today
 Introduction to teacher
 Introduction to course
 Paper pattern
 Why students fail
 Teaching methodology
Lecture Outcome: Find way to study and qualify this

course
Instructor Name: Mubashir Wasim
Ph# 0333-4273174
My qualifications
S# Degree Specialization A1M-
1- MSc. Economics Money, Banking & Finance
2- MBA Marketing
3- MS Business Management
4- MCS Software Engineering
5- MS-IT Information System

Main field of teaching is profession education
and programs like
 CMA
 CA
 CIMA
 ACCA
Mubashir Wasim
3- Strategic
Level
2- Managerial Level
1- Operational Level
OPERATIONAL LEVEL
Level-1
O1- Fundamentals of Financial Accounting
Computer Based
O2- Business Economics Six Months
Examination
O3- Business Communication & Report Writing
Level-2
O4- Fundamentals of Management
O5- Business Mathematics & Statistical Inference Computer Based

Six Months
Examination
O6- Commercial Laws

a) Introduction to Management
b) Management Relationship
c) Global Business Environment
04 Fundamentals of Management-
a) Introduction to Management
1. Management Definition and Functions

• The Concepts of Power, Bureaucracy, Authority,
• Leadership and Delegation of Power
• Authority and Responsibility
• Delegation
• What is Management?
• Human Relations School & Theories of Management
04 Fundamentals of Management-a) Introduction to Management
2. Basics of Management Process

• Management By Objectives (Drucker)
• Theories of Leadership
04 Fundamentals of Management-a) Introduction to Management
3. Key concepts in Management

• Role of the Manager
• Power Authority, Responsibility and Delegation
• Management and Leadership
• Organizational Flexibility
• Discipline
• Grievance
• Termination of Contract
• Equal Opportunities
• The Practical Implications of Legislation
• Diversity
B) Management of Relationship
4. Control
• Theories of Control
• Internal Control Systems
• Performance Management-Controlling the individual
• Controlling Health and Safety
04 Fundamentals of Management-B) Management of Relationship
5. Leadership and Motivation

• Leading, Managing and Motivating Teams
• Mentoring
• Business Ethics and CSR
• Corporate Governance
6. Culture
• What is Culture?
• Organization Culture
• Culture and Structure
• Culture and Strategy
• Cross-Cultural Leadership
7. The financial function; conflict

• The Role of the Finance Function
• The Nature of Conflict
• Causes of Conflict
• Managing Conflict
8. Negotiation and communication
• Negotiation
• Communication
C) Global Business Environment
9. Social, political and economic context
• The Global Business Environment
• International Environment Influences
• Economic Context
• Emerging Economies
04 Fundamentals of Management-C) Global Business Environment
10. Type of organization

• Different Types of Organization
• Culture and the Global Organization
04 Fundamentals of Management-C) Global Business Environment
11. Governance and Regulation

• Government Intervention in Business
• Government and the Macroeconomic Environment Market Regulation
• Corporate Governance
• Corporate Social Responsibility
What Examiner Want?
Read
Understand
Question
Requirement
Carefully
Don’t be Panic
Interviews of the Student who are Failed
• We should do some more practice- test not attended?
• Not Utilize Full Time in Examination.
• No seriously work on assignments
• Paper was out of course
• I generally come late/ join class late in the class in introduction of
topic is missed.
• Absent due to cousin marriages
• I have not attended the lecture completely-Miss few topics- Mobil?
TEACHING AND LEARNING
METHODOLOGY
Lectures:
• Multi-media based Lectures are basically interactive
sessions in which teacher uses different techniques to
deliver knowledge about subject
• Some re-cap of previous lecture
• Outline of the current lecture
• Discussion on theoretical concepts
• Class activity
• Concluding remarks
Way of Teaching A22M-
Concept
Practice
Teaching Methodology
Organization Structure
Organizational Structure
Organizations Structure is the framework for allocating tasks, delegating
authority, coordinating activity and channeling communication between
individual and groups in the organization.
There are three key components on which organization structure is based on
a) Organization structure designates formal reporting relationships,
including the number of level in the hierarchy and the span of control of
managers and supervisors.
b) Organization structure identifies the grouping together of individuals
into departments and of departments into the total organization.
c) Organization structure includes the design of systems to ensure
effective communication, coordination, and integration of effort across
departments.
Q1: Which of the following statements about an organization chart is
not true?
A. An organization chart provides a summary of the structure of a
business.
B. An organization chart can improve internal communications
within a business.
C. An organization chart can improve employees’ understanding of
their role in a business.
D. An organization chart cannot indicate line authority within a
business.
Q1- Rationale: Line authority can easily be shown on the

organisation chart.
Entrepreneurial
Structure
Manager – Owner
Early days of Small Business
Advantages
1. Fast Decision Making
2. More Responsive to Market
3. Goal Congruence
4. Good Control
5. Close Bond to Workforce
Disadvantages
1. Lack of Career Structure
2. Capabilities of Manager /
Owner
3. Difficulties in Growth &
Diversified
Q2: The entrepreneurial structure is typical of which of the
following?
A. Large and successful companies dominated by a powerful
individual
B. Small companies in their early days
C. Risk taking companies of all sizes
D. Fast growing companies
Q2: B
Entrepreneurial structure is built around the owner manager
and is typical of small companies in the early stages of their
development. The owner manager will often exercise direct
control over all staff.
Course Teaching Steps- Sequence
Course Course Exam.

Completion Revision Techniques
THE MORE YOU SWEAT IN
TRAINING, THE LESS YOU BLEED IN
THE FIGHT
Remember that
“QUITTERS NEVER WIN, AND

WINNERS NEVER QUIT”

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#2
 Management
 Successful Management of Business
(CASES)
 Power
 Sources of Power
 Authority Lecture Outcome:
 Understanding of meanings of management
 Importance of management as art
 Why we obey others?
A) Introduction to Management
• Delegation
• Human Relations Management
Management
Getting the things done through other people
Management
Management is the process of dealing with or controlling resources and people to
achieve a specific purpose.
Resources
Management Specific Purpose
People
Management is getting people to work harmoniously together by making efficient

use of resources to achieve objectives
In simple words,
• Management can be described as the art of getting things done through people in
organizations.
• Give an organizations a sense of purpose and direction.
• Managers do more than just keeping the organisation running its routine tasks.
• Management can be a very complex and creative part of the duties of all the
people working in an organisation.
• They can transform organizations and create new ways of producing and
distributing goods and services, in turn changing how every business in the world
works.
There are numerous examples from where some great entrepreneurs created
exemplary organisations through their management endeavors; for example:
 Sam Walton built Wal-Mart from scratch into the largest retailer in the world.
 Steve introduce Apple Computer introduced the world’s first mass marketed, easy-
to-use personal computer.
Test your understanding#1
Q1: Management is about planning, controlling, putting appropriate organization

structures in place (organising), as well as communicating and coordinating.
Which of the following is/are meanly dealt and controlled
A. People
B. Resources
C. Logistics
D. A & B
Option D: which is A &B

IBM
• In the 1970s IBM was one of the most successful and profitable
companies in the world. It made most of its profits by selling large,
mainframe computers to corporations and governments. Success
continued into the early 1980s, but soon IBM reported the largest
corporate loss ever made.
• Development of personal
computers in the early 1980s
• Network technology that allowed ☼
Mainframe
PCs to be interconnected for work Computer
and data sharing.
• Simpler manufacturing. PCs are
very modular, susceptible to mass
production techniques, and
factories could easily be
established in low-cost
economies.
• IBM did not correctly predict the
revolutionary effect that PCs .
• Why were these developments
not predicted more accurately?
Perhaps when a company is very
dominant,
• IBM has now changed from
being predominantly a
hardware manufacturer to
being a provider of
consultancy services.
• Few years back, it sold its
laptop business to Lenovo, a
company based in China.
• Mark-ups are better in
consultancy, the provision of
skilled services are more
difficult for others to copy and
consultancy services are
almost immune from threats
from cheap overseas suppliers.
Kodak
• Kodak is a very famous brand
and the company produced a
range of high-quality
photographic films and
papers. It possessed very
advanced colour chemistry
technology and know-how,
and was a world leader in
this business sector.
• Of course, managers at Kodak
were fully aware that digital
photography presented a threat
and predicted that demand for
film would fall at 10% per year
(in fact, it fell at 30% per year).
Kodak looked around for
products and services that could
replace the falling revenue from
films. They produced some
good digital cameras, but Kodak
had had a reputation for
cheaper cameras, and their
high-quality cameras found it
very difficult to compete with
elite names such as Nikon,
Canon, Olympus.
• It is unlikely that Kodak will ever be the
success it once was. It based its success on
provision of a range of excellent products,
but if those products become obsolete, it
does not matter how good they were,
sales will stop.
• It's also not clear if managers at Kodak did

anything wrong in their approach to
planning. Sometimes even the most
successful companies are subject to
inevitable decline.
• According to the basic understanding of

Strategy, what are reason you find out
which causes failure of the ‘Kadak,?
Power
It is the potential ability of a person or group to influence another person or group. It is
the ability to get things done the way one wants them to be done
Power is the capacity to exert influence to

make someone act according to your own
preferences
Power & Type/Sources of Power
Sources or Types of Power

John French and Bertram Raven identifies following resources or bases of power:
Reward power –
This power is on the bases that a person having the ability to reward another person for
carrying out orders or meeting other requirement.
A person has power over another because he can give rewards to him such as promotions,
recommendations or answers to questions.
Raises, promotions, desirable assignments, training opportunities, and simple
compliments – these are all examples of rewards controlled by people "in power." If others
expect that you'll reward them for doing what you want, there's a high probability that
they'll do it.
Coercive power –
The power on the base that a person’s ability to punish another for not meeting
requirements, is the negative side of the reward power.
Enables a person to give punishments to others: for example, to dismiss, suspend, or make
them carry out unpleasant tasks.
Threats and punishment are common coercive tools. You use coercive power when you
imply or threaten that someone will be fired, demoted or denied privileges. While your
position may allow you to do this, though, it doesn't mean that you have the will or the
justification to do so.
Expert power –
A power on the base of perception or belief that one person has some relevant expertise or
special knowledge that other do not.
When you have knowledge and skills that enable you to understand a situation, suggest
solutions, use solid judgment, and generally outperform others, people will listen to you,
trust you, and respect what you say.
based upon doing what the expert says since they are the expert. You will have a measure of
expert power when you join CMA as an associate member – people will do as you suggest
with the month end accounts because you've studied and have qualified. Note – expert
power only extends to the expert's field of expertise.
Referent Power –
Referent power comes from one person liking and respecting another, and identifying with
her in some way. Celebrities (Superstar or Personality) have referent power, which is why
they can influence everything from what people buy to which politician they elect. In a
workplace, a person with referent power often makes everyone feel good, so he tends to
have a lot of influence.
Legitimate Power
The power derived from being in a position of authority within the organizational
structure – according to the position they hold within the organization.
A president, prime minister or monarch has legitimate power. So does a CEO, a religious
minister, or a fire chief. Electoral mandates, social hierarchies, cultural norms, and
organizational structure all provide the basis for legitimate power.
This type of power, however, can be unpredictable and unstable. If you lose the title or
position, your legitimate power can instantly disappear, because people were influenced
by the position you held rather than by you.
Informational Power
Having control over information that others need or want puts you in a powerful
position. Having access to confidential financial reports, being aware of who's due to be
laid off, and knowing where your team is going for its annual “away day” are all
examples of informational power.

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#3
 Review of the last lecture

 Sources of Power Questions
 Authority
 Authority vs. Responsibility
 Types of Power Max Weber
 Delegation of Authority
Management
Management is the process of dealing with or controlling resources and people to
achieve a specific purpose.
Resources
Management Specific Purpose
People
Management is getting people to work harmoniously together by making efficient

use of resources to achieve objectives
There are numerous examples from where some great entrepreneurs created
exemplary organisations through their management endeavors; for example:
 Sam Walton built Wal-Mart from scratch into the largest retailer in the world.
 Steve introduce Apple Computer introduced the world’s first mass marketed, easy-
to-use personal computer.

A. People
B. Resources
C. Logistics
D. A & B

A. People
B. Resources
C. Logistics
D. A & B
Option D: which is A &B

Sources / Bases of Power
John French and Bertram Raven identifies five resources or bases of power.
• Reward power – is bases on one person having the ability to reward another person for
carrying out orders or meeting other requirement.
• Coercive power – is bases on one person’s ability to punish another for not meeting
requirements, is the negative side of the reward power.
• Expert power – is bases on the perception or belief that one person has some relevant
expertise or special knowledge that other do not.
John French and Bertram Raven identifies five resources or bases of power.
Referent power – is bases on one person’s desire to identify with or imitate other.
• Legitimate power – the power derived from being in a position of authority within the
organizational structure – according to the position they hold within the organization.
• Informational power – the power derived from being in a position to hold crucial
information.
If a manager justifies an instruction to a subordinate by saying

‘because I am qualified accountant’ the manager is relying on
which of the following bases of power?
A Referent
B Reward
C Legitimate
D Expert

‘because I am qualified accountant’ the manager is relying on
which of the following bases of power?
A Referent
B Reward
C Legitimate
D Expert
D Expert
‘because I am your superior’ the manager is relying on which
of the following bases of power?
A Referent
B Reward
C Legitimate
D Expert
‘because I am your superior’ the manager is relying on which
of the following bases of power?
A Referent
B Reward
C Legitimate
D Expert
C Legitimate
A team which is a mix of HR experts and Senior Accountants is

appoint to evaluate your job before increment in your salary
for the next year.
Which of the following bases of power hold by this team?
A Referent
B Reward
C Legitimate
D Expert
A team which is a mix of HR experts and Senior Accountants is

appoint to evaluate your job before increment in your salary
for the next year.
Which of the following bases of power hold by this team?
A Referent
B Reward
C Legitimate
D Expert
B Reward
Topic Today
A) Introduction to Management
• Delegation
• Human Relations Management
Authority
Authority is the right to get things done: to ask someone else to do something and expect
it to be done. Authority is thus another word of position or legitimate power
The right to exercise powers such as hiring and firing or buying and selling on behalf of
the organization; the right that an individual has to require certain actions of others; the
right to do or act.
'the right to give orders and power exact obedience’. Henry

Fayol
How authority is being defined in the words of Henry Fayol?
A. Get the things done
B. Right to perform an act
C. the right to give orders and exact obedience
D. 'the obligation to request and power conditional obedience
How authority is being defined in the words of Henry Fayol?
A. Get the things done
B. Right to perform an act
C. the right to give orders and power to exact obedience
D. 'the obligation to request and power conditional obedience
C. the right to give orders and power to exact

obedience
Authority Versus Responsibility
Authority is the power or right to give Responsibility is the obligation a
orders, make decisions, and enforce person has to fulfill a task, which
obedience. he/she has been given
'The right to give orders and power Responsibility is the state or fact of
exact obedience’. Henry Fayol having a duty to deal with
something, or of having control over
someone.
Authority vs. Responsibility
Authority Responsibility
Flow Downward Upward
Requirement Ability to give order / Ability to obey order /
Instruction knowledge experience or
potential
Task related with Delegation of authority Feeling/ Assumption of
responsibility
Result of Formal position in Superior-Subordinate
authority relationship
Authority without Will result into an irresponsible behaviour
Responsibility
Responsibility without Places a subordinate in an impossible and stressful position
Authority
Authority with Works
responsibility
Test your Understanding#7
Abid is working as Senior Accountant but facing a situation arise due the organization is
doing something new or in a different way, its existing rule and procedures may be out of
date or unable to cope with the new development.
He is feeling about his post
A. It is responsibility without authority
B. It is authority without responsibility
C. His joiner are inefficient
D. His coworker are very cooperative
Abid is working as Senior Accountant but facing a situation arise due to the organization
is doing something new or in a different way, its existing rule and procedures may be out
of date or unable to cope with the new development.
He is feeling about his post
B. It is authority without responsibility
C. His joiner are inefficient
D. His coworker are very cooperative

If a responsibility is given without authority, it result for an official

a) Stress which may leads to depression
b) Embarrassing situation
c) Failed to complete the task
d) All of above
If a responsibility is given without authority, it result for an official

a) Stress which may leads to depression
b) Embarrassing situation
c) Failed to complete the task
d) All of above
d) All of the above

Bureaucracy : Max Weber
Max Weber’s Three Types of Authority
Max Weber identified three types of legitimate authorities which are explained below:
(i) Traditional authority is based on custom, gender, birth order and the like. Traditional
authority is associated with the hereditary power of royal families and chieftains
(Tribal Chief) and the ‘head of the household’, with leadership passing from father to
son when the father dies.
(ii) Rational-legal authority refers to the use of established laws and rules that are
applied uniformly. A superior is obeyed because of the position occupied within the
organisation’s hierarchy. This authority depends on employees’ acceptance of the
organisations’s rules.
(iii) Charismatic authority is evident when subordinates suspend their own judgment
and comply voluntarily with a leader because of special personal qualities or abilities
they perceive in that individual. Charismatic leaders often lead social, political and
religious movement e.g. Quaid–e-Azam Mohammad Ali Jinnah.
Be a good listener
Management- meaning
What is difference between

management and organization?
Be a good listener
Reward Power: Complete

Wondering of thoughts
Coercive Power: Just started-
What is difference between

reward power and coercive
power?
Be a good listener
Management
What is difference between management and organization?

Delegation of Authority
Delegation of authority is the process where by a superior gives to a subordinate part of
his or her own authority to make decision

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#4
Authority Delegation
 Review of the last lecture (Authority)

 Delegation of Authority
 Why we need to delegate?
 Why managers are reluctant to
delegate
Authority
Authority is the right to get things done: to ask someone else to do something and expect
it to be done. Authority is thus another word of position or legitimate power
The right to exercise powers such as hiring and firing or buying and selling on behalf of
the organization; the right that an individual has to require certain actions of others; the
right to do or act.
'the right to give orders and power exact obedience’. Henry

Fayol
Test Your Understanding#1
Q1: Authority is defined as the right to give orders, supervise the work of others &
make certain decisions. It is linked with the managerial position to give orders & expect
to follow the orders.
Which one is not the definition of authority?
A. The right to give orders and power exact obedience
B. The power or right to give orders, make decisions, and enforce obedience
C. To ask someone else to do something and expect it to be done.
D. The state or fact of having a duty to deal with something
D- the state or fact of having a duty to deal with something

Q2: Delegation of Authority means division of authority and powers downwards to the
subordinate.
What are three elements of delegation of authority are
A. Manager subordinate and work
B. Supervisor, subordinate and assignment
C. Responsibility, authority and accountability
D. Organization, willingness and responsibility
C. Responsibility, authority and accountability

The obligation a person
To account for actions
has to fulfill a task, which
and results
he/she has been given
Need for individuals to
explain and justify any
failure to fulfill their
responsibilities to their
Right to give order and superiors in the
power to exact hierarchy
obedience
Reasons of Authority Delegation
Managers and supervisors must delegate some authority for three reasons
1. Physical and mental limitation
There are physical and mental limitation to the work load of any individual or group in
authority
authority
2. Concentration on other aspects of the work
Managers and supervisors are free to concentrate o the aspects of the work such as
planning which only they are competent to do.
authority
2. Concentration on the aspects of the work
Managers and supervisors are free to concentrate o the aspects of the work such as
planning which only they are competent to do.
3. Increase in size and complexity
The increase size and complexity of some organization calls for specialization, both
managerial and technical
How to Delegate
1) Specify performance
The goals and standard expected of the subordinate, keeping in mind his or her level of
expertise.
2) Formally assign tasks
Task should be assign formally to the subordinate, who should formally be agree to do
them
3) Allocate resource and authority
The subordinate to enable him or her to carry out the tasks must be provided required
resources and authority
How to Delegate
4) Back off
Senior should withdraw himself from task and let the subordinate to perform the
delegated task.
5) Maintain contact
Senior should available to give advice and help, if requested and make constructive
criticism
6) Review the progress
Senior review progress and get in touch with the feedback.
Problem of Delegation
a) Low Confidence and Trust:
Low Confidence and trust in the abilities of the junior and staff: Senior thought that junior
either not handle the job well or might not hold the information required.
So Seniors often believe that their subordinates are not able or experienced enough
to perform the tasks.

So Seniors often believe that their subordinates are not able or experienced enough to
perform the tasks.
b) Senior is accountable for the mistakes of junior:
The burden of accountability for the mistakes of subordinate have to bear by the senior in
official environment therefore senior avoid to delegate.

b) Senior is accountable for the mistakes of junior:
The burden of accountability for the mistakes of subordinate have to bear by the senior in
official environment therefore senior avoid to delegate.
c) Desire to stay in touch:
Manager want to in touch with all activities and working of his unit. While delegating
authority he feels that decision will be taken by junior and in this way he may remain
unknown about any crucial issue.
d) Feeling Threatened:
An unwillingness to admit that assistants have developed to the extend that they could
perform some to the supervisor’s duties. And top management may think that the junior is
substitute to the senior.
d) Feeling Threatened:
e) Poor control and communication system:
Manager retain control with them, because they feel that in the poor communication they
cannot properly guide and junior is not enable to get advise.
d) Feeling threatened:
e) Poor control and communication system:
Manager retain control with them, because they feel that in the poor communication they
cannot properly guide and junior is not enable to get advise.
f) Organization culture and reward system:

In performance appraisal system the skills of delegation of authority are not rewarded with
so many points and similarly not given required reward.
g) Lack of Training:
In training and development of managers they are not being given the techniques and
methods to delegate authority and importance of delegation is also neglected.
Q1: Other reasons why managers do not delegate as much as they could include: The
belief that employees cannot do the job as well as the manager can.
What is/are reasons that managers are reluctant to delegate
A. Loss of direct control.

B. Danger of less satisfactory outcome/lower productivity.
C. Fear of losing one's job to a good subordinate
D. All of the above
D. All of the above

Q2: The belief that it takes less time to do the work than it takes to delegate the
responsibility. Lack of trust in employees' motivation and commitment to quality.
There are common problems associated with delegation, namely:
A. Failure to delegate sufficient authority.
B. Managers are supportive to subordinates
C. Need for higher managerial skill.
D. A & C
D. A&C
Q3: Delegation is the process of granting authority to subordinates to perform activities of
superior level. However, in this case, the superior retains accountability. It offers a
solution of coping with the increased workload without causing delays in an organization.
In this scenario which is not the reason of reluctancy to delegate.
a) Boss is secure and comfortable in his old job.
b) Subordinate may become impatient for monetary recognition.
c) Heavy investment on training & development
d) Failure to monitor and counsel
c) Heavy investment on training & development

Summary
There are reasons why managers may be reluctant to delegate.
They include the following:
1. Negative attitude towards workers where managers lack confidence and trust in
their subordinates and therefore find it difficult to delegate work to them.
2. Unwillingness to let others make mistakes as they carry the blame.
3. Perceived threat. Some superiors fear being replaced by brighter and better
subordinates.
4. Lack of time of supervision and control. Managers are advised not to delegate if
they do not have enough time for supervision since they will be blamed for any
negative outcome.
5. Lack of ability by managers to delegate.
6. Lack of subordinates with potential abilities to take up the task.

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#5
Authority Delegation & Motivation
 Review of the last lecture (Authority Delegation)

 Overcoming the Reluctance of Managers to Delegate
 Benefits of Delegation
 Introduction to Motivation
 Maslow Hierarchy of Needs
2. Concentration on the aspects of the work
3. Increase in size and complexity
How to Delegate
1) Specify performance
2) Formally assign tasks
3) Allocate resource and authority
4) Back off
5) Maintain contact
6) Review the progress
Problem of Delegation-Why managers are reluctant to delegate
a) Low Confidence and Trust
b) Senior is accountable for the mistakes of junior
c) Desire to stay in touch
d) Feeling Threatened
e) Poor control and communication system
f) Organization culture and reward system
g) Lack of Training
Overcoming the Reluctance of Managers to Delegate
Encourage managers to delegate therefore involves increasing trust.
1) Training the subordinates:
Train the subordinates is that they are capable of handling delegated authority in a
responsible way. If subordinates are of the right ‘quality’, supervisors will be prepared to
trust them more.
2) Open communication:
Have a system of open communication, in which the supervisor and subordinates freely
interchange ideas and information. If the subordinate is given all the information needed to
do the job, and if the supervisor is aware of what he is doing.
 The supervisor will make better-informed decisions
 The supervisor will not panic he does not know what is going on.
3) Ensure that a system of control is established:
If responsibility and accountability are monitored at all levels of the management hierarchy,
the risks of relinquishing authority and control to subordinates are significantly lessened.
Test Your Understanding
Q1: Aslam is not satisfied with his job at Falcón International. He gets only routine work
and he has to fallow same routine of the job. Falcon International is facing high
employees turn over rate. His supervisor Ms. Munaza appears to be very busy. She comes
early, goes late, takes work home and gets criticized behind her back by her juniors. Now
she says that she is fed up with this job.
There could be a number of causes contributing to this problem.
A. She does not understand the kind of tasks which can be delegated.
B. Her subordinate avoid to do task and unwilling to take responsibility.
C. She don’t understand the way in which delegation of authority can improve the
motivation and job satisfaction
D. A & C
D: A & C
Benefits of Delegation
There are many practical reasons why managers should overcome this reluctance to
delegate:
1) Better Time Management: Allowing the individual with the appropriate skills to make
the decision improves time management.
2) Resolve problem of physical and mental limitation of the senior: Without it the chief
executive would be responsible for everything – individuals have physical and mental
limitations.
3) Career planning & growth: Allows for career planning and development, aids
continuity and cover in absence of boss.
4) Allows for better decision making: those closer to the problem make the decision,
allowing higher-level managers to spend more time on strategic issues.
5) Job become more interesting: Gives people more interesting work, increases job
satisfaction for subordinates; increased motivation encourages better work.
Q2: Your are working as sales representative in pharmaceutical company. Your

supervisor is very cooperative, involve you in planning and give you freedom to plan
your weekly market visit activity with your own style and convenience, he just wants
maximum customer satisfaction.
What will be the ultimate outcome/s of this working style of your supervisor?
A. There are chances that your skills are better used further developing the
strategy,
B. You perhaps coming up with other new ideas.
C. By doing the work yourself, you're failing to make the best use of your time
D. A & B
D. A&B
Q3: Your manager gives you authority to make decisions, or wherever you required
to bring information or any time a decision has to be made.
What will not be the ultimate outcome/s of this working style of management?
A. You will be meaningfully involve your in the project,
B. You will be more developed for higher position
C. Your skills and abilities will improve
D. None of the above

Topic Done
• The Concepts of Power, Bureaucracy, Authority, Ok
• Leadership and Delegation of Power Ok
• Authority and Responsibility Ok
• Delegation Ok
• Human Relations Management ?
2. Basics of Management Process

• Theories of Motivation & Leadership
• Management By Objectives (Drucker)
Defining Motivation
Motivation
The processes that account for an individual’s
intensity, direction, and persistence of effort toward
attaining a goal.
Key Elements
Intensity: how hard a person tries,
Power or passion to attain goal.
Direction: toward beneficial goal,
Selection of way or path to reach or
attain the goal
Persistence: how long a person tries,
Determination to achieve objective.
6–13
Theories of Motivation
Many theories try to explain motivation and why and how people can be
motivated. One classification is between content and process theories.
Theories of
Motivation
Job Security + Bonus +

Content Process
Good Salary Theories Theories
What are the things that motivate People?

a) They assume that human beings have a set
of needs or desired outcomes. Maslow’s
hierarchy theory.
b) All human being are have same wants and
desired, therefore they can be motivated
by full filling some sort of desires
Theories of Motivation They explore the process
through which outcomes
become desirable and are
pursued by individuals.
Theories of How can

Motivation people be
motivated?
Content Process
What are the things that motivate People? a) Each individual is different than other
a) They assume that human beings have a set therefore their desires and goal are
of needs or desired outcomes. Maslow’s different. There are different ways to
hierarchy theory. motivate different individual
b) All human being are have same wants and b) This approach assumes that people are
desired, therefore they can be motivated able to select their goals and choose the
by full filling some sort of desires paths towards them.
Q4: Content theories focus manager's attention of the calculation

process that takes place when people decide whether certain rewards
are worthwhile.
This statement is correct?
A. True
B. False
B- False
Q5: Process theories assume all people are the same; therefore a
standard set of incentives could be applied to meet staff needs.
This statement is correct?
A. True
B. False
B- False

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#5
Motivation
 Review of last lecture (Content & Process Theory)

 Maslow's Hierarchy of Needs
 Theory X Theory Y
Defining Motivation
Motivation
The processes that account for an individual’s
intensity, direction, and persistence of effort toward
attaining a goal.
Key Elements
Intensity: how hard a person tries,
Power or passion to attain goal.
Direction: toward beneficial goal,
Selection of way or path to reach or
attain the goal
Persistence: how long a person tries,
Determination to achieve objective.
6–3
Theories of Motivation
Many theories try to explain motivation and why and how people can be
motivated. One classification is between content and process theories.
Theories of
Motivation

Content Process
What are the things that motivate People?

a) They assume that human beings have a set
of needs or desired outcomes. Maslow’s
hierarchy theory.
b) All human being are have same wants and
desired, therefore they can be motivated
by full filling some sort of desires
Theories of Motivation They explore the process
through which outcomes
become desirable and are
pursued by individuals.
Theories of How can

Motivation people be
motivated?
Content Process
What are the things that motivate People? a) Each individual is different than other
a) They assume that human beings have a set therefore their desires and goal are
of needs or desired outcomes. Maslow’s different. There are different ways to
hierarchy theory. motivate different individual
b) All human being are have same wants and b) This approach assumes that people are
desired, therefore they can be motivated able to select their goals and choose the
by full filling some sort of desires paths towards them.
Hierarchy of Needs Theory (Maslow)
Hierarchy of Needs Theory

There is a hierarchy of five
needs—physiological, safety,
social, esteem, and self-
actualization; as each need is
substantially satisfied, the next
need becomes dominant.
Self-Actualization
The drive to become what one is capable of becoming.
6–6
Hierarchy of Needs Theory:- Abraham Maslow’s
Theory include in the Content theories

assume that human beings have a set of Self-
needs or desired outcomes: motivation is actualization Higher-
about offering them the satisfaction of order
Ego
those needs. Needs
Social
It’s probability safe to say that the most will
known theory of motivation is Abraham
Maslow’s Hierarchy of Needs. He
hypothesized that within every human
being there exists a hierarchy of five needs.
Safety Lower-
These are: order
Physiological
Needs
Physiological Needs:- Includes hunger,

thirst, shelter, medical and other bodily
needs.
Self-
actualization Higher-
Safety:- Includes security and protection Ego order
form physical and emotional harm. Needs
Social
Social:- Includes affection, belongingness,

acceptance, and friendship.
fulfillment.
Safety Lower-
order
Physiological
Needs
Esteem & Ego:- Includes
i) Internal esteem factors such as self-

Self-
respect, autonomy, and achievement ; and actualization Higher-
Ego order
ii) External esteem factors such as status, Needs
recognition and attention. Social
Self-actualization:- The drive to become

what one is capable of becoming; include
growth, achieving and one’s potential, and Safety Lower-
self-. order
Physiological
Needs

growth, achieving and one’s potential, and
Self-
self-. actualization Higher-
Ego order
Needs
Social
Safety Lower-
order
Physiological
Needs

growth, achieving and one’s potential, and
Self-
self-. actualization Higher-
Self actualization is additionally order
Ego
described as: Needs
Social
i) Freedom of enquiry and expression
needs (for social conditions
permitting free speech and
encourage justice, fairness and
honesty
Safety Lower-
ii) Knowledge and understanding order
needs (to gain knowledge of the Physiological
Needs
environment, to explore, learn)
Higher-order Needs:- Needs that are

satisfied internally, social, esteem, and
self-actualization needs.
Lower-order Needs:- Needs that are Self-
actualization Higher-
satisfied externally, physiological and order
safety needs. Ego
Needs
Social
Safety Lower-
order
Physiological
Needs
Q1: According to Maslow’s hierarchy of needs, which of the following is the final
‘need’ to be satisfied?
A Self-realisation
B Self-actualisation
C Esteem needs
D Physiological needs
Q1 : B_Rationale: According to Maslow, self-actualization is the final ‘need’ to be

satisfied. It is the fulfillment of personal potential. Maslow claims that this can rarely
be satisfied.
Q2: Which of the following is not a category in Maslow ’s hierarchy of needs theory?
A. Physiological needs
B. Self actualization
C. Need for power
D. Safety needs
15.2BPP12 : C Rationale: Need for power is actually a category in

another need model by David McClelland. The other options are
Maslow ’s (although freedom of inquiry and expression overarches
the hierarchy itself).
Q3: Which of the following would fit into Maslow's Ego category?
A. Loss of one's home
B. Winning a prize
C. A salary increase
D. An invitation to a party
Q3: B
This would meet the need for recognition and status.
Q4: Match the following statement with the level of Maslow’s hierarchy of needs?
i) A has been offered a large pay rise in recognition of his hard work on several recent
projects.
ii) B has been offered a permanent contract with the business she works for, giving her
access to a good pension scheme.
iii) C has been offered her first ever job with a company. The pay she receives will be
sufficient to cover her essential costs.
A. i)- basic ii)-ego iii)- security
B. i) Self-fulfilment ii) Basic iii) Social
C. i) Ego ii) Security iii) Basic
D. i) Ego ii) Social iii) Security
Q4 : C
Large pay rises are a classic ‘ego’ factor. Pension scheme and permanent contracts
will give the employee security, while covering living (or essential) costs is a basic
need.
Major Limitations to Maslow’s theory:
There are a number of major limitations to Maslow’s theory:
(i) Theory lack empirical backing for the rank-ordering of the needs
(ii) The satisfaction of same need may cause different behaviour in different individuals.
(iii) The theory ignores the concept of deferred gratification
( ‫طویل المدتی مفاد کے لیے وقتی خواہش کو موخر کر دینا‬, ) (it is the ability to resist the
temptation for an immediate reward and wait for a later better reward. )whereby
individuals are prepared to ignore current suffering or dissatisfactions for the promise of
future benefits.
Major Limitations to Maslow’s theory:
(iv) The hierarchy reflects UK and US cultural values which may not transfer to other
contexts.
The model does not consider the probability of culture difference, on the other hand
assume that the same needs apply equally to all human cultures
v) The model fails to consider the probability of individual difference, nonetheless assum
that the same needs in the same order apply equally from one person to another
irrespective of nature
Theory X and Theory Y:- Douglas McGregor
The theory include in the Process Theories which means outcome is desirable, selected
and pursued by individuals. Douglas McGregor proposed two distinct views of human
beings: one basically negative, labeled Theory X, and the other basically positive, labeled
Theory Y.
After viewing the way in which mangers dealt with employees, McGregor concluded that a
manager’s view of the nature of human beings in based on a certain grouping of assumptions and
that he or she tends to mold his or her behavior to grouping assumptions and that he or she tends
to mold his or her behavior toward employees according to these assumptions.
Theory X:-
Under Theory X, the four assumptions held by managers are:
1. Employees inherently dislike work and, whenever possible, will attempt to avoid it.
2. Since employee dislike work, they must be coerced, controlled, or threatened with
punishment to achieve goals.
3. Employees will avoid responsibilities and seek formal direction whenever possible.
4. Most workers place security above all other factors associated with worked and
will display little ambition.
Theory Y:-
In contrast to these negative views about the nature of human beings, McGregor listed
the four positive assumptions that he called theory Y.
1. Employees can view work as being as natural as rest or play.
2. People will exercise self-direction and self-control if they are committed to the
objectives.
3. The average person can learn to accept, even seek, responsibility.
4. The ability to make innovative decisions is widely dispersed throughout the
population and is not necessarily the sole province of those in management position.
McGregor himself held to the belief that theory Y assumptions were more valid than
theory X. Therefore, he proposed such ideas as participative decision making, responsible
and challenging jobs and good group relations as approaches that would maximize an
employee’s job motivation.

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#7
Motivation
 Review of last lecture (Theory X Theory Y)

 Herzberg's Two Factor Theory
Theory X:-
Under Theory X, the four assumptions held by managers are:
1. Employees inherently dislike work and, whenever possible, will attempt to avoid it.
2. Since employee dislike work, they must be coerced, controlled, or threatened with
punishment to achieve goals.
3. Employees will avoid responsibilities and seek formal direction whenever possible.
4. Most workers place security above all other factors associated with worked and
will display little ambition.
Theory Y:-
In contrast to these negative views about the nature of human beings, McGregor listed
the four positive assumptions that he called theory Y.
1. Employees can view work as being as natural as rest or play.
2. People will exercise self-direction and self-control if they are committed to the
objectives.
3. The average person can learn to accept, even seek, responsibility.
4. The ability to make innovative decisions is widely dispersed throughout the
population and is not necessarily the sole province of those in management position.
McGregor himself held to the belief that theory Y assumptions were more valid than
theory X. Therefore, he proposed such ideas as participative decision making, responsible
and challenging jobs and good group relations as approaches that would maximize an
employee’s job motivation.
Two Factor Theory:- Frederick Herzberg.
Intrinsic Factors are related to job satisfaction, while extrinsic factors are
associated with dissatisfaction.
Hygiene Factors Motivators

Environment Factors (Intrinsic)
Maintenance Factors
Extrinsic Factors
Intrinsic Factors are related to job satisfaction, while extrinsic factors are associated
with dissatisfaction.

Maintenance Factors
•Policies and procedures for staff treatment •Sense of achievement or
•Suitable level and quality of supervision. accomplishment
•Pleasant physical and working conditions. •Increasing levels of responsibility
•Appropriate level of salary and status for the •Career advancement
job. •Attraction of the job itself
•Team working
Salary
25000 – 500= 24500

50000 – 500=49500
100000 – 500 = 99500
Salary
25000 – 500= 24500 25000 =BC – 5000 , lifebuoy soap, Den-tonic Powder
50000 – 500=49500 50000 =BC – 10000 , Lux soap, Close up
100000 – 500 = 99500 100000 =BC – 25000 , Dave soap, Close up
Standard of Living

Maintenance Factors
•Team working
Intrinsic Factors are related to job satisfaction, while extrinsic factors are associated with
dissatisfaction.
Maintenance Factors
Must be addressed to avoid dissatisfaction and Motivators are always intrinsic and
include cognitive
Extrinsic motivators tend to reduce motivation Intrinsic motivators tend to create
when they are absent, so their presence remove motivation when they are present
dissatisfaction.
Q1: Suppose you have theory X workers at your office and as per opinion of
Douglas McGregor, how we can motivate Theory X workers, by offering
A. money and security
B. attainments at work
C. interactive relationships
D. recognition for outstanding work
Q1 : A Theory X workers are lazy and will work only if there is a

direct connection between efforts and rewards.
Q2: The management of Venus Brothers Limited runs a tight policy with strict
timekeeping systems, procedures and rules. Managers are of the opinion that if we
allow workers to have freedom at work, they generally take advantage of it and
damage the work and environment.
Managers are watching worker with which of the following lenses?
A. Theory X
B. Theory Y
C. Theory Z
D. Believe in Human Relation School
Q2 : A Rationale: Theory X is the managerial assumption that most people
dislike work and responsibility and will avoid them if possible they have to
be coerced and controlled to work. So therefore manager believe that they
have theory X workers.
Q3: If Venus brother believe that they have Theory Y workers, they would adopt ?
1. an dictatorial and authoritarian style,
2. A participative style
3. An emphasis on responsibility and self direction
4. tight and bureaucratic control.
A. 1 and 4
B. 1 and 3
C. 2 and 3
D. 2 and 4
Q3 :C
(1) and (4) would be appropriate to Theory X workers, who must be coerced to get
them to make an effort.
For Theory Y workers, a participative, liberating, developmental approach would be
appropriate.
Q4: The gain to both individuals and the organization from promoting good mental
health at work and authority delegation is reflected in increased presence of
subordinate in scheduling work, well-being and production plan. Reflects
A. Theory X
B. Theory Y
C. Theory Z
Q1: The job factors like more tangible, basic needs, such as status, job security,
salary, and fringe benefits.?
A. Maslow’s Basic Needs
B. Herzberg Intrinsic Factors
C. McGregor Theory Y factors
D. Herzberg Hygiene factors
Q1 : D
This is the definition of hygiene factors.
Q2: The job factors are less tangible, more emotional needs, such as
challenging work, recognition, relationships, and growth potential.?
Q1 : B
This is the definition of Intrinsic-motivators factors.
Q3: ‘The absence of certain job features will reduce employee satisfaction. However,
their presence will not result in positive motivation just avoid dissatisfaction.’
What term relating to motivation does this refer to?
A. Maslow’s basic needs
B. Herzberg hygiene factors
D. Max Weber Source of Power
Q1 : B
This is the definition of hygiene factors.
Q4: Rose Co offers its employees:
i. Sensible company policies and organizational justice
ii. Good salaries and bonuses
iii. Considerate supervision and coworkers
iv. Training & development programs
According to Herzberg ’s two-factor theory, which of these things will satisfy employees in
such a way as to motivate them to superior effort in the long-term?
A. (ii) only
B. (iv) only
C. (ii) and (iv) only
D. (i), (ii), (iii) and (iv)
Q4 : B According to Herzberg ’s theory, only training is a ‘motivator factor ’. The others

are all ‘hygiene’ factors:
Q5: The factors are expected and so cause dissatisfaction if they are absent. .?
Q5 : D
This is the definition of extrinsic factors.
Q6: All of the following, which one is different form other alternative terms used
for the same meaning. Which one is an exception?
A. Motivator factor
B. Hygiene factor
C. Environmental factor
D. Maintenance factor
Q6: A
Hygiene factors or environmental factors or maintenance factors all terms are used
for the same meanings while the opposite set of factors is ‘motivator ’ factors in the
work itself, which – according to Herzberg – positively create satisfaction and
motivation to superior performance.

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#8
Motivation
 Review of last lecture (Herzberg's Two Factor

Theory)
 Herzberg’s suggestions for motivation
 Introduction to Leadership

Maintenance Factors
•Team working
Intrinsic Factors are related to job satisfaction, while extrinsic factors are associated with
dissatisfaction.
Maintenance Factors
Must be addressed to avoid dissatisfaction and Motivators are always intrinsic and
include cognitive
Extrinsic motivators tend to reduce motivation Intrinsic motivators tend to create
when they are absent, so their presence remove motivation when they are present
dissatisfaction.
Herzberg Suggestions for Improvement of
Motivation
Herzberg defines three ways that management can attempt to improve staff satisfaction
and motivation.
1. Job Enrichment:-
2. Job Enlargement:-
3. Job Rotation:-
Herzberg Suggestions for Improvement of Motivation
Job Enrichment:-
Job enrichment is planned, deliberate action to build greater responsibility, breadth
and challenge of work into a job. Job enrichment is similar to empowerment.
Giving the job holder decision-making of a higher order
Giving the employee greater freedom to decide how the job should be done
Encouraging employees to participate in the planning decision of their superiors.
Giving the employee regular feedback.
Job Enlargement:-
Job enlargement is the attempt to widen jobs by increasing the number of operations
in which a job holder is involved.
Job enlargement is a ‘horizontal’ extension of the job by increasing task variety and
reducing task repetition.
While scientific management school was in the support of Micro-division of labour for
maximum specialization
Job Enlargement:-
Job enlargement is the attempt to widen jobs by increasing the number of operations
in which a job holder is involved.
Job enlargement is a ‘horizontal’ extension of the job by increasing task variety and
reducing task repetition.
While scientific management school was in the support of Micro-division of labour for
maximum specialization
Job Rotation:-
Job rotation is the planned transfer of staff from one job to another to increase task
variety. Job rotation is also sometime seen as a from of training, where individuals gain
wider experience by rotating as trainees in different positions.
Leadership
Definition
Leadership is interpersonal influence directed towards achievement of
goal/s
Theories of Leadership approaches
• Trait Theories:
• Style Theories of Leadership
• The Contingency approach (Fiedler):
• Transformational leadership (Bennis):Managing
change (Kotter)
Trait Theories:
Early studies of leadership were based on the assumption that leaders were born
and not made.
• They tried to pick out the common personality characteristics so that they had a
basis on which to recognize actual and potential leaders by knowing their traits
and comparing with them the traits of known leaders.
Lists of leadership qualities were compiled that included.
• Physical traits – drive, energy, appearances
Trait Theories:
and not made.
• Personality traits – adaptability, enthusiasm and self-confidence
Trait Theories:
and not made.
• Social traits – co-operation, tact, courtesy
Next: Style Theories of Leadership

Blake and Mouton
Robert Blake & Mouton carried out research into managerial behavior and
observed two basic dimensions of leadership: Concern for Production and
Concern for People. High 9 (1,9) (9,9)
*1.1 Management 7
Impoverished:- This manager only 6
makes minimum effort in either area 5
and will make the smallest possible 4

effort required to get the job done. 3
*1.9 ‘Country Club’ 2
Management:- This manager is 1
thoughtful and attentive to the needs
Low 0 (1,1) (9,1)
of the people, which leads to a
0 1 2 3 4 5 6 7 8 9
comfortable friendly organization
Low High
atmosphere but very little work is
actually.
*9.1 Task Management:- This manager only concerned with production

and arranges work in such a way that people interference is minimized.
*9.9 Team Management:- This manager integrates the two areas to foster
working together and high production to produce true team leadership.
Benefits or Practical Applications:-
Q1: A common motivational technique used by organizations to give an employee
greater satisfaction in his work. It means giving an employee additional responsibilities
previously reserved for his manager or other higher-ranking positions.?
A. Job enlargement
B. Job rotation
C. Job enrichment
D. Job switching
Q2: Saleem is a junior employee who has been performing very well in his job. His
senior Abdullah wishes to motivate him and has decided to offer him a greater level of
responsibility within the business by involving him in planning. What type of job
redesign is Abdullah offering to Saleem?
A. Job enlargement
B. Job rotation
C. Job enrichment
D. Job switching
Q3: Increasing the scope of a job through extending the range of its job duties and
responsibilities generally within the same level and periphery?
A. Job enlargement
B. Job rotation
C. Job enrichment
D. Job switching
Q4: It involves combining various activities at the same level in the organization and
adding them to the existing job?
A. Job enlargement
B. Job rotation
C. Job enrichment
D. Job switching
Q5: Ms. Najma used to pack chocolate bars into boxes of four dozen. Her job has been
redesigned, so that she will also applies a promotional sticker with expiry date.
Of which form of job redesign is this an example?
A Job evaluation
B Job enlargement
C Job enrichment
D Job rotation
Q5: Ms. Najma used to pack chocolate bars into boxes of four dozen. Her job has been
redesigned, so that she will also applies a promotional sticker with expiry date.
Of which form of job redesign is this an example?
A Job evaluation
B Job enlargement
C Job enrichment
D Job rotation
Q6: A management approach where employees are shifted between two or more
assignments or jobs at regular intervals of time in order to expose them to all aspects of
related field.?
A Job evaluation
B Job enlargement
C Job enrichment
D Job rotation
Q1&2: C
This allows people to grow personally and professionally by exposing them to higher
levels of responsibility and more challenging tasks.
Q3&4: A
Since responsibilities given are of the same level.
Q5 : B Rationale: Najma’s new tasks are of the same skill level and
responsibility as her original task, so her job has been horizontally enlarged
rather than vertically enlarged (which would be job enrichment).
Q6 : D_ Job rotation is a technique used by some employers to rotate their

employees' assigned jobs throughout their employment.

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#9
Leadership
 Review of last lecture (Leadership)

 Style Theories of Leadership
 1- Blake and Mouton
 2- Ashbridge School
Trait Theories:
and not made.
• Lists of leadership qualities were compiled that included.
• Social traits – co-operation, tact, courtesy
Q1: The trait theories of leadership were based around which of the
following groups of qualities?
A. Intelligence; Rationality; Decisiveness
B. Physical; Personality; Social
C. Empathy; Inspiration; Courage
D. Aggression; Negotiation; Vision
Q1: B
Early studies of leadership were based on the assumption that
leaders were born and not made. The physical traits included drive
and energy; the Personality traits included adaptability and
enthusiasm and the Social traits included co-operation and tact.
Blake & Mouton Managerial Grid
The Blake Mouton Managerial Grid is based on two behavioral dimensions:
•Concern for People: this is the degree to which a leader considers team
members' needs, interests and areas of personal development when deciding how
best to accomplish a task.
•Concern for Results: this is the degree to which a leader emphasizes concrete
objectives, organizational efficiency and high productivity when deciding how best
to accomplish a task.
1.1 Management Impoverished:-
This manager only makes minimum
effort in either area and will make the
smallest possible effort required to
get the job done.
1.9 ‘Country Club’ Management:-
This manager is thoughtful and
attentive to the needs of the people,
which leads to a comfortable friendly
organization atmosphere but very
little work is actually.
9.1 Task Management:-
This manager only concerned with
production and arranges work in such
a way that people interference is
minimized.
9.9 Team Management:- This
manager integrates the two areas to
foster working together and high
production to produce true team
leadership.
Example:
Application for leave to a manager of style → Management Impoverishment
Application for leave to a manager of style → Country Club Management
Application for leave to a manager of style → Task Management
Application for leave to a manager of style → Team Management
5.5 A Middle-of-the-Road or
"status quo" Manager tries to
balance results and people, but this
strategy is not as effective as it may
sound. Through continual
compromise, he fails to inspire high
performance and also fails to meet
people's needs fully.
Q1: When manager is committed to, and have a stake in, the organization's
success, their needs and production needs coincide. He creates an environment
based on trust and respect, which leads to high satisfaction, and motivation of
employees.
A. Management impoverished
B. Country Club'
C. Task management
D. Team management
Q1: D_ Team management

Q2: In the context of Blake and Mouton's grid a manager in the top left hand
corner of the grid would fall into which of the following categories?
B. Country Club'
C. Task management
D. Team management
Q2: B
Q3: In the context of Blake and Mouton's grid a manager in the top right hand
corner of the grid would fall into which of the following categories?
B. Country Club'
C. Task management
D. Team management
Q3: D
Q4: Sadia is a manager in the sales department of Zic. Co and she has several staff
working for her. From last two terms, her department is failed to meet sales targets.
But is very friendly with most of her staff and they like her and appreciate that she
does everything she can to attend to their needs. Which type of managerial style does
Sadia have?
A Impoverished
B Task management
C Country club
D Dampened pendulum
Q4: C
The ‘country club’ is low-task, high-people focus and 1.9 on Blake and Mouton's
managerial grid.
This describes Monica. Impoverished is 1.1 (both low),
task management is 9.1 (all about the task).
9.9 is team management (good in both)
Q5: Ashraf is CFO of Kohinoor Energy Projects. He is passionate about his work
and who does the best he can for the people he works with.
A Impoverished
B Task management
C Country club
D Team management
Q5:D Team Management: because he is good in both care about work and people as
well
Ashridge School of Leadership
Research at Ashridge Management College focuses on four different
management styles.
1. Tells
2. Sells
3. Consults
4. Joints
Tells (autocratic) –
The manager makes all decisions and issues instruction which must be
obeyed without question.
Strengths:
1. Quick decisions can be made when required
2. The most effective type of leadership for highly- programmed work.
Weaknesses:
1. Communication are one-way, neglecting feedback potential for
upward communication or team member input
2. Does not encourage initiative or commitment from subordinate,
merely compliance.
Sells (persuasive) -
The manager makes all decisions but believe that team members must be motivated
to accept them in order to carry them out properly.
Strengths:
1. Team members understand the reason for decisions
2. Team members may be more committed
3. Team members may be able to function slightly better in the absence of
instruction.
Weaknesses: 1. Communications are still largely one-way.
2. Team members are not necessarily motivated to accept the decision.
Consults (Participative) –
the managers confers with the team and takes their views into account, although
still retains the final say. (According to research it is the most faviourate and liked
method of workers of their leader)
Strengths:
1. Involves team members in decisions, encouraging motivation through greater
interest and involvement
2. Encourages upward communication
Weaknesses:
1. May take longer to reach decisions
2. Team members input may not enhance the quality of the decisions.
3. Consultation can be a façade for a basic ‘sells’ style.
Joint (democratic) –
The leaders and the team members make the decision together on the basis of
consensus.
Strengths:
1. Can provide high motivation and commitment from team members.
2. Empowers a Team member to take the initiative
Weaknesses:
1. May undermine the authority of the manager.
2. May further lengthen the decision – making process.
3. May reduce the quality of the decisions because of the politics of decision making.
Leadership

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#10
Leadership
 Review: Style Theories of Leadership

 1- Blake and Mouton
 2- Ashbridge School
 Lippitt & White
Blake and Mouton
Robert Blake & Mouton carried out research into managerial behavior and observed two basic
dimensions of leadership: Concern for Production and Concern for People.
High 9 (1,9) (9,9)
*1.1 Management Impoverished:- This 8
manager only makes minimum effort in 7
either area and will make the smallest 6
possible effort required to get the job 5
done. 4
3
*1.9 ‘Country Club’ Management:-
2
This manager is thoughtful and attentive to
1
the needs of the people, which leads to a
Low 0 (1,1) (9,1)
comfortable friendly organization
0 1 2 3 4 5 6 7 8 9
atmosphere but very little work is actually.
Low High
*9.1 Task Management:- This manager only concerned with production and arranges work
in such a way that people interference is minimized.
*9.9 Team Management:- This manager integrates the two areas to foster working together and
high production to produce true team leadership.
Benefits or Practical Applications:-
Ashridge School of Leadership
Tells Sells Consults Joints

Pre-decision /
Before decision
At the time of
decision
Post decision
Q1: Miss Rose working and accounts manager. She makes all the decisions and issues
instructions which must be obeyed without question. Her style is
A. Tells
B. Sell
C. Joints
D. Consults
A. Tells
Q2: Mr. Jamil is production engineer, in spite of instruction of production director still
makes all the decisions, but believes that team members must be motivated to accept
them in order to carry them out properly.. His style is
A. Tells
B. Sell
C. Joints
D. Consults
B. Sells
Q3: Mr. Abid is the purchase manager confers with the team and takes their views into
account, although still retains the final say. His style is
A. Tells
B. Sell
C. Joints
D. Consults
D. Consults
Q4: Mr. Tahir is sales manager he collect all member of his team and the team members
make the decision together on the basis of consensus. His style is
A. Tells
B. Sell
C. Joints
D. Consults
C. Joints
Q5: According to researchers in the field of leadership, which of the following
statements is true of a consultative style of management, if we compare to other styles
of leadership?
A It is most popular among subordinates
B It is most popular among leaders
C It encourages the highest productivity
D It provokes most hostility in groups
Q5: A _ It is most popular among subordinates

Lippitt and White
In 1938/1939 Lippitt and White carried out an investigation into leadership styles, using
groups of schoolchildren working on arts and crafts projects, such as making masks. Three
different types of leaders were assigned to the groups, and the behaviour of the children
with each of the different types of leader was studied. The three types of leadership style
for the groups were:
 Authoritarian or autocratic leadership style. The leader continually gave orders and
instructions without offering any consultation.
 Democratic style. The leader offered guidance and encouragement to the children, and
participated actively with the group.
 Laissez-faire style. The leader gave the children the knowledge they needed to do the
work, but did not become involved and did not participate in the activities of the group
Groups with Groups with Groups with laissez-
democratic leaders autocratic leaders faire leaders
Relationship Friendly relationships Interpersonal Group members are
between between the group conflicts are observed dissatisfied from each
members members and others
between the group
members and the
leader were friendly
Willingness to work The group members Showed not much Group members were
showed themselves interest, Just work as unable to work
capable of working bound by leader or independently
independently, with make leader happy.
the leader out of the
room
Quantity of The quantity of their The quantity of their These were the worst
Work output was lower output was higher performing groups
than the quantity than the quantity Productivity (quantity
produced by groups produced by groups produced) was low
with an authoritarian with a democratic
leader leader.
Quality of The quality of their The quality of the Quality of output was
Work output was higher output of children in low.
than the quality this group was less
produced by groups than the quality
with an authoritarian produced by groups
leader with a democratic
leader
Members Morale was high. Moral is poor Satisfaction of group
Satisfaction members was low.
Culture Constructive and Blame culture when Group members did
supportive culture things gone wrong not cooperate with
each other
Q1: With reference to Lippitt and White if a leader just tells the group what to do. The
it is
A. Authoritarian
B. Democratic
C. Laissez-fair
D. Diplomatic
Q1: A_Authoritarian
Q2: Three of the leadership styles are replacable for each other one is exception
A. Authoritarian
B. Autocratic
C. Tells
D. Democratic
Q2: D_ Democratic
Q3: A style where the leader does not really do anything but leaves the group alone
and lets them get on with it.
Lewin . The it is
A. Authoritarian
B. Democratic
C. Laissez-fair
D. Diplomatic
Q3: C_ Laissez-fair
Likert’s four systems of management
he four management systems as identified by Likert were:
1. Exploitative Authoritative,
2. Benevolent Authoritative,
3. Consultative
4. Participative.
In his view, the closer the organisational characteristics are to the
Participative system, the more satisfied and therefore more productive the
employees will be.
Exploitative
System 1 - Exploitative Authoritative: Authority
Responsibility lies in the hands of the people at the Responsibility Top Level
lies on
top level of the hierarchy. The superior has no trust
and confidence in subordinates. The decisions are
imposed on subordinates and they are not given Confidence of No
freedom to discuss things about the job with their Superior on
superior. More common are individual work not Subordinates
teamwork. Source of motivation is threat
coerciveness. Decision Imposed
Motivation is Threat - Coercive

based
System 2 - Benevolent Authoritative: Benevolent
Authoritative
The responsibility is moved to the
Responsibility Transfer to Middle
middle/managerial levels. Responsibility does lies on Level
not lie at the lower levels of the organizational
hierarchy. The superior has disdainful confidence
and trust in subordinates based on master- Confidence of Low depends on
servant relationship. In this system as well the Superior on Master Servant
subordinates do not has freedom to discuss Subordinates Relationship
things about the job with their superior. Here is
Decision Imposed
very little teamwork or communication. In this Then make clear
system motivation is based on a system of
rewards.
Motivation is System of Reward
based
System 3 - Consultative: Consultative
In this responsibility is spread widely through Responsibility Transfer to Up to

the organizational hierarchy. The senior has lies on Operational Level
significant but not ample confidence in
subordinates. A little amount of discussion
Confidence of Substantial but not
about job related things takes place between Superior on 100%
the superior and subordinates. There is a Subordinates
reasonable amount of teamwork, and
communication takes place vertically and Decision Fair amount of
horizontally. Here motivation is based on discussion the
rewards and involvement in the job. decision
Motivation is Reward &

based Involvement
System 4 - Participative: Participative
Responsibility for achieving the Responsibility Wide Spread

organizational goals is extensively lies on
widespread all over the organizational
hierarchy. There is a very high level of
confidence that the superior has in his Confidence of Complete Confidence
Superior on
subordinates. There is a high level of Subordinates
teamwork, communication, and
participation. Motivation is based on Decision Communicative and
sense of achievement, collective goal Participative
decisions, career growth with reward on
both team and individual performance.
Motivation is Sense of team- collective
goals, growth. Individual
based
and team based reward
Exploitative Benevolent Consultative Participative
Authoritative Authoritative
Responsibility Top Level Transfer to Transfer to Up to Wide Spread
lies on Middle Level Operational Level
Authority Authoritative
Confidence of No Low depends on Substantial but Complete

Superior on Master Servant not 100% Confidence
Subordinates Relationship

Decision Imposed Imposed Fair amount of Communicative
Then make clear discussion the and Participative
decision

decision
Motivation is Threat - Coercive System of Reward Reward & Sense of team-
based collective goals,
Involvement growth. Individual and
team based reward
Q1: The first major study of leadership styles was performed by Likert who led a group of
researchers to identify different styles of leadership. In which leadership system the
responsibilities is lies at the top level.
A. Exploitative Autocratic
B. Benevolent Autocratic
C. Consultative
D. Participative
A- Exploitative Autocratic
Q2: The first major study of leadership styles was performed by Likert who led a group of
researchers to identify different styles of leadership. In which leadership system the
responsibilities is lies at the Middel level.
C. Consultative
D. Participative
B- Benevolent Autocratic
Q3: The first significant studies into leadership style were carried out in the 1930s by a
psychologist called Likert. His studies focused attention on the different effects created
by four different leadership styles.
In which system of leadership supervisor has complete confidence on subordinate
C. Consultative
D. Participative
D- Participative
Leadership

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#11
Leadership
 Lippitt & White
 Likert
Contingency Theory
 Adair Action Centered Approach

 Fiedler Contingency Approach
Lippitt and White
In 1938/1939 Lippitt and White carried out an investigation into leadership styles, using
groups of schoolchildren working on arts and crafts projects, such as making masks. Three
different types of leaders were assigned to the groups, and the behaviour of the children
with each of the different types of leader was studied. The three types of leadership style
for the groups were:
 Authoritarian or autocratic leadership style. The leader continually gave orders and
instructions without offering any consultation.
 Democratic style. The leader offered guidance and encouragement to the children, and
participated actively with the group.
 Laissez-faire style. The leader gave the children the knowledge they needed to do the
work, but did not become involved and did not participate in the activities of the group
Likert’s four systems of management
he four management systems as identified by Likert were:
1. Exploitative Authoritative,
2. Benevolent Authoritative,
3. Consultative
4. Participative.
In his view, the closer the organisational characteristics are to the
Participative system, the more satisfied and therefore more productive the
employees will be.

decision
Motivation is Threat - System of Reward Reward & Sense of team-
based collective goals,
Coercive Involvement growth. Individual and
team based reward
Contingency Theory of Leadership
The Contingency Theory of Leadership states that a leader’s effectiveness is
contingent upon with how his or her leadership style matches to the situation
(Leadership Theories, n.d). That is, the leader must find out what kind of leadership
style and situation he or she thrives in. The Contingency Theory is concerned with
the following:
•“There is no one best style of leadership” (Fiedler’s Contingency Model)
•A leader is effective when his or her style of leadership fits with the situation
(Fiedler’s Contingency Model, n.d)
Contingency Leadership
The action-centered approach:
• Adair suggests that any leader has to strive to achieve three major goals while at
the same time maintaining a position as an effective leader.
• The model focuses on what leaders do and not what they are
• Action– centered leadership model look at leadership in relation to
i) The needs of the task,
ii) The need of the individuals
iii) The needs of the group.
Setting objectives
Communication Planning tasks
Team building Allocating of
Motivating responsibilities
Discipline Setting performance
standards
TASK NEEDS
GROUP INDIVIDUAL
NEEDS
NEEDS
Coaching
Counseling
Developing
Motivating
Adair’s 50:50 rule Adair suggested a 50:50 rule that applies to his thinking about
leadership. Leadership is influential, but effective leadership on its own is not
sufficient.
Individual: 50% of motivation comes from within the individual. The other 50% of
motivation comes from influences outside the individual, including the influence of
the leader.
Team: 50% of building a successful team comes from the team members and 50%
comes from the leader of the team
Q1: Adair's action-centred leadership model can be considered to be part of which
of the following schools of thought?
A. Human relations school
B. Classical school
C. Contingency school
D. Scientific school
Q1: C_ Contingency School

Q2: John Adair ’s leadership model is part of which approach?
A Trait theories
B Style theories
C Action-centered
D Fundamentalist School of Thought
Q2: C_ Action Centered Approach

Q2: Which leadership approach sees the leadership process in a context made up of
three interrelated variables: task needs, the individual needs of group members and the
needs of the group as a whole?
A. Action-centered leadership
B. Trait theory of leadership
C. Transformational approach
D. Dispersed leadership
Q3: A _ Action Centered Approach

Q4: Are the following statement/s true or false?
1. The Ashridge leadership model proposes a laissez-fair approach to leadership
2. Adair’s leadership model focuses on what leaders do and not what they are
A Both statement are true
B Statement 1 is true; statement 2 is false
C Statement 1 is false; statement 2 is true
D Both statements are false
Q4: C _ Statement 1 is false; statement 2 is true

Contingency Leadership by Fred Fiedler
Fred Fiedler’s contingency theory of leadership was developed from research he
conducted in the 1960s into two leadership styles, and which style was the more
effective. He began by identifying two leadership styles:
 Psychologically Distant Leader: Task-orientated leadership, and
 Psychologically Close Leader: Relationship-orientated leadership.
These styles could be related to Blake’s grid and ‘concern for the task’ and ‘concern for
people’.
Psychologically distant managers (PDMs) Task-orientated leadership,
o Maintain distance from their subordinate by formalizing roles and relationships

within the tram (who have to accept your instruction).
o Are withdrawn and reserved in their interpersonal relationships.
o Prefer formal communication and consultation methods rather than seek informal
opinion.
o Judge subordinate on the basis of performance and are primarily task-oriented.
o Fiedler found that leaders of the most effective work groups actually tend to be
PDMs.
Psychologically close managers (PCMs); Relationship-orientated leadership.
o Do not seek to formalize roles and relationships

o Prefer informal contacts t regular forma staff meetings
They are more concerned to maintain good human relationships at work to ensure that
tasks are carried out efficiently.
The work situation depends on three factors:
 The relationship between the leader and the subordinates: If the leader is liked and
respected, he is more likely to have the support of his subordinates
 The structure of the task. If the task is clearly defined, with clear goals, methods of
working and standards of performance, it is more likely that the leader will be able to
exert influence.
 The position power of the leader. If the organization gives power to the leader, for
the purpose of getting the job done, this is likely to increase the influence of the
leader. For
Q1: When a situation is either very favourable or very
unfavourable to the leader we assess on the bases of that the
leader's power to reward or punish is limited,
According to Fiedler which of the following styles works best?
A. Psychologically close
B. Psychologically open
C. Psychologically committed
D. Psychologically distant
Q1: D
Psychologically distant leaders favour formal roles and
relationships, judge subordinates on the basis of performance and
are primarily task oriented.
Q2: A particular team leader is being liked and favorite of his work group, and his
position gives him authority to distribute bonuses within the team and to apply
whatever disciplinary measures are necessary. The team is currently working on
routine project, with well-defined, structured tasks.
According to Fiedler ’s contingency theory, would this situation be favourable or
unfavourable to the team leader?
A. Favourable
B. Unfavourable
C. Comfortable
D. Uncomfortable
Q2: A
Q3: According to Fielder, which of the following are the
behaviour characteristics of psychologically distant managers?
1. They assess subordinate on the basis of performance
2. They are mainly task-oriented
3. They prefer formal communication
4. They are nearer to their subordinates
A. 1 and 2
B. 2 and 3
C. 3 and 4
D. 1, 2 and 3
Q3 : D
Q4: Jamil is task-oriented leaders tend to be good at organizing teams and
projects and getting's things done formally.
Jamil is ____________ leader.
Q4: D_Psychologically distant

Q5: Tasneem is a relationship-oriented leaders tend to be good at building good
relationships and managing conflict to get things done.
Jamil is ____________ leader.
Q: A_ Psychologically close
Transformational leadership (Bennis):
Some of the values used to distinguish between managers and leaders have also been
identified as;
Transactional leaders – see the relationship with their followers in terms of trade:
they give followers the rewards they want in exchange for service, loyalty and
compliance.
Transformational leaders – see their role as inspiring and motivating others to work at
level beyond mere competence.
Bennis is an influent American author on leadership and change. He focuses on the
need to inspire change rather than imposing it. He identifies five ‘avenues of change’:
Dissent and Conflict – top management imposes changes by means of their position
of power, the result being rancor amongst those affected.
Trust and truth – management must gain trust, express their vision clearly, and
persuade other to follow.
Cliques and cabals – cliques have power, money and resources; cabals have ambition,
drive and energy. Unless the cliques can co-opt the cabals, revolution in inevitable.
External events – forces of society can imposes change; e.g. by new government
regulation or through overseas competition.
Culture or paradigm shift – changing the corporate culture is the most important
avenues of change.
Managing change (Kotter) Kotter set out the following changes
approaches to deal with resistance:
Participation and E.g. this approach aims to Employees are more likely to
involvement involve employees, usually by support changes made and give
allowing some input in to positive commitment as they ‘own’
decision making. the change.
Education and E.g. this approach aims to keep This approach relies on the
communication employees informed, usually hopeful belief that communication
through presentations about the about the benefits of change to
reasons for the required employees will result in their
change. acceptance of the need to
exercise the changes necessary.
Facilitation and E.g. training, counselling Employees may need help to
support overcome their fears and anxieties
about change.
Manipulation and E.g. the information that is Involves covert attempts to
co-optation disseminated is selective and sidestep potential resistance.
distorted to only emphasize the
benefits of the change.
Negotiation and E.g. this approach enables This bargaining leads to situation
agreement several parties with opposing of compromise and agreement.
Leadership

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#12
Leadership
 Adair Action Centered Approach
 Fiedler Contingency Approach
Contingency Theory
 Hersey and Blanchard: Situational

Leadership Theory
 Transformational Leadership
Contingency Leadership
The action-centered approach:
• Adair suggests that any leader has to strive to achieve three major goals while at
the same time maintaining a position as an effective leader.
• The model focuses on what leaders do and not what they are
• Action– centered leadership model look at leadership in relation to
i) The needs of the task,
ii) The need of the individuals
iii) The needs of the group.
Setting objectives
Communication Planning tasks
Team building Allocating of
Motivating responsibilities
Discipline Setting performance
standards
TASK NEEDS
GROUP INDIVIDUAL
NEEDS
NEEDS
Coaching
Counseling
Developing
Motivating
Fiedler’s contingency theory
Fiedler studied the relationship between style of leadership and effectiveness of the work
group. Two styles of leader were identified.
Psychologically distant managers (PDMs)
 Maintain distance from their subordinate by formalizing roles and relationships
within the tram (who have to accept your instruction).
 Are withdrawn and reserved in their interpersonal relationships.
 Prefer formal communication and consultation methods rather than seek informal
opinion.
 Judge subordinate on the basis of performance and are primarily task-oriented.
 Fiedler found that leaders of the most effective work groups actually tend to be
PDMs.
Psychologically close managers (PCMs)
 Do not seek to formalize roles and relationships
 Prefer informal contacts t regular forma staff meetings
 They are more concerned to maintain good human relationships at work to ensure
that tasks are carried out efficiently.
Fiedler’s contingency theory
Contingency approach sees effective leadership as being dependent on a number of

variable or contingent factors. There is no one right way to lead that will fit all
situations; rather it is necessary to lead in a manner that is appropriate to a particular
situation.
The factor to consider leaders’ favorable situation
Leader position power,
task structure,
 leader member relation
Hersey and Blanchard: Situational Leadership Theory
Paul Hersey and Kenneth Blanchard (1968) developed another contingency theory of
leadership, which they called situational leadership theory.
A leader should adjust his or her leadership style to meet the requirements of the work
situation. Leaders must be able to use any leadership style, and should switch from one
style to another as circumstances require Blanchard identified subordinates’ maturity in
terms of:
 Able to Work: competence in their job and their ability to undertake successfully the
tasks they are given – job maturity and confidence in their ability to deal with the
challenges of the task
 Follower Readiness: Willingness To Work: commitment to the organization's goals and
commitment to undertake the task – psychological maturity.
Tell Selling Participative Delegating
Leader announce Leader define role Leader involve Leaders brief,
the decision, & task, opinion & decision by
one-way Seek ideas & suggestions, subordinate,
communication suggestions, Two- delegate day to involve leader
way day decisions where they need
communication
Ableness to Work Low Low high High
Readiness to Low High low High
Work
------- -------- ------ -------
Directive Activity Directive Directive Not directive Not directive
Supportive Supportive Not supportive But supportive Not supportive
Activity
Q1: With reference to Hersey and Blanchard theory, if subordinates are highly ready,
motivated and willing to work with ability.
A. Telling
B. Selling
C. Participating
D. Delegating
D: Delegating
Q2: A subordinate has higher working skills but low motivation to work, which style is
ideal according to Hersey and Blanchard Theory
A. Telling
B. Selling
C. Participating
D. Delegating
C_ Participating
Q3: A subordinate has low working skills but motivation to work, which style is ideal
according to Hersey and Blanchard Theory
A. Telling
B. Selling
C. Participating
D. Delegating
B_ Selling
Q4: A subordinate has low working skills but also unwilling to work due to
demotivation to work, which style is ideal according to Hersey and Blanchard Theory
A. Telling
B. Selling
C. Participating
D. Delegating
A_ Telling
Transformational leadership (Warren Bennis):
Some of the values used to distinguish between managers and leaders have also been
identified as;
Transactional leaders – see the relationship with their followers in terms of trade: they
give followers the rewards they want in exchange for service, loyalty and compliance.
Transformational leaders – see their role as inspiring and motivating others to work at
level beyond mere competence.
Transformational leaders display the following characteristics and traits:
Q1: Abid is a leader works with teams to identify needed change, creating a vision to
guide the change through inspiration, and executing the change in tandem with
committed members of a group;
Leadership is called
A. Transformational leadership
B. Transactional leadership
C. Traditional managerial style
D. Directional leader
Q1: Transformational Leader

Q2: Saleem is manager promote compliance by followers through both rewards and
punishments. ;
Leadership style is called
A. Transformational leadership
B. Transactional leadership
C. Traditional managerial style
D. Directional leader
Q2: Transactional Leader

Transactional Leaders: The Transformational Leaders: The
Managers Leadership
Runs routine matters Develop direction for future
Doing things right Doing the right things
Maintain Develop
Focus on procedure Focus on people
Short-run view Long-range Perspective
Rely on control Inspire and trust
Q1: If a senior deals with subordinate by inspire and trust, challenging the status quo and
develop subordinate for growth in their career.
What you say about this senior?
A. He is a leader
B. He is a manager
C. Both of above
D. None of above
Q1: A He is a leader
Q2: If a senior deals with subordinate by focusing on systems and structures and reliance
on control and maintain control?
What you say about this senior?
A. He is a leader
B. He is a manager
C. Both of above
D. None of above
Q2: His is a manager

Q3: Leaders may be distinguished from managers by the fact that they do not depend, on
__________ power in the organization.
Which of the following types of power correctly completes this statement?
A Person power
B Expert power
C Position power
D Physical power
Q3: C Position Power

Managing change (Kotter) Kotter set out the following changes
approaches to deal with resistance:
Participation and E.g. this approach aims to Employees are more likely to
involvement involve employees, usually by support changes made and give
allowing some input in to positive commitment as they ‘own’
decision making. the change.
Education and E.g. this approach aims to keep This approach relies on the
communication employees informed, usually hopeful belief that communication
through presentations about the about the benefits of change to
reasons for the required employees will result in their
change. acceptance of the need to
exercise the changes necessary.
Facilitation and E.g. training, counselling Employees may need help to
support overcome their fears and anxieties
about change.
Manipulation and E.g. the information that is Involves covert attempts to
co-optation disseminated is selective and sidestep potential resistance.
distorted to only emphasize the
benefits of the change.
Negotiation and E.g. this approach enables This bargaining leads to situation
agreement several parties with opposing of compromise and agreement.
Management Theories

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#13
Theories of Management
 Classical Theories by Fayol

 14 Principles by Fayol
 Scientific Management by Taylor
 Bureaucracy by Max Weber
 Human Relation School by Dr. Elton
Mayo
A- The classical school
Fayol shared the belief that individuals must subordinate
themselves to the needs of the organization.
• Fayol believed in ‘one best way’ the optimum way to
• Organize the firm
• Do the individual job
• Emphasis on the task to be done rather that the person doing it.
• Some of the main features of their approaches were as follows
• Belief in one controlling central authority
• Specialization of tasks
• Clear lines command
• Individual subordinates them to the needs of organization
prefer organizational interest over individual interest.
Fayol applied 14 rules of managerial conduct. These are
• Specialization of labour. Specializing encourages continuous improvement in skills
and the development of improvements in methods.
• Authority. The right to give orders and the power to exact obedience.
• Discipline. No slacking, bending of rules. The workers should be obedient and
respectful of the organization.
• Unity of command. Each employee has one and only one boss.
• Unity of direction. A single mind generates a single plan and all play their part in
that plan.
• Subordination of Individual Interests. When at work, only work things should be
pursued or thought about.
• Remuneration. Employees receive fair payment for services, not what the company
can get away with.
• Centralization. Consolidation of management functions. Decisions are made from the
top.
• Chain of Superiors (line of authority). Formal chain of command running from top to
bottom of the organization, like military
• Chain of Superiors (line of authority). Formal chain of command running from top to
bottom of the organization, like military
• Order. All materials and personnel have a prescribed place, and they must remain
there.
• Equity. Equality of treatment (but not necessarily identical treatment)
• Personnel Tenure. Limited turnover of personnel. Lifetime employment for good
workers.
• Initiative. Thinking out a plan and do what it takes to make it happen.
• Esprit de corps. a feeling of pride and mutual loyalty shared by the members of a
group.. Fayol stated that for promoting esprit de corps, the principle of unity of
command should be observed and the dangers of divide and rule and the abuse of
written communication should be avoided.
Q1: Which of the following statement best describe the classical
approach to management?
A. No one best approach
B. Communication should be encouraged
C. One best approach
D. An employee is considered an input to the organizational
system.
Q1: C: One best approach

Taylor and the scientific school of management
Taylor is considered the originator of ‘time and motion study’. Scientific management
resulted in:
 Dividing big tasks into much small parts,
 Employee should be deployed in small units of their speicialisation
 In this way efficiency can be increased by division of work and specialisation.
 Financial reward / incentive to motivate
Four Principles of Scientific Management
The four underlying principles of scientific management Taylor suggested that there should
be four underlying principles in scientific management.
Taylor suggested that there should be four underlying principles in scientific management:
i. There should be a science of work, based on the analysis of work methods and work
times, with a view to finding the most efficient way of carrying out tasks. A fair level of
performance or efficiency can be identified. Workers should be rewarded through higher
pay if they succeed in performing more efficiently than the expected or standard level.
ii. Workers should be selected carefully. They should have the skills and abilities that are
well-suited to the work. They should also be trained in how to do the work efficiently.
iii. The scientifically-selected and trained workers and the science of work should be
brought together for the best results and greatest efficiency.
iv. There should be an equal division of work between the workers and management, and
workers and managers should operate closely together.
Q2: Which of the following is not a technique of scientific
management or Taylorism?
A Micro-design of jobs
B Dividing big tasks into much small parts
C Multi-skilled team working
D Financial incentives
Q2 : C
Bureaucracy by Max Weber
A continuous organization of functions bound by rules
Mechanistic
Bureaucracy
He argued that an ‘ideal’ bureaucracy has the following characteristics.

 There should be a hierarchy of authority, from top management down to workers at
the bottom.
 Impersonal and impartial way.
 Written rules of conduct
 Promotion of individuals within the organisation, based on their achievement
 Division of labour and specialisation of work.
The human relation school
This began through the work of G Elton Mayo (1880 – 1949) who conduct
a series of experiments at the Hawthorne plant of the General Electric
Company in Chicago during the years 1927 – 32. Mayo sought to evaluate
the effects of the changes in physical working conditions which according
to scientific management, should cause significant variations in
productivity.
• Further research established the following propositions of the human
relation school
• Employees work hard if they are given a wide range of tasks to complete.
• Leadership style and job satisfaction are major determinants of the output
of the working group.
• Employee behavior depends upon the social and organizational
circumstances of work.
Q3: Fayol and Taylor shared the belief that:
A. employees work better if they are given a wide range of tasks to complete
B. management must gain trust and persuade others to follow
C. changing the corporate culture is the most important avenue of change
D. individuals must subordinate themselves to the needs of the organization
Q3: D
Q4: What is the key contribution of the human relations approach to
management?
A. Awareness of the importance of group dynamics and worker attitudes as an
influence on productivity
B. Concern for productivity and efficiency
C. Awareness of the many different variables that influence and constrain a
manager ’s behaviour
D. Proof of a clear link between job satisfaction, worker motivation and business
success
Q4 : A
Q5: Which of these steps aimed at increasing job satisfaction could be attributed to
the findings of the human relation school?
A. Creating an open-office environment with range of task
B. Paying staff for each hour worked or item produced
C. Managers setting challenging individual targets
D. Producing an organizational chart so staff are aware of where they stand in the
hierarchy
Q5: A.
Q6: Which of the following writers is not a member of the
school of management thought to which the others belong?
A FW Taylor
B Elton Mayo
C Abraham Maslow
D Frederick Herzberg
Q6 : A .
Management Theories

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#14
Management & Manager
 Management
 Functions of Management
 Henry Fayol Five Functions of
Management
 Mintzberg’s Building Blocks of
Management
 Management by Objectives
 Mintzberg’s Roles of Manager
Management
The process of dealing with or controlling things or people.
Management has the task to coordinate the organization towards accomplishing

organizational goals. Activities are completed efficiently and effectively by others.
Business management is the act of organizing people

to accomplish the desired goals and objectives of a
business. Business management requires the
utilization of the entity’s resources in the most
efficient manner possible.
Good managers discover how to
master five basic functions: planning, organizing,
staffing, leading, and controlling..
Q1: As concern with nature of management
A. Management is an art
B. Management is a science
C. Management is body of knowledge
D. All of the above
Q1: D_ All of the above

Reason behind
B&C: It is considered as a science because it has an organized body of knowledge which
contains certain universal truth.
C: It is called an art because managing requires certain skills which are personal
possessions of managers.
Planning:
Planning is also a management process, concerned with defining goals for a company's
future direction and determining the missions and resources to achieve those targets. To
meet objectives, managers may develop plans, such as a business plan or a marketing
plan.
Organizing:
Organizing is the function of management that involves developing an organizational
structure and allocating human resources to ensure the accomplishment of objectives.
The structure of the organization is the framework within which effort is coordinated.
Staffing:
After a manager recognizes his human resource needs, he may decide to improve his
staffing by recruiting, selecting, training, and developing employees. A manager in a
large organization often works with the company's human resources department to
accomplish this goal.
Leading:
A manager needs to do more than just plan, organize, and staff her team to achieve a
goal. She must also lead. Leading involves motivating, communicating, guiding, and
encouraging. It requires the manager to coach, assist, and problem solve with employees.
Controlling:
After the other elements are in place, a manager's job is not finished. He needs to
continuously check results against goals and take any corrective actions necessary to
make sure that his area's plans remain on track.
Henry Fayol Five Functions
Fayol argued that management may be split into five broad areas that are
(i) Planning – The planning function involves determining the medium and long-term
objectives/goals of the organisation and formulating strategies for their achievement. This function
entails arranging resources required for achieving the objectives and allocating them in the
organisation.
(ii) Organising – The organising function involves defining lines of authorities and responsibilities in
the organisation and managing flow of communication for optimal utilisation of human and other
resources.
(iii) Coordinating – Coordinating function involves determining the timing and sequencing of
activities so that the functions are carried out in proper order to achieve the objectives.
(iv) Commanding – Commanding function aims to ensure unity of directions. It involves obtaining
insight in the human resources and assigning work to employees according to their skills.
(v) Controlling – Controlling function entails confirming that all activities in the organisation are
proceeding according to the plan in accordance with the established principles and the issued
instructions. This function involves taking timely corrective steps to remove or rectify weaknesses.
Levels Of Organization & Managers
A manager: someone who coordinates and
oversees the work of other people in order to
accomplish organizational goals.
First- line managers: the lowest level of
management who manage the work of non-
managerial employees and typically are directly or
indirectly involved with producing the
organization’s products or servicing the
organization’s customers.
Middle managers: manager between the lowest
level and top levels of the organization who
manage the work of first-line managers
Top managers: managers at or near the upper
levels of the organization structure who are
responsible for making organization wide decisions
and establishing the goals and plans that affect the
entire organization.
Q2: Middle management is at the center of a hierarchical organization,
Which option is exception or wrong?
A. Subordinate to the senior management and the lowest levels of operational staff
B. Middle managers are accountable to top management for their department's function
and they provide guidance to lower-level managers and inspire them to perform
better.
C. Survey as interface between lower level and upper level
D. They make directional and strategic decisions for organization
Q2: D_ They made strategic decisions for organization

Mintzberg building blocks of Organization
(a) The five elements or ‘building blocks’ in a typical

organisation structure as suggested by Mintzberg are:
(i) Strategic Apex – This is the top management in the
organisation. with overall responsibility for planning the
organisation.
(ii) Operating Core – This comprises of those individuals
who perform basic work of the organisation. convert input
into output
(iii) Middle Line – These are the managers who interact
with the strategic apex and the operating core to achieve
the objectives of the organisation.
(iv)Support staff – These individuals render supporting

services in the organisation, i.e. secretarial staff, repairs
and maintenance personnel, cleaning staff, etc
(v) Techno structure – The staff which provides technical
support services such as accountants and I.T. specialists
who do not have line management responsibilities and
are in staff positions
Q3: In your college, cleaning and maintenance staff is included in which Mintzberg’s Core
of Management
A. Strategic Apex
B. Operational Core
C. Support Staff
D. Middle Line
E. Techno structure
Q3: C- Support Staff

Q4: Your college manage hires an auditor, an interior decorator for campus and legal
consultant for some issues, in which Mintzberg’s Core of Management you include them
A. Strategic Apex
B. Operational Core
C. Support Staff
D. Middle Line
E. Techno structure
Q4: E- Techno Structure

Q5: In your college, academic board and board of studies is included in which Mintzberg’s
Core of Management
A. Strategic Apex
B. Operational Core
C. Support Staff
D. Middle Line
E. Techno structure
Q5: A- Strategic Apex

Management by Objective
Management By Objectives (MBO) is an performance management approach in which a
balance is sought between the objectives of employees and the objectives of an
organization.
However, Peter Drucker sets a number of conditions that must be met:
•Objectives are determined with the employees;
•Objectives are formulated at both quantitative and qualitative levels;
•Objectives must be challenging and motivating;
•Daily feedback on the state of affairs at the level of coaching and development instead of
static management reports;
•Rewards (recognition, appreciation and/or performance-related pay) for achieving the
intended objectives is a requirement;
•The basic principle is growth and development not punishments.
Q6: If an organization successful link organizational objectives with
employees objective and needs we called it
A. Bureaucratic approach
B. Systematic approach
C. Management by objective
D. Human relation approach
Q6_ C_ Management by objective

Management Roles by Mintzberg
Interpersonal Roles
Figurehead Symbolic role, manager obliges to carry E.g. Receive visitors and See
out social, legal and ceremonial duties offatt end court proceedings
Leader Manager’s relationship with subordinate, E.g. seeking to build teamwork
especially in allocating tasks, hiring, and foster employee
training and motivating staff. commitment.
Liaison The development of a network of E.g. lunches with suppliers or
contacts outside the chain of command customers
through which information and favors can
be traded for mutual benefits.
Informational Roles
Monitor The manager collects and sorts out the e.g. reading reports and
information which is used to build up a interrogating subordinate
general understanding of the
organization and its environment
Disseminator To be a Disseminator means to spread e.g. passing privileged
the information information to subordinates
Spokesp- Managers transmit information by e.g. a sales presentation to
ersons various external groups by acting in a prospective the customers.
PR capacity, lobbying for the
organization, informing the public
about the organization’s performance,
plans and policies.
Decisional Roles
Entrepreneur Managers should be looking continually e.g. launching a new idea or
problems and opportunities when situations introducing procedures such as a
requiring improvement are discovered cost reduction program. .
Disturbance A manager has to respond to pressures over e.g. strikes
handler which the department has no control.
Resource Choosing from among competing demands for e.g. approving expenditure on a
allocate money, equipment, personnel and project.
management time.
Negotiator Manager takes a charge when their e.g. drawing up contracts with
organization must engaged in negotiating with suppliers
others. In these negotiations, the managers
participates as figurehead, spokesperson and
resources allocate.
Q7: Which of the following contains the three categories used by Mintzberg to group
the ten skills managers need?
A. Tactical; Operational; Strategic
B. Interpersonal; Informational; Decisional
C. Visionary, missionary, supportive
D. Objectives; Directional; Drive
Q7 : B: Interpersonal, informational and decisional

Q8: Which of the following is an ‘interpersonal’ role of management, in Mintzberg ’s
classification of nine managerial roles?
A. Monitor
B. Figurehead
C. Negotiator
D. Resource allocator
Q8: B_ Figurehead
Q9: Of Mintzberg ’s nine managerial roles, which is being exercised by a manager
who gathers information from contacts within and outside the organisation?
A Figurehead
B Monitor
C Spokesperson
D Disseminator
Q9: B- Monitor
Q10: If a manager is out of office giving presentation on the new model of car
launched in the market, last month.
Which of following role he is performing?
A Figurehead
B Monitor
C Spokesperson
D Disseminator
Q10: C_ Spokesperson
Q11: Which of the following roles of manager is combination three roles figurehead,
spokesperson and resources allocate.
A. Negotiator
B. Figurehead
C. Monitor
D. Leader
Q11: A_ Negotiator
Management Theories

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#15
 Management by Objectives
 Mintzberg’s Roles of Manager
 Organization’s Flexibility
Management by Objective
Management By Objectives (MBO) is an performance management approach in which a
balance is sought between the objectives of employees and the objectives of an
organization.
However, Peter Drucker sets a number of conditions that must be met:
•Objectives are determined with the employees;
•Objectives are formulated at both quantitative and qualitative levels;
•Objectives must be challenging and motivating;
•Daily feedback on the state of affairs at the level of coaching and development instead of
static management reports;
•Rewards (recognition, appreciation and/or performance-related pay) for achieving the
intended objectives is a requirement;
•The basic principle is growth and development not punishments.
Q6: If an organization successful link organizational objectives with
employees objective and needs we called it
A. Bureaucratic approach
B. Systematic approach
C. Management by objective
D. Human relation approach
Q6_ C_ Management by objective

Management Roles by Mintzberg
Interpersonal Roles
Figurehead Symbolic role, manager obliges to carry E.g. Receive visitors and See
out social, legal and ceremonial duties offatt end court proceedings
Leader Manager’s relationship with subordinate, E.g. seeking to build teamwork
especially in allocating tasks, hiring, and foster employee
training and motivating staff. commitment.
Liaison The development of a network of E.g. lunches with suppliers or
contacts outside the chain of command customers
through which information and favors can
be traded for mutual benefits.
Informational Roles
Monitor The manager collects and sorts out the e.g. reading reports and
information which is used to build up a interrogating subordinate
general understanding of the
organization and its environment
Disseminator To be a Disseminator means to spread e.g. passing privileged
the information information to subordinates
Spokesp- Managers transmit information by e.g. a sales presentation to
ersons various external groups by acting in a prospective the customers.
PR capacity, lobbying for the
organization, informing the public
about the organization’s performance,
plans and policies.
Decisional Roles
Entrepreneur Managers should be looking continually e.g. launching a new idea or
problems and opportunities when situations introducing procedures such as a
requiring improvement are discovered cost reduction program. .
Disturbance A manager has to respond to pressures over e.g. strikes
handler which the department has no control.
Resource Choosing from among competing demands for e.g. approving expenditure on a
allocate money, equipment, personnel and project.
management time.
Negotiator Manager takes a charge when their e.g. drawing up contracts with
organization must engaged in negotiating with suppliers
others. In these negotiations, the managers
participates as figurehead, spokesperson and
resources allocate.
Q7: Which of the following contains the three categories used by Mintzberg to group
the ten skills managers need?
A. Tactical; Operational; Strategic
B. Interpersonal; Informational; Decisional
C. Visionary, missionary, supportive
D. Objectives; Directional; Drive
Q7 : B: Interpersonal, informational and decisional

Q8: Which of the following is an ‘interpersonal’ role of management, in Mintzberg ’s
classification of nine managerial roles?
A. Monitor
B. Figurehead
C. Negotiator
D. Resource allocator
Q8: B_ Figurehead
Q9: Of Mintzberg ’s nine managerial roles, which is being exercised by a manager
who gathers information from contacts within and outside the organisation?
A Figurehead
B Monitor
C Spokesperson
D Disseminator
Q9: B- Monitor
Q10: If a manager is out of office giving presentation on the new model of car
launched in the market, last month.
Which of following role he is performing?
A Figurehead
B Monitor
C Spokesperson
D Disseminator
Q10: C_ Spokesperson
Q11: Which of the following roles of manager is combination three roles figurehead,
spokesperson and resources allocate.
A. Negotiator
B. Figurehead
C. Monitor
D. Leader
Q11: A_ Negotiator
Organizational Flexibility
Flexibility is an organization that easily adapts to size, structure, and feedback of
human resources, and also resources and expenses that are needed for reaching
objectives and goals.
Here are some aspects of organizational flexibility:
•The flexible working hours when the workers can choose the beginning and end
of their work.
•The possibility for a worker to take some time during the working day to solve
family problems, for example, an employee can go to take children from school
and take them home every day, and then return to the workplace.
•The possibility to take a few days off without losing vacation days or pay. For
example, in a case if a family member is sick, or there are some circumstances
like funeral or unexpected emergency situation, the employee can stay at home.
•An employee has a possibility to work partly from home, so they work at home in
the morning and come later to the work, or they leave the work earlier and
continue work at home in the evening.
•All employees can work at shifts, so they need to work in different times
depending on the day of week. Some people prefer to work at day shift when for
others it’s better to work at night shift. If so, such employees would prefer not to
change shifts so they can plan their life better.
•When employees choose what hours are best for them to work, it means they
can work according this schedule every day, so they will work more optimal at the
chosen hours.
•Sometimes it’s possible to work longer for several days to get more days off.
Management Procedure & Practices

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#16
 Organization’s Flexibility
 Discipline
 Disciplinary Situation
 Handling Discipline
 Grievances
 Procedure of Grievances
 Arbitration Conciliation & Tribunal
 Termination of Employment
Contract
Organizational Flexibility
Flexibility is an organization that easily adapts to size, structure, and feedback of
human resources, and also resources and expenses that are needed for reaching
objectives and goals.
•The flexible working hours when the workers can choose the beginning and end
of their work.
•The possibility for a worker to take some time during the working day to solve
family problems, for example, an employee can go to take children from school
and take them home every day, and then return to the workplace.
•The possibility to take a few days off without losing vacation days or pay. For
example, in a case if a family member is sick, or there are some circumstances
like funeral or unexpected emergency situation, the employee can stay at home.
•An employee has a possibility to work partly from home, so they work at home in
the morning and come later to the work, or they leave the work earlier and
continue work at home in the evening.
•All employees can work at shifts, so they need to work in different times
depending on the day of week. Some people prefer to work at day shift when for
others it’s better to work at night shift. If so, such employees would prefer not to
change shifts so they can plan their life better.
•When employees choose what hours are best for them to work, it means they
can work according this schedule every day, so they will work more optimal at the
chosen hours.
•Sometimes it’s possible to work longer for several days…...
Discipline
Discipline means a prescribed conduct or pattern of behavior. Discipline at workplace
can be defined as adherence to the company policies, rules, regulations and
processes laid down by the management.
Discipline means learning, as in the discipline of management, along a set of rules.

Maintaining discipline (learning) among employees is an integral part of the functions
of management.
Discipline is present when the members of the enterprise follow goals or objectives
sensibly without overt conflict and conduct themselves according to the standards of
acceptable behaviour.
Disciplinary Rules and Regulations Cover
Rules will normally cover issues such as absence,
 Timekeeping and holiday arrangements,
 Health and safety,
 Use of the organisation's equipment and facilities,
 Misconduct,
 Substandard performance,
 Discrimination,
 Bullying and harassment.
Q1: A discipline fosters appropriate behavior by encouraging employee
participation. The first step is to lay out clear protocol and ethical guidelines to
ensure your employees fully understand what you expect.
A. Positive Discipline
B. Negative Discipline
C. Neutral discipline
Q1:A _ Positive Discipline

There are three principles:
 Rules and procedures provide a framework for behaviour and performance.
 Discipline and grievances are about people not processes.
 In most cases employers should aim to improve and not to punish.
Disciplinary situations
There are several situations where work norms may not be adhered to:
Leaving work early
Defective work performance
Breaking safety or other rules
Refusing to carry out legitimate work
Poor attitude
The stages involved in a disciplinary process
Rules and procedures should be clear, and should preferably be put in writing. They
should be known and understood by all employees. Standards for handling disciplinary
procedures:
 The informal talk.
 The oral warning.
 The written or official warning – first; second.
 Disciplinary layoffs or suspension.
 Demotion or transfer.
Handling discipline
i) Encourage improvement
The main purpose of operating a disciplinary procedure is to encourage improvement in
an employee whose conduct or performance is below acceptable standards.
ii) Act promptly
Problems dealt with early enough can be 'nipped in the bud', whereas delay can make
things worse as the employee may not realise that they are below standard unless they
are told. Arrange to speak to the employee as soon as possible – the matter may then be
able to be dealt with in an informal manner and not as part of the disciplinary process.
iii) Gather the facts
Whilst maintaining satisfactory standards and dealing with disciplinary issues requires
firmness on the part of the manager, it also requires fairness. Be as objective as possible,
keep an open mind, and do not prejudge the issues.
Disciplinary Action is Required or Not
Drop the matter – there may be

no case to answer or the matter
may be regarded as minor.
Arrange a
Arrange
disciplinary
counselling/take
meeting – this
informal action –
Is disciplinary will be necessary
this is an attempt to
action necessary when the matter
correct a situation
is considered
and prevent it from
serious enough
getting worse
to require
without using the
disciplinary
disciplinary
action.
procedure.
Implementing Disciplinary Procedure
Stay calm
Conduct enquiries, investigations and proceedings with thought and care.
Be consistent
The attitude and conduct of employees may be seriously affected if management fails to
apply the same rules and considerations to each case.
Consider each case on its merits
While consistency is important, it is also essential to take account of the circumstances
and people involved.
Follow the disciplinary procedure
The disciplinary procedure must be followed and the supervisor or manager should never
exceed the limits of his or her authority.
If the employee is dismissed or suffers a disciplinary penalty short of dismissal – such as
suspension without pay – the statutory minimum procedures must have been followed.
Implementing Disciplinary Procedure
Suspension with pay

Where there appears to be serious misconduct, or risk to property or other people, a
period of suspension with pay should be considered while the case is being investigated.
Self-discipline
Positive self-discipline is based upon the premise that most employees want to do the
right thing. Most people accept the idea that following instructions and fair rules of
conduct is part of the work ethic.
Grievance Procedure
A grievance occurs when an employee feels superiors or colleagues are wrongly
treating him or her; e.g. unfair appraisal, discrimination, prevented from advancing,
being picked on, etc.
Procedure
The grievance procedure often follows this

sequence:
The employee discusses the grievance
with a colleague, staff or union
representative.
If the grievance is warranted, it is taken to
the employee's immediate superior.
If that superior cannot help, then it is
referred to the superior's manager, at which
stage the Head of department or HR or
Personnel department should be informed.
Next is Grievance Committee
CEO
Arbitration
Benefits of discipline and grievance procedure
 Employer's legal obligations are being met
 Cost savings – legal damages and operating costs
 Company image – company does not want to be associated with a discipline and
grievance record
 To preserve the wellbeing of employees and others, improves employee morale, trust
and motivation
Conciliation
This can be used to settle a dispute before it gets to a tribunal hearing. Conciliation is a
method of resolving dispute, wherein an independent person helps the parties to
arrive at negotiated settlement.
Benefits include:
 Confidentiality
 Avoid time, stress and cost of attending a tribunal
 Lessening damage to the employment relationship
 Reaching an agreement that satisfies both parties
Arbitration
Arbitration is one form of what is commonly known as Alternative Dispute Resolution. It’s
a process where both sides come together and agree to follow and respect the decision of
the arbitrator. This is one route you can try instead of filing a lawsuit and going to court to
resolve a dispute. The arbitrator is usually an attorney familiar with the field of law being
decided.
Speedy private informal hearing

No cross-examination
Limited grounds for review of the arbitrator’s decision
The primary difference between arbitration and conciliation is that arbitration is the
process by which parties select an independent person, who renders a decision regarding
the case. Conversely, conciliation attempts to make parties come to an agreement, about
the problem at hand.
Q2: If an independent person helps the parties to arrive at negotiated settlement. But he
/ she does not have the power to enforce his decision
A. Arbitrator
B. Conciliator
C. Tribunal
B_ Conciliator
Tribunal
A company may find that an employee is not happy with the outcome of a grievance
procedure and that the individual wants to make a claim to a tribunal.
Industrial tribunals are independent judicial bodies, less formal than a court, established
to hear and determine claims to do with employment matters. Their aim is to resolve
disputes between employers and employees over employment rights.
Examples include:
 unfair dismissal
 breach of contract
 discrimination
 equal pay
Termination of Contract
There are three forms of termination that constitute dismissal under internal law.
a) The termination of an employee’ s contract by the employer
b) The ending of a fixed-term contract without renewal on the same terms: in effect,
there is no such thing as a fixed-term contract of employment.
Types of Termination of Contract
Constructive Dismissal:– resignation by the employee because the conduct of the
employer was sufficient to be deemed to have terminated the contract by the employer’s
actions
Wrongful Dismissal:- Wrongful dismissal is dismissal that breaches the contract of
employment. An example would be failure to give the contractual period of notice
(assuming the circumstances did not justify summary dismissal). Wrongful dismissal
relates to the method of dismissal.
Unfair Dismissal:- The legal concept of unfair dismissal gives protection to the employee
against arbitrary dismissal; that is dismissal without good reason.
Q3: Under typical employment protect legislation, which of the following would be
classified as an ‘unfair’ reason for the dismissal of an employee?
A. The employee was a member of a trade union
B. The employee was guilty of misconduct
C. The employee’s job became redundant
D. The employee had a lack of qualifications or capability for the job
Q3: A_ The employee was a member of a trade union

Q4: Constructive dismissal occurs when an organization no longer needs an employee
and therefore terminates their contract.
Is this statement TRUE or FALSE?
A. True
B. False
Q4: B -FALSE
Constructive dismissal is when an employee resigns because their employer has
breached the terms of their contract. The definition given in the question is that of
redundancy.
Resignation
People resign for many reasons, personal and occupational. Employees who are particularly
valuable should be encouraged to stay. Particular problems the employee has been experiencing
may be solvable, though not always in the short term.
 Avoidable : Salary, Working Conditions, Post or Nature of Work
 Unavoidable: Family reasons, Personal problems
Two things are very important
 Exit Interview: In any case, an exit interview, when the leaver explains the decision to go, is a
valuable source of information.
 Period of Notice: The period of notice required for the employee to leave should be set out
in the contract of employment, but some leeway may be negotiated on this
Redundancy
Redundancy is dismissal under two circumstances.
a) The employer has ceased to carry on the business at all or in
the place where the employee was employed.
b) The requirement of the business for employee to carry out
work of a particular kind have ceased or diminished or are
expected to.

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#17
 Termination of Contract
 Redundancy
 Health & Safety
 Equal Opportunity
 Diversity
Health & Safety
A legal requirement which management must adhere to is health and safety
legislation. Management have a responsibility to manage the health and safety
risks in their workplace. They must think about what, in their organisation, might
cause harm to people and ensure that they are doing enough to prevent that
harm.
Benefits of Health & Safety
 Employers' legal obligations for health and safety are being met.
 Cost savings – accidents and illness cost the employer money – legal
damages and operating costs.
 Company image – company does not want to be associated with a poor
health and safety record.
 To preserve the wellbeing of employees and others, improves employee
morale, trust and motivation.
Health and Safety
Desk and Chairs nears to doors
Unsafe electric plugs

Torn carpets
Trailing wires cables and leads
Untrained Operator
using machine
Top heavy
filling
cabinets
Unmarked plate glass doors
Wet
Floors
Key Areas to be focused
The following are key areas:
 their policy for health and safety
 the organisation to enforce it
 the arrangements to implement it and bring it to the attention of the employees.
 Provision and maintenance of risk-free plant and systems of work.
 Ensuring the safety in use, handling, storage and transport of articles and
substances.
 Provision of information, training, instruction and supervision.
 Maintenance of a safe workplace.
 Provision of a safe working environment.
 Adequate facilities.
Responsibility
Employer Employee
The employer has a duty to provide The employee has a duty to provide
the following the following
1. Safe ways in and out of the 1. Be responsible for his or her
place of work own health and safety
2. A safe working environment 2. Consider the health and safety
3. Safe equipment and fallow of other people who may be
procedures affected by his or her actions
4. Arrangement for the safe use, 3. Co-operate with anyone
handling, storing and transport carrying out duties under the
of article and substances. act.
5. Adequate information,
instruction, training and
supervision.
Q4: Which TWO if the following are responsible for health and
safety in the workplace?
1) The employer
2) The external auditor
3) The employee
4) The Chief Security Officer
A. 1) and 2)
B. 1) and 3)
C. 3) and 4)
D. 1) only
Q4: B
Health & Safety Training Program
1. First, problems or training needs are identified by inspection, by accident

reports and through discussion at the health and safety committee.
2. Next, the planning, execution and evaluation of the training takes place. Because
training programmes only have a shortterm effect on employee's behaviour,
regular refresher courses should be organised.
3. Top management support is a key ingredient in the availability and success of
health and safety courses
Health & Safety Committee & Health & Safety Meeting
There is a difference between a safety committee and a safety meeting:
 A safety committee is an organisational structure where members represent a
group. This gives everyone a voice but keeps the meeting size to an effective
number of participants.
 A safety meeting includes all employees and a management person is there to
ensure that issues are addressed. Typically, the safety committee is an effective
safety management tool for a larger employer and safety meetings are more
effective for a smaller employer.
Mubashir Wasim
Equal opportunities
This is a generic term describing the belief that there should be an equal chance for all
workers to apply and be selected for jobs, to be trained and promoted in employment
and to have that employment terminated fairly.
The difference between diversity and equal opportunities are:
Equal Employment Opportunity Policy
The main points of a typical Equal Opportunities Policy should be as
follows:
 Equal opportunities shall mean fairness for all; the recognition,
development and use of everyone's talents.
 This fairness will run through recruitment, selection, training,
promotion, specialisation and career development generally. It should
also govern the relationship of all employees to each other.
 No job applicant or employee shall receive unfavourable treatment
directly or indirectly on the grounds of gender, sexual orientation,
marital status, race, nationality, ethnic origin, religious beliefs and,
where applicable, trade union membership, age or disability.
Selection criteria and procedures will be frequently reviewed to ensure
that individuals are selected, promoted and dealt with on the basis of
merit, fitness and competence, subject only to the restrictions imposed
by law.
Training is an important part of the implementation of the Equal
Opportunities Policy. Training programmes will be arranged to ensure
that staff are fully aware of their roles and responsibilities and have the
opportunity to develop and progress within the organization.
•
Legislation relating to discrimination typically includes the following
Legislation Typical Term

Implies an equally clause into all contracts of employment if
Pay workers of the opposite sex do the same job or a different job
of equal value.
Deals not only with pay, but other terms.
Sex Discrimination in employment affairs because of martial status
Discrimination or sex is illegal.
Racial Prohibits discrimination on ground of
Discrimination Race
Nationality
Color
Disability` Prohibits discrimination on ground of disability.
Discrimination
What is diversity?
People are not like. Everyone is different. The concept of diversity
embodies the belief that people should be valued for their differences and
variety.
The benefits of a diverse workforce
The benefits includes
Broader range of skills
Increase competitive advantage
Improve effectiveness and efficiency by maximizing the human
resource potential
Increase creativity and innovation
Q6: The concept of diversity embodies the belief people should
be:
A. Value for status & recognition
B. Encouraged to develop the cultural activities associated with
their country of origin
C. Encouraged to adopt the way of life of their own cultural group
D. Valued for their difference and variety.
Q6 : D
Diversity is perceived to enrich an organization's human capital
Representative Workforce
An organization’s workforce should be ‘representative’ of the compositions of the
operational environment.
Some organizations set themselves goals on the representation of certain groups to
address the problem of under – representation
The HR plan is a useful device to help the organization recruit a diverse workforce and
be representative of the external community
The monitoring activity is a crucial component of the planning cycle. It is here that an
employer can determine whether goals are being attained and problems resolved.
The benefits of a diverse workforce
Monitoring implies the need to be proactive in managing the needs of a diverse
workforce in areas such as:
Tolerance of individual difference
Communication effectively
Managing the adjustments to be made by an increasingly aged workforce.
Managing work with increasingly diverse family
Group
A group is a collection of individual who
1) Interaction with one another
2) Are psychologically aware of one another
3) Perceive themselves to be a group
4) Have a common interest.
“two or more than two persons who interact with one another such that each person
influences and is influenced by each other person.” ( )
Importance of Group
An individual has physical and mental limitation therefore it cannot do well that why
a group can better combine skill and knowledge e. g.
1. Better end result in terms of speed, efficiency and quality.
2. Some task require mixture of all skills
3. Task require coordination of activities.
4. Better result in terms of Synergy 2+2=5
5. Generating idea and energies in group give greater outcome then working
individually. ()
Types of Group
Types of Group
Formal Group Informal Group

Formal group will be consciously organized, for
a task which they are held responsible- they
are task oriented, and become teams.
Although many people enjoy working in teams,
their popularity in the work place arises
because of their effectiveness in fulfilling the
organization’s work
Informal groups will invariably be present in

any organization. Informal groups include
workplace cliques, and networks of people
who regularly get together to exchange
information or groups of ‘mates’ who
socialize outside work. They have a
constantly fluctuating membership and
structure.
Q1: Synergy describes the phenomenon where:
A. Collaboration leads to high levels of output
B. More energy is output than is input
C. Sun spots drive turbulent business conditions on earth
D. 2+2=5
Q1 : D
The combined activity of separate entities has a greater effect
than the sum of the activities of each entity working alone.
Q2: When two or more people or organizations combine their efforts, they can accomplish
more together than they can separately. They can get more done working together than they
can working apart.
Which term is concerned among the given Concepts
A. Union is strength
B. Individualism
C. Collectivism
D. Synergy
Q2: D_ Synergy
Group & Team

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#18
Group & Team
 Termination of Contract
 Redundancy
 Health & Safety
 Equal Opportunity
 Diversity
Group
A group is a collection of individual who
1) Interaction with one another
2) Are psychologically aware of one another
3) Perceive themselves to be a group
4) Have a common interest.
“two or more than two persons who interact with one another such that each person
influences and is influenced by each other person.” ( )
Importance of Group
An individual has physical and mental limitation therefore it cannot do well that why
a group can better combine skill and knowledge e. g.
1. Better end result in terms of speed, efficiency and quality.
2. Some task require mixture of all skills
3. Task require coordination of activities.
4. Better result in terms of Synergy 2+2=5
5. Generating idea and energies in group give greater outcome then working
individually. ()
Types of Group
Types of Group
Formal Group Informal Group

Formal group will be consciously organized, for
a task which they are held responsible- they
are task oriented, and become teams.
Although many people enjoy working in teams,
their popularity in the work place arises
because of their effectiveness in fulfilling the
organization’s work
Informal groups will invariably be present in

any organization. Informal groups include
workplace cliques, and networks of people
who regularly get together to exchange
information or groups of ‘mates’ who
socialize outside work. They have a
constantly fluctuating membership and
structure.
Q1: Synergy describes the phenomenon where:
A. Collaboration leads to high levels of output
B. More energy is output than is input
C. Sun spots drive turbulent business conditions on earth
D. 2+2=5
Q1 : D
The combined activity of separate entities has a greater effect
than the sum of the activities of each entity working alone.
Q2: When two or more people or organizations combine their efforts, they can accomplish
more together than they can separately. They can get more done working together than they
can working apart.
Which term is concerned among the given Concepts
A. Union is strength
B. Individualism
C. Collectivism
D. Synergy
Q2: D_ Synergy
Teams A team is more than a group. It has joint objective and accountability
and may be set up by organization under the supervision or coaching
of a team leader.
A team is a ‘small number of people

with complementary skills
who are committed to a common purpose, performance goals and
approach,
for which they hold themselves mutually accountable’.
Group Team
1- People accommodate each other 1- There is more openness and trust
People negotiate Feeling are expressed more freely
2- Politics are common and wide spread, 2- Conflict are worked out
even it has leadership but based on Decision are by consensus.
politics
3- Objective may be modified, due 3- There are common and shared
common interest or common purpose objective means specific goals.
which is regularly changed
4- The process issues are often hidden 4- Process Issues are part of the work.
5- Weak organization of work, even 5- Better organization (synergy) of
sense of identity and loyalty is there work- Complex Problems.
Tuckman’s Stages of Group Development
Forming
The group is not yet a group, simply a collection of individuals. At this stage, the
purpose of the group is discussed along with its title, composition, leadership and life-
span. Individuals will be keen to establish their personal identities in the group and
make some impression on others. Important mechanisms include developing trust,
finding similarities, and norms. Team members become acquainted with each other,
information is exchanged. They determine each team member's strengths and assign
roles and responsibilities.
Storming
Groups members are collected in this stage attitude and behaviors are accepted &
Rejected, group members. In the other words, the members start sharing their views,
ideas attitudes and behavior with each other which sometimes results in conflict among
the members due to which this stage is refereed to as “storming”. The team s a whole at
this point still needs top be led as there is competition between the team members for
their roles. The team members start building trust for each other during this stage. If the
team passes through this stage successfully, it will emerge as a very strong and
productive team.
Norming
Individual members become clear on what their roles and responsibilities are. In
addition, rules, values, acceptable behaviours and work styles start to get established for
the team. The level of reliance on a leader decreases significantly.
Performing
At this stage the team is function as a cohesive whole with no interference or
participation form the leader. The problems related to conflicts and adjustments
amongst team members are resolved at this stage. The team is focused, and works
towards achieving all goals and objectives.
Dorming
A new "dorming" stage as the group gets complacent or"adjourning" as the group
successfully reaches its goal and completes its work and the progress become
static.This is the dangerous stage, the team has become complacent and lost interest,
its sole concern is self preservation.
Q3: Which is the stage of team development during which the efficiency of work
will be at the lowermost point according to Tuckman?
A. Forming
B. Storming
C. Norming
D. Performing
Q3: B
Q4: The fifth stage which has been later additional to Tuckman's four stages
of team development is:
A. Warming
B. Reforming
C. Dorming
D. Leading
Q4: C
Q5: At the Shafique Bros factory, a project team has been put
together by management. In the team factions are emerging, not
only around different ideas, but around three dominating
members who always seem to disagree.
At what stage of Tuckman’s group development model is this
team?
A Forming
B Storming
C Norming
D Performing
Q5 : B
Dorming & Group Think
A very cohesive group can become blinkered to outside

information and feedback, to the point where its decision-
making processes are dangerously distorted. Irving Janis
describe this phenomenon as ‘Group Think’.
Symptoms of Group Think.
Resistance to criticism, contradiction to new information.
 A tendency to stereotype all outsiders as competitors or
enemies.
 A sense of blinding towards the group to problems and
risks.
Solution is Group Polarization
Consider the outside opinion, information
and criticism.
Get knowledge and consider suggestion
from the outsiders.
Group Cohesion (Group Behaviour)
Cohesiveness is strong team spirit; a cohesive group

is one in which the members react as a part of the
group rather than as individual. There is the strong
ability of group members to stick together, and the
ability of the group to attract new members.
The elements required to make a cohesive group could include;
1-Leadership:-
The leader should use an appropriate leadership style in order to promote
co-operation and to motivate individuals towards the takes and ensure
that work is properly organized.
•Creating a climate of communication and mutual trust.
•Creating a climate in which people speak their minds
2- Right Mix of Skills
A mixed balance of individuals each able to perform the role required.
3- Clear & Commitment to Share Goals
The task must be clearly defined and every one must understand their
contribution to the task.
4- Team Identity
The sense of being a team.
5- Team Solidarity
Loyalty to group, so that team
members put in extra effort for the
group and in support of its norms
and values
48FTC12: The factors required to make a cohesive group are
best represented in which of the following?
A. Right mix of skills/Leadership/Clear objectives
B. Negotiation/Dealing with challenging tasks/Shared
objectives
C. Shared values/Preference for formal meetings
only/Openness
D. Determination/Empathy/Emphasis on following rules
48FTC12: A
The other factors required for a cohesive group are a
commitment to shared goals, team identity and team solidarity.
Advantages of Cohesive Group
1- Atmosphere An effective, cohesive group will work in an informal,

relaxed atmosphere
2- Participation The group will discuss the work and will participate
in the decision-making.
3- Commitment As result of effective communication and
acceptance of the objective, there will be a high
degree of commitment and desire to complete the
tasks.
4- Progress The group monitors its progress and quality, always
trying to perform better.
5- Support & There will be a good understanding between group
Communication members.
4Ch12BPP11old: Which of the following would worsen group think,
rather than restrain it?
A Actively encouraging self-criticism
B Paying more attention to group maintenance
C Welcoming outside ideas and criticisms
4Ch12BPP11: B
Rationale: Excessive attention to group maintenance and solidarity
is what leads to group think in the first place. The other strategies
are ways to control the tendency.
Belbin’s Team Role Theory
Action Oriented Roles
1- Shaper:- (Challenging, Dynamic, Thrive on Pressure)

A very dominant unpredictable and extrovert person. A task focused
individual who is committed and acts as a force, of action within the team.
Usually ‘shapes’ the behaviour of others by encouraging them to work
under pressure towards achieving the team objectives.
2- Implementer:- (Discipline, Reliable, Conservative and Efficient)
Acts as an administrator and organizer by forming ideas into practical
actions. Sometime he could be inflexible or resistant to change.
3- Completer / Finisher:- (Painstaking, Conscientious, Anxious)
Focuses on ensuring that work is finished within prescribed time limits and
is as error free as possible. He is more interested in details and more
concerned about urgency and follow-through. He is reluctant to involve
other in his own task. He always tries to push the team to meet the targets,
due to which he is less popular in the team.
People Oriented Role
1- Coordinator / Leader :- (Mature, Confident, a good Chairman)

He focuses on delegating roles, promoting decision making and
coordinating the efforts of other team members. He could be seen as
manipulative.
2- Teamworker:- (Cooperative, Mild, Perceptive and Diplomatic)
Focuses on ensuring that the team functions effectively through building
relationships as a whole so that personal conflicts an tensions between
individual members are minimized. He is noticed only during his
absenteeism. He is very popular with the team and could face difficulties in
taking decisions.
3- Resource Investigator:- (Extrovert, Enthusiastic, Communicative)
Focuses on negotiating for the team with outside parties and obtaining any
resources but not idea the team may need. He is popular I the team. He
could be over-optimistic but might lose interest with passage of time.
Group & Team

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#19
Group & Team

 Team
 Group Cohesion
 Elements of Group Cohesion
 Advantages of Group Cohesion
 Tuckman Stages of Group
Development
 Dorming & Group Think
 Belbin’s Team Roles
A team is more than a group. It has joint objective and
Teams accountability and may be set up by organization under the
supervision or coaching of a team leader.
A team is a ‘small number of people

with complementary skills
who are committed to a common purpose, performance goals and
approach,
for which they hold themselves mutually accountable’.
Types of Teams
Here are six different types of teams that currently exist:
1. Working Teams
Working teams are teams that are basic to any organization: Marketing teams, Human
Resource teams, Finance Teams. They are divided according to their function and they
perform ongoing tasks for any organization. Traditionally, majority of organizations are
organized in such a way.
Pros: Efficient, functional and task-oriented. Each department fulfills a clear role in the
organization. Little mis-communication about cross-functional responsibilities.
Cons: Little communication between department leads to inter-department rivalry.
Clashing interests causing conflict. Lack of innovation on better procedures.
2. Management Teams
Management Teams are like the board of directors of a company. The directors or
managers come together to deliberate on strategic and macro-issues that affect the
whole organization. This function is traditional and an necessary extension if the
organization has work groups.
3. Special Purpose Teams / Task Force
Special purpose teams are teams that are formed to fulfil a special purpose
or a one time off project. These teams include working committees for a
particular event, or a committee that comes together to solve a particular
problem.
Usually, these teams are not permanent and they are usually disbanded
once the purpose of the team is served.
Peters and Waterman- Key Aspects of Successful Task Force Teams
Number
should
be small
Should be of Membership
Limited Duration should be
Voluntary
Communication Should be
should be Informal Action
& Unstructured Oriented
Q: Which TWO of the following are key aspects of successful special purpose team, as
defined by Peters and Waterman?
i. Team should be relatively small
ii. Membership of the team should be voluntary
iii. Successful teams should be given a wide range of tasks in the long-term.
iv. There should be formal, well-structure communication channels within the team.
a) (i) and (ii)
b) (ii) and (iii)
c) (i) and (iv)
d) (iii) and (iv)
Q:A
4- Multiskilled teams
Teams bring together individuals who can perform any of the group's tasks. These
can be shared out in a flexible way according to availability and inclination.
Multi-skilled employees have a number of different skills, enabling them to do more
than one kind of work. Many member so the team are now multi-skilled in
everything from welding to electrical.
5- Multidisciplinary Team
Teams bring together individuals with different specialisms so that their skills, knowledge
and experience can be pooled or exchanged.
Multidisciplinary care team membership for treatment planning:
lung cancer
Core team members Non-core team members

•Respiratory Medicine
•Thoracic Surgery •Nuclear medicine
•Medical Oncology •Social work
•Radiation Oncology •Physiotherapy
•Pathology •Psychiatry/Psychology
•Radiology •Dietetics
•Nurse Specialist •Occupational Therapy
•Palliative care
6- Self-Directed Teams
Self-Directed Teams do not have a clear leader. They have shared leadership and share
responsibility of their work. We do not often see self-directed teams in companies and
big organizations; they usually exist in small music groups like bands.
Pros: Members are motivated volunteers. Shared goals, objectives and responsibilities.
Good environment for open feedback.
Cons: May not have clear vision. Without a leader, conflicts may lead to separation.
Leader is usually determined by popularity more than ability.
Mubashir Wasim
Group/Team Cohesion (Group Behaviour)
Cohesiveness is strong team spirit; a cohesive group

is one in which the members react as a part of the
group rather than as individual. There is the strong
ability of group members to stick together, and the
ability of the group to attract new members.
The elements required to make a cohesive group could include;
1-Leadership:-
The leader should use an appropriate leadership style in order to promote
co-operation and to motivate individuals towards the takes and ensure
that work is properly organized.
•Creating a climate of communication and mutual trust.
•Creating a climate in which people speak their minds
2- Right Mix of Skills
A mixed balance of individuals each able to perform the role required.
3- Clear & Commitment to Share Goals
The task must be clearly defined and every one must understand their
contribution to the task.
4- Team Identity
The sense of being a team.
5- Team Solidarity
Loyalty to group, so that team
members put in extra effort for the
group and in support of its norms
and values
Advantages of Cohesive Group
1- Atmosphere An effective, cohesive group will work in an informal,

relaxed atmosphere
2- Participation The group will discuss the work and will participate
in the decision-making.
3- Commitment As result of effective communication and
acceptance of the objective, there will be a high
degree of commitment and desire to complete the
tasks.
4- Progress The group monitors its progress and quality, always
trying to perform better.
5- Support & There will be a good understanding between group
Communication members.
Forming
The group is not yet a group, simply a collection of individuals. At this stage, the
purpose of the group is discussed along with its title, composition, leadership and life-
span. Individuals will be keen to establish their personal identities in the group and
make some impression on others. Important mechanisms include developing trust,
finding similarities, and norms. Team members become acquainted with each other,
information is exchanged. They determine each team member's strengths and assign
roles and responsibilities.
Storming
Groups members are collected in this stage attitude and behaviors are accepted & Rejected,
group members. In the other words, the members start sharing their views, ideas attitudes and
behavior with each other which sometimes results in conflict among the members due to which
this stage is refereed to as “storming”. The team s a whole at this point still needs top be led as
there is competition between the team members for their roles. The team members start
building trust for each other during this stage. If the team passes through this stage successfully,
it will emerge as a very strong and productive team.
The efficiency of the group is very poor in this stage of the group development.
Norming
Individual members become clear on what their roles and responsibilities are. In
addition, rules, values, acceptable behaviours and work styles start to get established for
the team. The level of reliance on a leader decreases significantly.
Performing
At this stage the team is function as a cohesive whole with no interference or
participation form the leader. The problems related to conflicts and adjustments
amongst team members are resolved at this stage. The team is focused, and works
towards achieving all goals and objectives.
Dorming
A new "dorming" stage as the group gets complacent or"adjourning" as the group
successfully reaches its goal and completes its work and the progress become static.
This is the dangerous stage, the team has become complacent and lost interest, its
sole concern is self preservation.
Q1: Which is the stage of team development during which the efficiency of work
will be at the lowermost point according to Tuckman?
A. Forming
B. Storming
C. Norming
D. Performing
Q1: B
Q2: The fifth stage which has been later additional to Tuckman's four stages
of team development is:
A. Warming
B. Reforming
C. Dorming
D. Leading
Q2: C
Q3: At the Shafique Bros factory, a project team has been put
together by management. In the team factions are emerging, not
only around different ideas, but around three dominating
members who always seem to disagree.
At what stage of Tuckman’s group development model is this
team?
A Forming
B Storming
C Norming
D Performing
Q3 : B
Dorming & Group Think
A very cohesive group can become blinkered to outside

information and feedback, to the point where its decision-
making processes are dangerously distorted. Irving Janis
describe this phenomenon as ‘Group Think’.
Symptoms of Group Think.
Resistance to criticism, contradiction to new information.
 A tendency to stereotype all outsiders as competitors or
enemies.
 A sense of blinding towards the group to problems and
risks.
Solution is Group Polarization
Consider the outside opinion, information
and criticism.
Get knowledge and consider suggestion
from the outsiders.
Q4: Which of the following would worsen group think, rather than
restrain it?
A Actively encouraging self-criticism
B Paying more attention to group maintenance
C Welcoming outside ideas and criticisms
Q4: B


manipulative.
taking decisions.
Cerebral Oriented Roles
1- Plant:- (Creative, Imaginative, Unconventional)
Thoughtful and thought provoking, idea person focuses on problem solving
and addressing the major issues facing the team. He lacks attention to
detail. He might communicate inefficiency at times due to being too pre-
occupied.
2- Monitor Evaluator:- (Sober, Strategic and Discerning- sensitive)
Focuses on comparing and evaluating the different proposals and
suggestions put forward by other team members to determine any errors
and faults I those idea. He is very critical but not creative in decision
making due to which he is not able to encouraged others.
3- Specialist / Expert:- (Single Minded, Self-Starting, Dedicated.)
This team role emerges only when any specialized knowledge, guidance
or opinion is required which is not possessed by any other team member.
The specialist is typically a very introverted and dedicated individual who
possess rare or unique technical skills and knowledge. He is not attached
with the tam as a whole and contributes only for the specific parts where
his expertise is required.
Mubashir Wasim
Group & Team

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#20
Group & Team
 Belbin’s Team Roles

 Group Roles & Perceptions
 Effective Team


manipulative.
taking decisions.
Cerebral Oriented Roles
1- Plant:- (Creative, Imaginative, Unconventional)
Thoughtful and thought provoking, idea person focuses on problem solving
and addressing the major issues facing the team. He lacks attention to
detail. He might communicate inefficiency at times due to being too pre-
occupied.
2- Monitor Evaluator:- (Sober, Strategic and Discerning- sensitive)
Focuses on comparing and evaluating the different proposals and
suggestions put forward by other team members to determine any errors
and faults I those idea. He is very critical but not creative in decision
making due to which he is not able to encouraged others.
3- Specialist / Expert:- (Single Minded, Self-Starting, Dedicated.)
This team role emerges only when any specialized knowledge, guidance
or opinion is required which is not possessed by any other team member.
The specialist is typically a very introverted and dedicated individual who
possess rare or unique technical skills and knowledge. He is not attached
with the tam as a whole and contributes only for the specific parts where
his expertise is required.
Q1: In Belbin’s model of team roles, which of the following is
most important for a well-functioning team?
A A mix and balance of team roles
B Nine members, so that all roles are filled
C A focus on functional/task roles, not process roles
D As few members as possible
Q1 : A
Case base Question 2: Match the following team roles with the appropriate
personality.
Sarah is a very quite person, she often reserves her opinion until being directly
asked for it however she always offers unusual and creative suggestions when the
team is faced with difficult problem
Jim is respected by all team members for his analytical skills, though he rarely
gets invited to out-of-office private parties as many find him tactless
Esther is the company's HR manager, she ensures that any potential conflicts are
promptly identified and resolved and the team members work harmoniously
Options:
A. 1- Shaper, 2 - Leader, 3 - Company worker
B. 1- Plant, 2 - Finisher, 3 -Team worker
C. 1- Plant, 2 - Monitor-Evaluator, 3 - Team worker
D. 1- Resource-Investigator, 2 - Shaper, 3 - Company worker
Case based Question 2: C
The plant role is played by a creative and innovative individual, the monitor-evaluator is
good at making correct judgments and analysis, whereas the team worker looks after
the atmosphere within the team work out on frictions and differences between
individuals.
Case based Question 3: Grant is a member of a project team. His colleagues in the
team rely on him to read and check complex project documentation. Grant has a
keen eye for detail and often identifies minor details in documents that others
miss but may be of significance. Despite this diligent approach, Grant always
meets his deadlines. However, Some of Grant's colleagues feel frustrated when he
refuses to involve others. He can hold up progress as he will not agree to the team
signing off project documents until all of his concerns are fully discussed.
According to Belbin's team roles theory, Grant is an example of which of the
following?
A. Implementer
B. Completer-finisher
C. Monitor-evaluator
D. Shaper
Case based Question 3: B
The indicators in the prompt that confirm Grant as a completer-finisher include
the phrases 'keen eye for detail', identifies minor details in documents that
others miss', 'always meets his deadlines' and 'reluctant to involve others'.
These are consistent with Belbin's
(Examiner’s Comments)
Q: B Rationale: only 33% of the students chose the correct answer. They key
words in the question were ‘keen eye for detail’, always meets deadlines’ and
reluctant to involve others. These phrases are typical characteristics of a
completer-finishers.
Q4: Team-member Mr. Asim is one of those people who is energetic and grow well on
pressure. He is a person who challenges and drives other team members.
Which of Belbin’s team roles does Mr. Asim have`?
A Plant
B Co-ordinator (chair)
C Implementer
D Shaper
Q4 : D
Mubashir Wasim
Group Perception
Developing a group means identifying distinct roles for each of its members. Any individual can
have several roles, varying between different groups and activities. The role adopted a will affect
the individual’s attitude towards other people.
A role is the expected pattern of behaviours associated with members occupying a particular
potion within the structure of the organization it also describes how individual perceive their own
situation.
 An individual’s perceptions of other people and interactions with other people will be influenced
buy the different roles. The role they adopt will affect their own behavour, as well as their attitude
towards other people.
There are several terms which are associated with role theory:
Role Ambiguity
Role ambiguity arises when individuals are unsure what role they are to play, or others are unclear
of that person’s role and so hold back co-operation. This can arise, for example, when a new
member joins an established group.
Role Conflict:
Role conflict arises, when individuals find a clash between differing roles that they have adopted. A
company finance officer who uncovers fraud by senior management may feel a conflict between the
roles of professional confidentiality and honest citizenship.
Role incompatibility:
Role incompatibility occurs when individuals experience expectations from outside groups about
their role that are different from their own role expectations.
Role Signs:
Role signs are visible indications of the role. Style of dress and uniform are clear example of role
signs. These may be voluntary or mandatory variations. In uniform denote status.
Role Set:
Role set describes the people who support a lead person in a major role. For example the clerk and
junior barristers would form part of a senior barrister’s role set.
Role Behavior:
Role behavior certain types of behavior can be associated with a role in an office or works. For
instance, the crown prince behaving as if they are heir apparent to a senior position
Q5: When checking sales records of the company by an audit team, Abid a
member of staff has uncovered a suspicious irregularity as the transaction is
being processed is out of set procedures and limitation. This would need more
time to be inspected fully, however the senior audit manager is stressing the
need to meet the close deadline for completion. Considering the role of Abid, this
could be referred to as:
A. role ambiguity
B. role sign
C. role behavior
D. role conflict
Q5: D
Q6: Mr. Saleem is newly appointed sale representative in Doon Pharmaceuticals. But
he is being conceptualized as a stressful condition due to other employees' confusion
concerning expectations of what their responsibilities are and lack of information
regarding appropriate actions in a given situation. He is not understanding the
expectation of management. The situation is
A. role ambiguity
B. role sign
C. role behavior
D. role conflict
Q6: Role Ambiguity

Q7: Waiters in a Zennath Restaurant have been told that they have to wear
blue suits and red bow ties so that can be easily identified by guests. What
features of role theory does this associated to?
A. Role behaviour
B. role sign
C. role set
D. role definition
Q7 : B
Team is Effective or Ineffective
Characteristics Effective Ineffective
On accomplishment and achievements Feel Pride No or little pride
Team Member participations in Issues and Equally and Respected No Equal Participation No
Decisions Each other Respect each others
Interpersonal Conflict Very Rare Very Common
Understanding of Roles and Purpose Clear Doubt and

Confusion
Continuity in Terms of Member Long-term No Continuity
In Achievments Consistency Inconsistency

Group & Team

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#21
Group & Team
Lecture Contents
Today
 Effective Team
 Effective or Ineffective
 Handy – Group Effectiveness
 High-performance Teams by Vaill
 DEC – high performance teams
 Steiner Four Basic Models of Group
Functioning
 Learning Organization
Team is Effective or Ineffective
Characteristics Effective Ineffective
On accomplishment and achievements Feel Pride No or little pride
Team Member participations in Issues and Equally and Respected No Equal Participation No
Decisions Each other Respect each others
Interpersonal Conflict Very Rare Very Common
Understanding of Roles and Purpose Clear Doubt and

Confusion
Continuity in Terms of Member Long-term No Continuity
In Achievments Consistency Inconsistency

Q1: Which of the following is most clearly a symbol of an ineffective group? In
the team environment
A There is disagreement and open discussion within the group
B There is race with other teams
C Members unresponsively accept work decisions
D Individuals achieve their goals
Q5 : C
Q2: Which of the following would be a real method for encouraging healthy
team environment?
A Discouraging competition with other groups
B Encouraging competition within the group
C Encouraging members to express disagreements
D Discouraging members from expressing discrepancies
Q6 : C
Handy – Group Effectiveness
Handy’s view is that group effectiveness will depend on:

The givens – the group, the task and the environment
The intervening factors – motivation of the group, leadership styles, processes and
procedures
The outcomes – productivity of the group, satisfaction of group members
Q3: Group effectiveness is the capacity a team has to accomplish the goals
or objectives administered by an authorized personnel or the
organization.
According to Handy three factors should be considered
A. Size, effectivity, production
B. Task analysis, task work, and production
C. Given, intervention and output
D. Ideas, implementation and output
C: Given, intervention and output

High-performance Teams by Vaill
A high-performance team can be defined as a group of people with specific roles and
complementary talents and skills, aligned with and committed to a common purpose,
who consistently show high levels of collaboration and innovation, produce superior
results, and extinguish radical or extreme opinions that could be damaging.
 Clarification of broad purposes and near-term objectives.
 Commitment to purposes.
 Teamwork focused on the task at hand.
 Strong and clear leadership.
 Generation of inventions and new methods.
Digital Equipment Corporation (DEC)
Digital Equipment Corporation (DEC), a computer manufacturer in the 1980s, developed
high performance work systems around empowered teams. This approach was found to
improve productivity, reduce the time to introduce new products and improve problem
solving and decision making.
Digital Equipment Corporation (DEC)
Their teams had the following features:
 Autonomous teams – 6 to12 members, self managing and self organizing
 Full “front to back” responsibility – team responsible for a whole section of production
 Production targets negotiated between teams and managers
 Multi skilled teams – members expected to share skills, no job titles within teams
 Members paid according to skill level
 Members of teams appraised each other, and involved in recruitment of new team
members
 Factory layout designed to facilitate communication
Integration and Organization
There are a number of factors that affect the integration of organizational and individual
objectives in groups:
Size of group – depending on the scope and nature of the task.
Homogeneity (similarity of members) and Diversity– similarity for simple tasks and
diversity for complex problems.
Alternatives – whether a member can leave a group easily if they have an alternative then
his or her dependence on the group is reduced
Membership of other groups – reduces cohesiveness and effectiveness.
Environmental factors – the compatibility of the task and the organization; the isolation of
the group including the presence of external threat, and incentives; the climate of
management and leadership including leadership style.
Steiner Four Basic Models of Group Functioning
How group dynamics can affect performance Steiner identified four basic models of
group functioning.
An additive model is in which every individual contributes but no one dependent
on anyone else. The total output in theory depends on the average skill or ability of
the group.
Example is online component based software development where each component
is given to a separate programmer in different country on bases of lowest possible
price vending
A conjunctive model is in which there is a high and often sequential dependence

between members, as in assembly lines. Overall performance of the team is here
dependent on the weakest member. If the team is small and homogeneous the
team performance will become more efficient.
A disjunctive model applies to things like problem-solving, where the group

performance should be close to that of the most competent member. Group size
should therefore be as small as possible, consistent with having all the necessary
range of skills available.
A complementary model applies where the task can be divided into separate parts
and different skills are needed for each.
Learning Organization:-
The learning organization is an organization

that facilitates the acquisition and sharing of
knowledge, and the learning of all its
members, in order continuously and
strategically to transform itself in response to
a rapidly changing and uncertain
environment.
The key dimensions of a learning organization
are:
(a) The generation and transfer of knowledge
(b) A tolerance for risk and failure as learning
opportunities
(c) A systematic, on-going, collective and
scientific approach to problem-solving
Mubashir Wasim
Garvin suggests that 'learning organizations' are good at certain key processes.
(a) Experimentation. Learning organizations systematically search for and test new
knowledge. Decision-making is based on 'hypothesis-generating, hypothesis-testing' techniques:
the plan-do check-act cycle. Application of information and learning is key. Innovation is
encouraged, with a tolerance for risk.
(b) Learning from past experience. Learning organizations freely seek and provide feedback
on performance and processes: they review their successes and failures, assess them
systematically and communicate lessons to all employees. Mistakes and failures are regarded as
learning opportunities.
(c) Learning from others. Learning organizations recognize that the most powerful insights
and opportunities come from looking 'outside the box' of the immediate environment. They
encourage employees to seek information and learning opportunities outside the organization as
well as inside.
(d) Transferring knowledge quickly and efficiently throughout the organization. Information
is made available at all levels and across functional boundaries. Education, training and networking
opportunities are constantly available.
Q4: Given the characteristics of a learning organization, identify of the following is
not a characteristic of a ‘learning organization’?
A. The generation and transfer of knowledge and awareness
B. Support for learning and development by all its employees
C. A scientific approach to problem-solving, in order to minimize risk
D. Willingness to endlessly transform itself in response to a changing business
environment
Q4: C
❑ Training & Development
❑ Mentoring
❑ Counseling
❑ Coaching
Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#22
Training & Development
Lecture Contents
Today
❑ Indicators of Training
❑ Types of Training
❑ Off the Job Training
❑ On the Job Training
❑ Induction Training
❑ Evaluation
Training
Development
The process of providing employees with
An effort to provide employees with abilities the
specific skill or helping them to correct their
organization will need in future.
deficiencies in their performance.
Future
Focus (Current Job)
Long Term
Time Frame (Immediate)
Indicators of Training Needs
1. A study (at the level of the individual, job or department) of
the required level of competence, the present/actual level of
competence and any gap between them.
2. Introduction of new technology or any other change.
3. Other training requirements may emerge in response to
critical incidents.
4. Some Qualitative indicators might be taken as symptoms of a
need for training absenteeism, high labour turn over, lack of
motivation.
Types of Training
On the Job Training Off the Job Training.
•On the job training is the training of Off the job training is the training of
employee during the working hours of an employee when he is paid to learn some
employee with in the organization skill from out side the organization.
Advantages Advantages
a. Less Costly a. No effect on production
b. Actual Working Situation b. No time pressure
c. Learning by doing c. No effect of errors on work
Disadvantages d. Time for learning.
a. Less Production Disadvantages
b. Time Pressure a. More Costly
c. Errors Direct Effect the work b. Artificial Environment
d. No Time learning c. Learning Not by doing
Off the Job Training
(a) Courses may be run by the organization's training department or may be provided by
external suppliers. These may be.
(i) Day release: the employee works in the organization and on one day per week attends
a local college or training centre for theoretical learning.
(ii) Distance learning, evening classes and correspondence courses, which make demands
on the individual's time outside work.
(iii) Revision courses for examinations of professional bodies.
(iv) Block release courses which may involve four weeks at a college or training centre
followed by a period back at work.
(v) Sandwich courses, which usually involve six months at college then six months at work,
in rotation, for two or three years.
(vi) A sponsored full-time course at a university for one or two years.
Off the Job Training
(b) Computer-based training involves interactive training via PC. The typing program
Mavis Beacon is a good example.
(c) E-learning
E-learning is computer-based learning through a network of computers or the Internet
(rather than stand-alone CD-Rom or software). Learning support is available from online
tutors, moderators and discussion groups.
(d) Techniques used on the course might include lectures and seminars (theory and
information) or role plays, case studies and in-tray exercises (to simulate work activities).
Q1: __________ is learning through a network of computers or the
Internet, so that learning support is available from on-line tutors,
moderators and discussion groups. Yet not stand-alone CD-Rom or
tuition software.
What term is used for this important new learning technology?
A. Computer based training
B. E-learning
C. Blended learning
D. Computer based assessment
Q1: B
On the Job Training
On the job training utilizes real work tasks as learning experiences. Methods of on
the job training include the following.
(a) Demonstration/instruction: show the trainee how to do the job and let them et on
with it. It should combine telling a person what to do and showing them how, using
appropriate media. The trainee imitates the instructor, and asks questions.
(b) Job rotation: the trainee is given several jobs in succession, to gain experience of a
wide range of activities. (Even experienced managers may rotate their jobs, to
gain wider experience; this philosophy of job education is commonly applied in
the Civil Service, where an employee may expect to move on to another job after a
few years.)
(c) Temporary promotion: an individual is promoted into his/her superior's position
whilst the superior is absent. This gives the individual a chance to experience the
demands of a more senior position.
On the Job Training
(d) 'Assistant to' positions (or work shadowing): an employee may be appointed as
assistant to a more senior or experienced person, to gain experience of a new or more
demanding role.
(e) Action learning: managers are brought together as a problem-solving groups to
discuss a real work issue. An 'advisor' facilitates, and helps members of the group
to identify how their interpersonal and problem-solving skills are effecting the
process.
(f) Committees: trainees might be included in the membership of committees, in
order to obtain an understanding of inter-departmental relationships.
(g) Project work: work on a project with other people can expose the trainee to other
parts of the organization
Induction Training
Induction is the process whereby a person is formally
introduced and integrated into an organization or system. The
purposes of induction are:
(a) To help new recruits to find their bearings
(b) To begin to socialize new recruits into the culture and
norms of the team/ organization
(c) To support recruits in beginning performance
(d) To identify on-going training and development needs
(e) To avoid initial problems at the 'induction crisis' stage of the
employment lifecycle, when
frustration, disorientation and disappointment may otherwise
cause new recruits to leave the organization prematurely
The immediate supervisor should commence the on-going
process of induction.
The five-level evaluation model
The effectiveness of a training scheme may be measured at different levels (Hamblin).
Level 1 Trainees' reactions to the experience. These are usually measured by
post-training feedback forms.
Level 2 Trainee learning (new skills and knowledge): measuring what the trainees have
learned on the course usually by means of a test at the end of it.
Level 3 Changes in job behaviour following training: observing work practices and
outputs (products, services, documents) to identify post-training differences.
Level 4 Impact of training on organizational goals/results: seeing whether the training
scheme has contributed to the overall objectives of the organization, in terms of quality,
productivity, profitability, employee retention and so on.
Level 5 Ultimate value: the impact of training on the wider 'good' of the organization in
terms of stakeholder benefits, greater social responsibility, corporate growth/survival.
Q2: The effectiveness of a training scheme may be measured at different levels.
Which of the following levels would be most appropriate for a team leader seeking to
evaluate a training programme designed to improve the productivity of her section?
A Level 1: trainee reactions
B Level 2: trainee learning
C Level 3: job behaviour
D Level 5: ultimate value
Q2: C
❑ Mentoring
❑ Counseling
❑ Coaching
Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#23
Lecture Contents
Today
❑ Personal Development Plan
Training
Development
The process of providing employees with
An effort to provide employees with abilities the
specific skill or helping them to correct their
organization will need in future.
deficiencies in their performance.
Future
Focus (Current Job)
Long Term
Time Frame (Immediate)
Personal Development Plan
Step 1: Analyze the Current Position:-
Select an area for development: a limitation to
overcome or a strength to build on. Your goals might
be based on your need to improve performance in
your current job and/or on your career goals, taking into account possible
changes in your current role and opportunities within and outside the
organisation. You might carry out a personal SWOT (strengths, weaknesses,
opportunities, threats) analysis. One helpful tool is an interest/ aptitude and
performance matrix, on which you can identify skills which you require (don't do
well) but for which you can build on your aptitudes and interests (like).
Step 2. Set Goals
Set a SMART (specific, measurable, agreed, realistic, time-bounded) learning
objective: what you want to be able to do or do better, and in what time scale.
Step 3. Draw an Action Plan
1. Methods you will use to develop the identified skills
2. Timescale for review of progress.
3. Methods of monitoring and reviewing progress and achievement of the
objective.
Q1: The stages of preparing a personal development plan are contained in which
of the following?
A. Position analysis/Attributes/Objectives
B. Past successes & failures/Corrective action/Review
C. Objectives / Detailed plan/Review
D. SWOT analysis/Setting goals/Action plan
Q1: D
Stage 1 = personal SWOT (strengths, weaknesses, opportunities, threats);
Stage 2 = Set goals, involving identifying particular weaknesses;
Stage 3 = Draw up an action plan based on addressing the identified weaknesses.

Q2: What name is give to the procedure whereby an individual defines objectives
and formulates action plans for learning with a view to improving his / her own
effectiveness?
A. Coaching
B. Mentoring
C. Counselling
D. Personal development planning
Q2: D
Q3: Which of the following is unlikely to be a goal of a personal development plan?
A. Growing during a person’s career
B. Meeting weekly sales targets
C. Developing expertise and capability
D. Comprehending personal aspirations.
284FTC12:B
Methods of development
Mentoring:-
Mentoring is a process where one person offers help, guidance, advice and support to
facilitate the learning or development of another. It follows an open and evolving
agenda and deals with a rang of issues.
Consists of three main processes:-
Exchange of Unique knowledge about industry or field
Sustain Partnering Relationship
Measurable / Beneficial Outcome for parties involved.
Coaching or Tuition Assistance Program:-
Focuses on achieving specific objectives, usually within a preferred time period. It is more
about improving the performance of someone who is already competent rather than
establishing competency in the first place, or focusing on the task and ensuring that
learner gains competence.
One-to-one basis, is set in the everyday working situation and is a continuing activity.
To develop their skills and to increase their self-confidence so that they can take more
responsibility for their own worked and develop their career prospects.
Coach should have the qualities of expertise, judgment and experience that make it
possible for the person coached to follow the guidance.
Counseling:-
Counseling can be defined as ‘a purposeful relationship in which one person helps
another to help himself/herself’.
The counselor needs to be:
Observant:- there is a need to note behavior, which may be symptomatic of
problem.
Sensitive:- there is need to acknowledge and understand that another person's
beliefs and values may be different from their own.
Empathetic:- there is a need to appreciate that the problem may seem
overwhelming to the individual.
Counseling
Impartial:- impartial to say change your values let the man do and help himself or
herself as requirement as per his or her personal choice.
Discreet:- there will be situations when an employee cannot be completely open
unless they are sure that the comments they make will be treated with
confidentiality.
Q4: Which of the following best defines coaching?
A. Developing the individual by helping to build on skills and overcome weaknesses
B. Provision of one-way instruction on formal tasks required to carry out the
immediate job
C. Offering career guidance in order to maximize the individual's potential
D. Provision of objective advice to overcome the individual's personal problems
Q:A
Q5- Which TWO of the following are benefits of counseling?
• A- It may help solve issues that can hinder productivity
• B- It removes the need for mentoring and coaching
• C- It may help reduce time lost due to personal problems
• D- It allows management to solve employee problems
Q5- C & D
 Organization Structure
 Departmentalization

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#24
Lecture Contents
Today
 Departmentalization
 Functional Structure
 Divisional Structure
 Geographic Structure
 Matrix Structure
Organizational Structure
Organizations Structure is the framework for allocating tasks, delegating authority,
coordinating activity and channeling communication between individual and groups in
the organization.
There are three key components on which organization structure is based on
a) Organization structure designates formal reporting relationships, including the
number of level in the hierarchy and the span of control of managers and supervisors.
b) Organization structure identifies the grouping together of individuals into
departments and of departments into the total organization.
c) Organization structure includes the design of systems to ensure effective
communication, coordination, and integration of effort across departments.
Entrepreneurial
Structure
Manager – Owner
Early days of Small Business
Advantages
1. Fast Decision Making
There is only one person making
2. More Responsive to Market
decisions- this should lead to decision
3. Goal Congruence being made quickly
4. Good Control As soon as an element of the
5. Close Bond to Workforce marketing alters, the entrepreneur
should recognize it and act quickly
A lack of chain of command and the
small size of the organization should
mean that the entrepreneur has
control over the workforce and all
decisions within the organization to
better goal (Page:21)
Disadvantages
1. Lack of Career Structure
2. Capabilities of Manager / This type of structure is usually
Owner suited to small companies where
3. Difficulties in Growth & due to the size there is no career
Diversified path for the employees.
If the organization grows, one
person will not be able to cope
with the increased volume of
decisions etc. (Page 21)
Q1: Which of the following statements regarding the entrepreneurial
structure is correct?
A. It usually allows for defined career paths for employees
B. It often enjoys strong goal congruence throughout the organisation
C. It can normally cope with significant diversification and growth
D. Control within the organisation tends to be weak
Q1 : B
Functional Organization
Transfer to Entrepreneur Structure to Functional Organization.
Few products, Similar Products
Board of
Directors
Marketing Production Finance Human Resource

Department Department Department Department
Functional organizations group together employees that under take

similar tasks into departments.
This type of structure is often found in organizations that have outgrown
the entrepreneurial structure.
It is most appropriate for small organization which have relatively few
products or locations and which exist in a relatively stable environment.
(Page: 21)
Advantages:- Rather than duplicating roles in
1. Economies of Scale different parts of the company,
2. Standardization similar activities are grouped
3. Specialist more comfortable together, leading to:
Lower costs
4. Career Opportunity
Standardization of
output/systems, etc.
People with similar skills
being grouped together and
so not feeling isolated.
Due to the larger size of the
organization and the grouping
into functions, there is a career
path for employees _ they can
work their way up through the
function.
(Page: 22)
Managers of the functions may try to
Disadvantages:- make decision to increase their own
1. Empire Building power or are just in the best interest of
2. Slow Response to Change their function, rather that working in the
3. Conflict Between Functions best interest of the company overall.
4. Cannot Cope with Diversity. This leads to empire building and
conflicts between the functions.
Due to the longer chain of command,
decision will be made more slowly. Less
frequent communication… informal
required
This style of structure is not suited to
an organization which is rapidly growing
an diversifying. For example, the
specialist in one organization’s
production function may not be able to
cope with making, say, gas fires and
radios.
Q2: Which of the following is a disadvantage of a functional
structure?
A. Lack of economies of scale
B. Absence of standardization
C. Specialists feel isolated
D. Empire building
Q2: D
Q3
Softstance Ltd is an organization that manufacture tissue paper.
The business is organized into four main departments: finance
marketing production and administration. What type of
organization structure does softness follow?
A- Functional
B- Matrix
C- Product
D- Geographic
Q3- Answer is A
Q4-(19)- An organization is split into five different
departments- production, finance, marketing, and
research.
Which of the following describes this organizational
structure.
• A- Matrix
• B- Entrepreneurial
• C- Geographical
• D- Functional
Divisional Structure
Department are name with products
Three names:
Profit Canters:
Board of Directors of Hitachi.
Heavy Mech. Home Access. Computer Equip.
Mkt. Fin. Pro. Mkt. Fin. Pro. Mkt. Fin. Pro.

This structure occurs where an organization is split into several divisions each
one autonomously overseeing a product or section or the organization.
Each division is likely to have a functional structure, with all the departments it
need in order to operate in its particular market segment.
Division are likely to be run as profit centers, with their own revenues,
expenditure and capital investments. Each divisional is a separately identifiable
part of the overall organization, which is often referred to as a strategic business
unit. (SBU)
Advantages:-
1. Enable Growth
2. Clear
Responsibilty
for Product
3. Further
Diversification
4. Top
Management
Free to
Concentrate on
Strategic
Matters.
Disadvantages:-
1. Potential Loss of Control
2. Lack of Goal Congruence
3. Specialists Feel Isolated
4. Allocation of Central Costs
can be a Problem.
5. Lack of Economies of Scale
Q5: H Ltd makes a variety of unrelated products, including bicycles, furniture and
electronics. It is aware that each of these products requires very different strategies
and functions. H wishes to use a structure that will allow for each product to
managed separately, but wishes to minimise its overall administrative costs.
Which of the following organisational structures would be most appropriate for H
Ltd to adopt?
A. Divisional
B. Entrepreneurial
C. Functional
D. Matrix
Q5 :A
Geographic Structure
Geographically Spread Organizations:-
Geographic Based Department:-
Board of Directors of Lucky Co.
Northern Division Eastern Division Southern Division
Mkt. Fin. Pro. Mkt. Fin. Pro. Mkt. Fin. Pro.
This is similar to the divisional structure, but involve each division covering a
specific location.
For example, a global company may be split into different divisions based on
geographic areas. There may be a division that looks after the organization’s
Asian operations, one that covers Europe and another division for America.
Advantages:- Disadvantages:-
1. Enable geographic growth 1. Potential Loss of Control
2. Allow local decision 2. Lack of Goal Congruence
making 3. Understanding of
3. Clear responsibilities for Different Cultures
areas 4. Human Resources
4. Regional Opportunities:-
5. Understanding of
Environment
6. Training for General
Managers
Product vs. geographic divisionalization Structure:-
Product divisionalization is generally preferred over say geographic
divisionalization when the product is relatively complex and require a high
cost of capital equipment, skilled operators, etc. e.g. the car industry.
Q6: Which of the following structures results in a
potential loss of control over key operating decisions?
A. Matrix
B. Entrepreneurial
C. Functional
D. Geographic
Q6 : D
Matrix Organization
Combination of Functional & Divisions
Ideal for Medium Size Organization with Projects/ Products
Matrix Organization
The matrix requires dual reporting to two different managers. For

example, looking at the diagram above, an employee manufacturing
product A would have to report to the manager of the production
department and the manager in charge of product A.
The aim of the matrix structure is to combine the benefits of both the
divisional and functional structures. (Page: 26)
Advantages In today’s rapidly changing
1. Advantages of both functional and environment, there is a need
divisional structures for effective coordination in
2. Flexibility & Customer Orientation very complex situations. If a
car manufacturer wants to
3. Economies of Scale
design, produce and market a
4. Sharing of Resources Across new model, the process
Projects involves most parts of the
5. Encourage Teamwork organization and a flexible
system is needed to achieve the
objectives. The more rigid
structure experienced in a
divisional company would not
have the flexibility to be able to
The production manager could be replaced coordination the tasks and the
with customer managers, in which case people, whereas the matrix
the whole team will be focused on structure can cope. (Page: 27)
meeting the needs of the customers.
Disadvantages
1. Dual Command & Conflict
2. Time Consuming
3. Conflicts between functions and
projects
Where the matrix structure can cause difficulty is in the lines of
control. These may become ambiguous and conflict with
each other . A team member may be answerable to the
product manager and to a functional head, and this may
cause confusion and stress. Time consuming meeting may be
required to resolve the conflict, so resulting in higher
administration cost.
Test Your Understanding #1
Consider the following statements:

(i) Under the functional structure, each department operates as a
strategic business unit.
(ii) The matrix structure will enable rapid decision-making within the
organization.
Which of the statement is/are correct?
A (i) only
B (ii) only
C Both
D Neither
The correct answer is D:
Test Your Understanding #2
M plc is a large company that operates in country G. It manufactures

several different products, each of which is highly complex and extremely
specialized. Its sales have grown significantly over the last several years
with each of its products producing a roughly equal amount of M’s over
all revenue.
Which organizational structure is most likely to be appropriate for M?
A Geographic
B Divisional
C Functional
D Entrepreneurial
The correct answer is B:

Q9: Which of the following structures is best placed to
address the need for co-ordination in very complex
situations?
A. Functional
B. Divisional
C. Matrix
D. Geographical
Q:C
Q10: The term 'networking' is most associated with what type of
organizational structure?
A. Functional
B. Entrepreneurial
C. Matrix
D. Divisional
Q10: C
Conflicting demands over allocation of resources is most likely to be a

disadvantage for which type of organization structure?
A. Entrepreneurial
B. Matrix
C. Divisional
D. Geographical
Answer is B
.
 Span of Control, Tall & Flat
Organization

Economics-Banking &
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Lecture#25
Lecture Contents
Today
 Scalar Chain
 Span of Control
 Tall & Flat Organization
Scalar Chain
Define:
Strategic
Tactical
Operational
Scalar Chain
This is the line of authority which can be traced up
or down the chain of command, from the most
senior member of staff to the most junior. It
therefore relates to the number of level of
management within an organization. Page: 29
Q1: Test Your Understanding
H Ltd is a manufacturing company. The work undertaken is simple,

meaning that each manager looks after a large number of employees.
Because of this, there are relatively few levels of management within
the company.
Which of the following is correct with regards to the structure of H Ttd?
A. Wide span of control, short scalar chain
B. Narrow span of control, short scalar chain
C. Wide span of control, long scalar chain
D. Narrow span of control, long scalar chain
Answer is A
Narrow Span Span of Control: Define Wide Span
Strengths:- Strengths:-
1. Better Control:- 1. Delegation of Authority:-
2. Smaller Group Better Social 2. Initiative & Creativity:-
Needs:- 3. Less Administrative Costs:-
3. Supervisor can Spare More 4. Flexible Supervision Style:-
Time for Instructing
Subordinates:- Weaknesses:-
4. More Influence of Supervisor:- 1. Weak Control:-
2. Larger Group Weak Social
Weaknesses:- Grouping:-
1. Lack of Delegation of 3. Supervisor Spare Less Time,
Authority:- More Learning from
2. Lack of Initiative & Creativity:- Coworkers:-
3. More Administrative Costs:- 4. Weak Influence of Supervisor:-
4. Rigid Supervision:-
Narrow Span Span of Control: Define Wide Span
A manager’s span of control
is the number of people for
whom he or she is directly
responsibility. Page:29
The factors that influence the span of control include:

The nature of the work: the more repetitive or simple the work,
the wider the span of control can be.
The type of personnel: the more skilled and motivated the
managers and other staff members are, the wider the span of
control can be.
The location of personnel: if personnel are all located locally, it
takes relatively little time and effort to supervise them. This allows
the span of control to become wider.
Q2: Test Your Understanding
Consider the following statements:

i) The scalar chain shows the number of people for whom a manager is
directly responsible.
ii) A business with highly skilled, motivated members of staff will tend to
have a wider span of control than a business with demotivated
employees.
Which of these statements is/are correct?
A (i) only
B (ii) only The correct answer is B:
C Both
D Neither
Narrow Span Span of Control: Wide Span
Contingency Theory:-
Practice - Revise
1. Nature of Work
2. Nature of Worker
3. Nature of Supervisor
4. Location of Personnel
Tall Flat
Organization Organization
A ‘tall’
organization has
many levels of
management (a
long scalar chain)
and a narrow
span of control A ‘flat’ organization has few level of
management (a short scalar chain)
and a wide span of control
Layers
Span of Control
Tall Flat
Organization Organization
A ‘tall’
organization has
many levels of
management (a
long scalar chain)
and a narrow
A ‘flat’ organization has few level of
span of control
management (a short scalar chain)
and a wide span of control
It is worth noting that tall organizations tend to be more bureaucratic and take
longer to make decision, due to the large number of levels of management that
need to be involved.
Flat organizations tend to have weaker control and fewer chances for employees to
progress or be promoted within the organization. Page:30
A narrow span of control is likely to lead to which of the following.
A. A tall management structure
B. A flat management structure
C. A short scalar chain
D. A reduction in the number of level of management
Answer is A
Q: Consider the following statements:
(i) Tall organizations typically have narrow spans of
control.
(ii) A 'flat' organisation is one that has a short scalar chain.
Which of these statements is/are correct?
A. (i) only
B. (ii) only
C. Both
D. Neither
Q: C
Both statements are correct.
The Anthony Triangle is a model that
Level of Strategy can be used to illustrate the type of
strategic planning that will be made
Strateic Planning is undertaken by senior
each level of the organization’s
hierarchy.
Strategic
Planning
Tactical
Planning
Operational Planning
Levels of Strategy- Levels of Planning- Levels of
Management Structure
Is undertaking by senior managers. It

Strategic involves making long-term decision for the
Planning entire organization
Is undertaken by middle management. It

Tactical tends to look at plans for specific
divisions or departments and specifies
Planning how to use resources
Operational Is undertaken by junior managers

and supervisors. It is short-term,
Planning detailed and practical.
Strategic Planning would involve
making plans for the whole business.
This could involve which locations to
open or close stores and whether to
raise cash form investors.
Tactical Planning would be the
creation of strategies for a particular
supermarket. For example decisions
about special offers, local advertising
and which products should be
stocked.
Operational Planning involve
practical, day-to-day strategies, such
organizing shift patterns, deciding
when to stock the shelves and
advertising for and selecting new
employees.
Q: Stark Limited is a company that currently manufactures metal tubing. It has
recently decided to open a series of new manufacturing plants within country H which
it believes will help it to break into the European market.
Which level of strategy planning would this decision relate to?
A. Functional
B. Strategic
C. Tactical
D. Operational
Q:B
 Behavioral Classification

Economics-Banking &
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Lecture#26
Lecture Contents
Today
 Mechanistic vs. Organic Organization
 Formal vs. Informal.
Mechanistic Organization Organic Organization
Bureaucratic Organization Informal Organization
Span of
Problem of Grape Vine
Control
An informal organization structure can arise in a organization due to
________ . Which one of the following does not complete the
sentences?
A. Friendship
B. Personal relationships
C. The grapevine effects
D. Common interests
Answer is C.
Formal Organization
Infor
mal
For
mal
Informal Organization
Informal
Formal
Need more multi-skill staff

Q: Which of the following statement is/ are true?
i. An informal organization exists with every formal organizational
ii. The objectives of the informal organization are broadly the same as those of
the formal organization
iii. A strong, close-knit informal organization is desirable within the formal
organization.
A. Statement i) only
B. Statement i) and iii) only
C. Statement ii) and iii) only
D. Statement iii) only2
Q: A
Formal Organization: Bureaucracy : Max Weber
He argued that an ‘ideal’ bureaucracy has the following characteristics.

There should be a hierarchy of authority, from top management down to
workers at the bottom.
Impersonal and impartial way.
Written rules of conduct
Promotion of individuals within the organisation, based on their
achievement
Division of labour and specialisation of work.
Centralization Vs.
Decentralization
In a centralized structure, In a decentralized structure,

the upper level the authority to take
organization’s hierarchy decisions is passed down to
retain the authority to units and people at lower
make decisions. levels.
The factors that will affect the amount

of decentralization are:
Management Style
Ability of managers
Location Spread
Size of Organization.
Advantages & Disadvantages of Decentralization:
Advantages Disadvantages
Senior management free to Loss of control by senior management
concentrate on strategy
Batter local decision due to local Dysfunctional decisions due to lack of goal
expertise congruence.
Better motivation due to increased Poor decisions made by inexperienced
training and career path managers
Quicker responses/flexibility, due to Training costs.
smaller chain of command.
Duplication of roles within the organization.
Extra costs in obtaining information.

A multinational company is likely to have a ______ structure

Fill in the blank with:
 Centralized
 Decentralized
Non of the above
Test Your Understanding 7
Decentralized
Which of the following does not affect the amount of decentralization
that occurs in a firm?
A. Management style
B. Nature of the brand
C. Location of employees
D. Size of the organization
Answer is B
 Organization Culture

Economics-Banking &
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Lecture#27
Lecture Contents
Course Contents
Organization vs. Culture
Introduction to
Organization
Characteristics of
Organization
Open vs. Closed
Organization
Course Contents
8. Culture
• Organization Culture and Theories of Organization Culture
Organization Culture
Organization …. Culture
Organization:- We use this term very commonly in our everyday life e.g.
1- ICMAP
2- Police
3- Toyota
“Organizations are social arrangment for the controlled performance of collective goals”
(Buchanan & Huczynski)
1- Collective Goals: organizations are defined by their goals. The main goal o a school is to
educate pupils. It will therefore be organized differently to a company that aims to make profits.
2- Social Arrangement: someone working alone cannot be classed as an organization. Organization
are structured to allow people to work together towards a common goal. Usually, the larger the
organization, the more formal its structures.
3- Controlled Performance: an organization will have systems and procedures in place to ensure
that group goals are achieved. For a company this could involve setting sales targets, or
periodically assessing the performance of staff members.
4- Synergy: the interaction or cooperation of two or more individual in an combined effect greater
and output rather than the working separately. 2 + 2 = 5
Illustration 1- A Football Team
A football team can be described as an organization because
1- Number of Players
2- Team has an Objective
3- Need to maintain a system- training- – goals
4- Each member – specific skill –
5- Spirit synergy, everyone work to gather.
Which of the following would be considered to be an organization?
(i) A Sole Trader
(ii) A Tennis Club
(iii) A Hospital
a) (i), (ii) and (iii)

b) (i) and (ii) only
c) (ii) and (iii) only
d) (i) and (iii) only
TYU#1 C
G1. An organization is a social arrangement which
pursues collective _______ which controls its own
performance and which has a boundary separating it
from its environment.
Which of the following words best completes this
sentence?
A- Profits
B- Stakeholders
C- Goals
D- Tactics
G1-C:
G2. Which one of the following CANNOT be called an
organization
A- Gourmet
B- Toyota
C- Honda
D- A Hockey Player
D- A hockey player is cannot be

called an organization
Q5- What is the term given to the idea that the combined
output of a number of individuals working together will exceed
that of the same individuals working separately?
A Sympathy
B Specialization
C Synergy
D Systems thinking
Q5- Correct answer is C:

Rationale: Synergy is the 2 + 2 = 5 factor, and is one of the key
reasons for the formation of teams and organizations.
Q6: A Ltd is a company which specializes in factory. It has
recently purchased B Ltd, which runs a chain of recreational
resorts. A has allowed B to build several new resorts on land
which is owned by A, but which it is no longer able to use. The
resorts have proven highly profitable and popular. Which of the
following best explains the reason for the improved
performance of the combined entity?
A Specialization
B Social Interactivity
C Synergy
D Service
Q6: Correct answer is C:
Rationale: Synergy is the 2 + 2 = 5 factor, and is one of the key
reasons for the formation of teams and organizations.
Q7: Which of the following is NOT a key feature of an
organization?
A- Controlled Performance
B- Collective Goals
C- Social Arrangements
D- Creation of a product or service
Q7- Correct Answer is D:

Organization do not have to create a
product or service in order to be
classified as an organization. For
example, an orchestra may be classed
as an organization, but it does not
necessarily create a product
Why do we need organizations?
1- Share Skills and Skills sharing and knowledge create a synergy
Knowledge
Specialization is perhaps the oldest organization device.
2- Specialization
It occurs when organizations or individual workers
3- Pool Resources
concentrate on a limited type of activity
It was first used in car production at Ford and is associated with the work of
Taylor, which we will be discussing later.
The car production process was broken down into many separate tasks and
each worker was required to specialize in only one small aspect other total
process. This benefits the manufacturer in three ways.
Simple tasks encourage the use of highly specific equipment, e.g. power
wrenches that speed up the manufacturing.
 Semi- skilled labour can be employed rather than highly skilled operatives.
 Workers are only responsible for one process and so are able to develop a
high level of expertise and increase their output per period
Drucker's key objectives
Drucker argues that the nature of the business organisation requires multiple
objectives to cover every area where performance and results affect the business.
Drucker suggested the following eight key objectives:
(1) Profitability – Growth in earnings per share. At some stage in the planning
procedure, probably at the time of developing the strategic plan, this objective will
need to be translated into targets for control linking sales, profit and capital
employed.
(2) Innovation – The board must determine whether it intends to lead in developing
technology and products, to follow other companies or to design to meet customer
needs.
(3) Market standing – Overall marketing policies and objectives such as which
products to sell and in which markets.
(4) Productivity – Productivity targets will be set in terms of output in relation to
manpower, plant, material yields and costs.
(5) Financial and physical resources – Financing both working and longterm
capital requirements through debt and shares. Physical resource objectives will
include the location and acquisition of physical resources over the planning period,
whether to lease or buy the assets, etc.
(6) Managerial performance and development – Policies and objectives will
cover matters such as organisation and development; measures of performance;
training and development; reward systems and organisational culture.
(7) Worker performance and attitude – Policies and objectives will cover the
development of management and worker relationships.
(8) Public responsibility – There may well be objectives relating to social
responsibility and business ethics.
Not
Open & Closed Organization
A business that operates an open system interacts with its environment through giving
and receiving information. In a closed system, interactions only happen within the
specific system, which means closed systems are shut off from the outside environment,
and every interaction is transmitted inside that closed system.
Open & Closed Organization
There are two types of systems in organizations: closed systems and open systems. An
open system interacts with its environment through giving and receiving information.
Closed systems are closed off from the outside environment, and all interaction and
knowledge is transmitted within the closed system only. Closed systems can hamper
growth since the flow of information stays within the system and has no chance to
interact with or build on knowledge from the outer environment
Open System
Under open system organization theory, the characteristics of open system organization
are shaped by specific and general environmental influences. Specific influences are the
people and groups the organization deals with on a regular basis: customers, suppliers,
distributors, regulators and competitors.
General environmental influences fall into four categories:
•The cultural values of the surrounding society. A century ago, it was culturally
acceptable to discriminate against women and minorities in hiring; now discrimination is
a black mark against an organization's image.
•Law and politics. It's not only socially unacceptable to discriminate based on gender,
religion, race and ethnicity, in many cases it violates federal law. In recent years, a
number of states have banned discrimination based on sexual orientation.
•The economy. A regional recession can leave a business struggling to stay afloat. A
booming economy with lots of jobs may force a company to boost pay and benefits to
recruit enough workers.
•Education. The quality of education affects the quality and ability of the local
workforce.

Economics-Banking &
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Lecture#28
Topics Under Discussion
Course Contents
Introduction of Organization Culture
Importance of Organization Culture
A Good Culture
Advantages of Strong Culture
Disadvantages of Strong Culture
Factor Influence Culture
Subtle Influencing Factors
Cultural Iceberg
Level of Cultures by Edgar Schein
Course Contents
8. Culture
• Organization Culture and Theories of Organization Culture
Organization Culture Culture is the collective programming of
the mind which distinguishes the
members of one category of people from
Definition:- another.
Culture is expressed by Handy as being:
By this Handy means the sum total of the belief, knowledge,

attitudes, norms and customs that prevail in an organization.
Culture Difference in the Different Firms:-Distinguish one group from
other:-
Every organization has its distinguish culture, one behavior which is
acceptable in one organization, may not be acceptable for another firm
in the same field.
Develop Over Time:-
Culture is developed overtime but can be changed with a single event.
Likewise Death of company founder, or threat from new innovation
from competitor.
Elements of Organization Culture
SYMBOLS
A SET OF AND
NORMS OF SYMBOLIC
BEHAVIOR ACTIONS
Organization
al Culture
A Set of Shared Values and Beliefs

Q: Explicit or implicit fundamental ________, concepts, and principles that
underlie the culture of an organization, and which guide decisions and behavior
of its employees, management, and members.
A. Concepts
B. Beliefs
C. Ideas
D. Impressions
Q: Beliefs
Q: The diagram below shows that, for every person, behaviour is driven by their
emotions and feelings, and by their thoughts and ___________.
A. Concepts
B. Beliefs
C. Ideas
D. Impressions
Q: Beliefs
Importance of Organisation Culture
Why is culture important?
It gives an individual a unique identity.
The culture of a community gives its people a character of their own.
Culture shapes the personality of a community – the language that a community
speaks, the art forms it hosts, its staple food, its customs, traditions and festivities
comprise the community’s culture.
A Good Culture in an Organization
Within an organisation a good culture:
is a talent attractor.
is talent retainer.
engages people.
changes the view of "work."
creates greater synergy.
makes everyone more successful.
Advantages of having a strong culture
An organisation's culture has a significant bearing on the way it relates to its
stakeholders (especially customers and staff), the development of its strategy and its
structure.
facilitate good communication and coordination within the organisation.
provide a framework of social identity and a sense of belonging.
reduce differences amongst the members of the organisation.
strengthen the dominant values and attitudes.
Strong Culture Weak Culture
Every member of organization understand the Only top management know that quality is
quality of work is important important
Every unit of the product they produce of Every unit of the product they produce is not
same quality and nature very similar.
Worker enjoy their job and thought standard Worker just want to do their job
for which they working
Love to recognize with brand name Their brand is source of earning just.
Disadvantages of having a strong culture
A strong culture that does not have positive attributes in relation to stakeholders and
change is a hindrance to effectiveness. Also, strong cultures can create resistance to
change and learning, and encourage a blinkered view
Dysfunctional Aspects of Culture-Disadvantages of Strong Culture
The existence of a well-defined and robust culture can bring dysfunctional

aspects to an organisation as well. The three key dysfunctional aspects are:
1) Creating barriers to change
 Not understanding the change in the environment and not responding
accordingly, leave in traditional paradise
•– for example resistance from management to the introduction of a ‘work-
life balance’ not understanding the change ‘we work to live’ from ‘we live to
work’
•– Similarly an example would be the corporate administration of Eastman
Kodak who failed to respond to the market’s shift in demand from traditional
photography equipment and processing to digital-based products.
Dysfunctional Aspects of Culture- Disadvatages of Strong Culture
2) Creating barriers to diversity

Practically new technology require diverse workforce but it will bring a big
change in organization culture
3) Creating barriers to mergers and acquisition
Top management measure in terms of equity worth, operational efficiency,
technology match or synergy
While success is hidden in whether culture is matched or unmatched.
Influences on Culture
The six major influences on the culture of an organisation are as follows:
Size: How large is the organisation in terms of turnover, physical size and employee
numbers?
Technology: How technologically advanced is the organisation – either in terms of its
product, or its productive processes?
Diversity: How diverse is the company – either in terms of product range, geographical
spread or cultural makeup of its stakeholders?
Influences on Culture
Age: How old is the business or the managers of the business – do its strategic level
decision makers have experience to draw upon?
History: What worked in the past? Do decision makers have past successes to draw
upon; are they willing to learn from their mistakes?
Ownership: Is the organisation owned by a sole trader? Are there a small number of
institutional shareholders or are there large numbers of small shareholders?
Subtle (Indirect) Influences
There are other, more subtle influences, however:
The degree of individual initiative – is it encouraged or are decisions always referred
upwards?
The degree of risk tolerance – are managers only allowed to follow low risk strategies?
Clarity of direction – is there a clear focus; are these clear objectives and performance
expectations?
The degree of integration between groups – are different units encouraged to work
together? Are management aloof or approachable; is communication clear to lower level
staff?
The reward system – are individuals rewarded for succeeding, i.e. are rewards based
on performance criteria?
Conflict tolerance – are employees encouraged to air grievances?
Communication patterns – is there a formal hierarchy or an informal network?
Formalisation of clothing and office layout – are there strict rules over this?
The kind of people employed (graduates, young, old, etc.).

Economics-Banking &
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Lecture#29
Models for Categorising Culture
There are a number of models dealing with culture:
1) Cultural Iceberg
2) Edgar Schein
3) 7S Model Mickensey
4) Cultural Web
5) Handy’s cultural types (developing the ideas of Harrison)
6) Deal and Kennedy – strong culture theory
7) Ouchi – theories J, A and Z
8) Peters and Waterman – pursuit of excellence
9) Peters – thriving in chaos
10) Hofestede Global Cultures
Cultural Iceberg
Level of Cultures by Edgar Schein
Mika
1) Cultural Iceberg
2) Edger Schein
4) Cultural Web
1- Cultural Iceberg
The iceberg describes two levels at which culture operates:

Formal aspects (apparent) above the water
Behavioural aspects (hidden) below the water
The elements of the culture above the surface:
goals
technology
finance
structure
skills
Cultural iceberg
The hidden elements represent the larger part of the iceberg which is below the
water:
attitudes
communication patterns
group processes
personality
conflict
problem solving style
Levels of Culture
According to Edgar Schein (1992)
Edgar Henry Schein (born March 5, 1928), a former professor at the MIT Sloan
School of Management, has made a notable mark on the field of organizational
development in many areas, including career development, group process
consultation, and organizational culture.
Schien argues that the first leaders of a company create the
culture of an organization. Once the culture exists., the
attributes/criteria for the later leaders are determined by
the culture. Thus the link between culture and leadership is
very strong.
Difficulties faced by the funder leader become the part of
the culture. Schein further commented that it if leaders are
to lead, it is essential that they understand the culture of
the organization. In order to try and define culture, Schein
described three levels.
Schein- Cultural Levels
Artifacts:- these are the aspects of culture

that can be easily seen, e.g. the way that
people dress.
•Espoused Values:- these are the strategies
and goals of an organization, including
company slogans etc.
• Basic Assumptions and Values:- Far
granted Assumtions:these are difficult to
identify as they are unseen, and exist mainly
at the unconscious level.
Now employee find the last level of culture
the most difficult to understand, and lack of
understanding of the basic values is one of
the main contributors to failure when trying
to implement change.
Q: M. Saleem begins a new job at Yasa Chemicals, he discovers
that, unlike his previous job, all staff members dress casually.
According to Schien, which level of culture is M. Saleem
observing?
A. Espoused values
B. Individuals
C. Basic Assumptions
D. Artefacts
Q:D
Q: Consider the following two statements:
1) Culture was expressed by Handy as 'the sum total of the belief, knowledge, attitudes,
norms and customs that prevail in an organization'?
2) The tales of company creation, such as difficulties the founder had to face and how
he/she managed to overcome them successfully often form a part of organizational culture
according to Schein.
Which of the above statements is/are correct?
A. 1 Only
B. 2 Only
C. Both
D. Neither
Q:B
Q: Which of the following is the first of the three levels of culture
described by Schein?
A. Things that are inspirational, such as slogans and mission statements
B. Things that can be easily seen, such as the way people dress
C. Things that endure, such as organizational hierarchy
D. Things that initially appear superficial, such as timekeeping rules
Q: B
Q: The first leaders of the organization tend to define its later
culture and upcoming leaders follow it.
Which major writer on culture came to this conclusion?
A Handy
B Schein
C Hofstede
D Peter & Waterman
Q: B
McKinsey-The 7S's an overview
The McKinsey 7S Framework is a management model developed by business
consultants Robert H. Waterman, Jr. and Tom Peters in the 1980s. This was a strategic
vision for groups, to include businesses, business units, and teams. The 7 Ss are
structure, strategy, systems, skills, style, staff and shared values
The model can be applied to many
situations and is a valuable tool when
organizational design is at question. The
most common uses of the framework
are:
•To facilitate organizational change.
•To help implement new strategy.
•To identify how each area may change in
a future.
•To facilitate the merger of organizations.
7s factors
Hard S Soft S
Strategy Style
Structure Staff
Systems Skills
Shared Values
The authors of the framework

emphasize that all elements must be
given equal importance to achieve the
best results.
Q: In McKinsey model, the seven areas of organization are
divided into the ‘soft’ and ‘hard’ areas.
Which major areas are hard?
A. Strategy, Structure & System
B. Staff, Style, Skill & Shared Values
C. Staff, Structure & System
D. Strategy, Skills & Shared Values
Q: A
Strategy is a plan developed by a firm to achieve sustained

competitive advantage and successfully compete in the
market. In general, a sound strategy is the one that’s
clearly articulated, is long-term, helps to achieve
competitive advantage and is reinforced by strong vision,
mission and values. But it’s hard to tell if such strategy is
well-aligned with other elements when analyzed alone. So
the key in 7s model is not to look at your company to find
the great strategy, structure, systems and etc. but to look
if its aligned with other elements. For example, short-term
strategy is usually a poor choice for a company but if its
aligned with other 6 elements, then it may provide strong
results.
Structure represents the way business divisions and units

are organized and includes the information of who is
accountable to whom. In other words, structure is the
organizational chart of the firm. It is also one of the most
visible and easy to change elements of the framework.
Systems are the processes and procedures of the
company, which reveal business’ daily activities and how
decisions are made. Systems are the area of the firm that
determines how business is done and it should be the
main focus for managers during organizational change.
Skills are the abilities that firm’s employees perform very

well. They also include capabilities and competences.
During organizational change, the question often arises of
what skills the company will really need to reinforce its new
strategy or new structure.
Staff element is concerned with what type and how many
employees an organization will need and how they will be
recruited, trained, motivated and rewarded.
Style represents the way the company is managed by top-

level managers, how they interact, what actions do they
take and their symbolic value. In other words, it is the
management style of company’s leaders.
Shared Values are at the core of McKinsey 7s model. They
are the norms and standards that guide employee behavior
and company actions and thus, are the foundation of every
organization.
Q: With respect to McKinsey model, the seven areas of organization are divided
into the ‘soft’ and ‘hard’ areas.
And according to McKinsey __________________
A. Hard factors should be given more importance than soft factors
B. Soft factors should be given more importance than hard factors
C. Only strategic factors should be given more importance
D. All factors should be given equal importance
D. All factors should be given equal importance


Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#29
1) Cultural Iceberg
2) Edger Schein
4) Cultural Web
 Cultural Web
 Handy’s cultural types (developing
the ideas of Harrison)
 Deal and Kennedy – strong culture
theory
Cultural Web by Johnson & Scholes
The Cultural Web Analysis is a model where the organisational paradigm,
convictions and assumptions within an organisation are clarified by means
of a coherent whole of six elements. The paradigm, the organisational
culture exists within the web.
Focus of Model
The model stimulates the way employees within an organisation interact with each
other,
How they handle their work,
But also how the organisation as a whole relates to the outside world and the various
cultures that exist in the outside world.
Cultural Web-Practical Objectives of Understanding
By analysing the six elements, the big picture of the organisational
culture is formed. This creates clarity regarding the questions:
What works,
What does not work,
How do we approach our work
How do we work together with other organisational cultures?
There is a great need to manage the organisational culture because
this affects the strategy and performances of the organisation
The Elements of Cultural Web
(i) Organisational structure –
• The organisation culture establishes relationships between the
different work groups
• It is a picture of the importance/dominance of particular
divisions/departments in achieving the overall objectives of the
corporation.
• Organization culture is influenced by organization structure.
The Cultural Web by Johnson & Scholes
(ii) Power structure –

• Individuals who are in a position of power influence ,
• Power is normally obtained form management position,
• Can also come form personal influence, experience and
expertise.
The Cultural Web
(iii) Stories and myths –

• Used to describe the history of an organization
• Used to suggest importance of certain individual or events
• Passed by word of mouth
• Help to create an impression of
• How the organisation got to where it is
• It can be difficult to challenge established myths.
The Cultural Web
(iv) Routines and rituals –

• Routines are ‘the ways things are done around here’
• Individual get used to the established ways of doing things
• Rituals are special events in the ‘life’ of the organisation, which
are an expression of what is considered important.
The Cultural Web
(iv)Symbols – Symbols can become a representation of organisation.

• Might be a car or helicopter
• An office building
• A logo or style of language printed
• A style of language or words used by member of an organisation.
The Cultural Web
(iv)Control systems - In terms of achievement what is important (Critical

Success Factors) and what is not so important in terms of
• Performance measurement
• Reward measurement
• Key Performance Indicator (KPI)
Charles Handy Cultural Types
Power Culture:- Zeus
There is one major source of power and influence. This is most
likely to be the owners of the organization, who strive to maintain
absolute control over subordinates. There are few procedures and
rules of a formal kind.
Quick to response the change.
Role Culture:- Apollo
In the role culture, people describe their job by its duties, not by
its purpose. It is a bureaucratic organization, where the structure
determines the authority and responsibility of individual and
there is a strong emphasizes on hierarchy ands status.
Ideal for the large size of organizations. Old and traditional
organization also prefer it.
Task Culture:-Athena
The task culture is best seen in teams established to achieve specific
takes, e.g. Project teams. People describe their positions in terms of the
results they are achieving. Nothing is allowed to get in the way to of task
accomplishment. If individuals do not have the skills or technical
knowledge to perform a task they are retrained or replaced.
Power and respect come from individual knowledge rather than rank or
position.
Although a structure existed but it is flexible and capable of being formed
and reformed depending upon the takes in hand. Structurally this culture
is often associated with the matrix structure.
Person Culture:-Dionysius
The person culture is characterized by the fact it sexists to satisfy the
requirements of the particular individuals involved in the organization.
The person culture is to be found in a small, highly participatory
organization where individuals undertake all the duties themselves, for
example, a barrister in chambers.
Q: Which of the following is one of the four cultural types
identified by Handy?
i. Role
ii. Person
iii. Bureaucratic
iv. Individual
A. (ii) and (iii) only
B. (i) and (iii) only
C. (i), (ii) and (iii) only
D. (i) and (ii) only
Q: D
The four cultural type are: person, role, task and power.
Q: According to Handy's theory, in the person culture which of
the following would be correct?
A. Contribution made by each employee is recognized and
appreciated
B. The status symbols are there to remind staff of their place
C. People believe that if they meet their job requirement, they
will slowly progress to the senior management
D. Rules are put in place and must be strictly followed by all
Q: B
Person culture focuses on the need of the few selected
individuals who occupy the prominent place. A is compatible
with the task culture, whereas C and D are common in role
culture.
Q: TJ International Ltd is an organization with a strongly traditional outlook. It
is structured and managed according to classical principles: specialization, the
scalar chain of command, unity of command and direction. Personnel tend to
focus on their own distinct tasks, which are strictly defined and directed.
Communication is vertical, rather than lateral. Discipline is much prized and
enshrined in the rule book of the company.
From the scenario, what sort of culture does TJ International Ltd have, using
Harrison’s classifications?
A Role culture
B Task culture
C Existential culture
D Power culture
Q: A
Rationale: The role culture is a bureaucratic or mechanistic culture, as
described in the scenario. Task culture is project-focused; existential culture
is person-focused; and power culture is leader-focused.
Q: Which of the four cultural types popularized by Handy is often
found in organizations with the an entrepreneurial structure?
A. Task
B. Person
C. Power
D. Role
Q: B
Person culture focuses on the need of the few selected
individual who occupy the prominent place. A is compatible with
the task culture, whereas C and D are common in role culture.
Deal and Kennedy identified four distinct types of cultures. They also identified two
marketplace factors that they felt influenced cultural patterns and practices. They were:
•The degree of risk associated with a company's key activities.
•The speed at which companies learn whether their actions and strategies are successful.
They believed that the risk involved in making a poor decision and the time it takes to find
out whether a decision is the right one both have a bearing on how cultural elements
develop and influence an organization's employees.
Deal and Kennedy present these factors in a 2 x 2 matrix that identifies the four culture
types, as shown in Figure 1 below.
Tough-Guy, Macho – This culture

contains a world of individualists who
enjoy risk and who get quick feedback on
their decisions. This is an all-or-nothing
culture where successful employees are
the ones who enjoy excitement and
work very hard to be stars. The
entertainment industry, sports teams
and advertising are great examples of
this cultural type.
Work Hard/Play Hard – This culture is the
world of sales (among others). Employees
themselves take few risks; however, the
feedback on how well they are performing
is almost immediate. Employees in this
culture have to maintain high levels of
energy and stay upbeat. Heroes in such
cultures are high volume salespeople.
Interestingly, this culture recognizes that
one person alone cannot make the
company. They know it is a team effort
and everyone is driven to excel. Contests
among employees are common here, as
they drive everyone to reach new heights.
Bet-Your-Company – Here, the culture is
one in which decisions are high risk but
employees may wait years before they
know whether their actions actually paid
off. Pharmaceutical companies are an
obvious example of this culture, as are oil
and gas companies, architectural firms and
organizations in other large, capital-
intensive industries.
Because the need to make the right
decision is so great, the cultural elements
evolve such that values are long-term
focused and there is a collective belief in
the need to plan, prepare and perform due
diligence at all stages of decision making.
Process – In this culture, feedback is slow,
and the risks are low. Large retailers,
banks, insurance companies and
government organizations are typically in
this group. No single transaction has much
impact on the organization's success and it
takes years to find out whether a decision
was good or bad.
Because of the lack of immediate
feedback, employees find it very difficult
to measure what they do so they focus
instead on how they do things. Technical
excellence is often valued here and
employees will pay attention to getting the
process and the details right without
necessarily measuring the actual outcome.

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#31
1) Cultural Iceberg
2) Edger Schein
4) Cultural Web
Ouchi – theories J, A and Z

Peters and Waterman – pursuit
of excellence
Peters – thriving in chaos
Theory Z (William Ouchi)
Ouchi suggested that there were a number of characteristics that differentiated
American organisations from Japanese firms. He compared the American organisation
culture (Theory A) with the Japanese approach (Theory J). By modifying their culture, he
proposed, American firms could compete more effectively against Japanese
organisations. The modified characteristics he called Theory Z.
The features of both American and Japanese firms' culture are compared below
Function Japan USA
Planning Long term. Mainly short term.
Collective decision making. Individual decision making.
Decisions start at bottom and Decisions taken at top and flow
considered higher up. downward.
Slow evolution of decision making. Fast decisions but slow
implementation.
Organisation Collective responsibility. Individual responsibility.
No clear decision Clear, specific decision
responsibility. responsibility.
Function Japan USA
Staffing Schoolleavers recruited, Recruitment at all stages,
limited staff turnover, high staff turnover and job
lifetime employment. insecurity.
Promotion is slow, after Promotion is rapid within
transfer between functions. specialisation.
Appraisal based on loyalty, Appraisal based on
with training viewed as current performance with
longterm investment. reluctant training.
Leading Leader acts as group Leader acts as head of
member and avoids 'status' group and displays status
trappings. differences.
Overall paternalistic style, Domineering style, with
avoidance of confrontation. facetoface confrontation.
Bottomup communication. Topdown communication.
Function Japan USA
Controlling Control by fellow members Control by superior with
through group performance focus on individual
Extensive use of groups. performance.
Limited use of groups.
Ouchi proposed Theory Z as being a compromise. Its main characteristics are as follows:
 Employment – fairly long term to develop a loyal, semipermanent workforce.
 Evaluation and promotion of personnel – slower, more emphasis is given to training and
evaluation than to promotion.
 Career paths – more general with an emphasis on job rotation and more broadlybased
training in order to give a person a better feel for the organisation.
 Decision making – carried out with more emphasis on group participation and
consensus.
 Control – more attention to internal control procedures coupled with explicit
performance measures.
 Responsibility – assigned on an individual basis.
 Concern for staff – expanded to include more aspects of the worker's whole life.
Peters and Waterman’s – Innovative Companies
Peters and Waterman's highly regarded book In Search of Excellence claims that excellence
requires companies to 'continuously innovate'. They identified 43 companies which they
considered to be excellent. They found eight characteristics which were common to these
companies.
 Productivity through people – treating staff with dignity and respect and investing in
their development.
 Action bias – focusing on achievement and results, rather than 'navel gazing’.
 Simple form, lean staff – informal processes and flat structures, few bureaucratic layers
of middle management
 Stick to the knitting – identify core competencies, focus on these, outsource noncore.
 Close to the customer – learning from and listening to customers.
Peters and Waterman's highly
 Autonomy and entrepreneurship – innovation is key, delegating decision making, and

encouraging risk taking through sponsoring 'fired up' product champions.
 Simultaneous loose-tight properties – centralising core activities and values and
decentralising the rest. Tight to core competencies; let junior managers learn by
experience with the rest.
 Hands-on value driven – managers are driven by organisational values, and they care,
and are seen to care. No 'them and us' attitudes
Peters Thriving in Chaos
'Thriving in chaos' means:
 Creating total customer responsiveness, and placing customer needs at the centre of
our organisational values;
 Using fastpaced innovation, through organisational learning and experimentation;
 Achieving flexibility by empowering people;
 Learning to love change, i.e. see change as an opportunity for flexible firms to attack
rigid competitors;
and most importantly for management accountants:
 Building systems for 'a world turned upside down' involving control systems based on
trust and integrity, and a wide range of financial and nonfinancial performance
measures (for instance, the 'Balanced Scorecard')
Balance Score Card
The balance scorecard approach
emphasizes the need to provide the user
of a set of account with information
which addresses all relevant areas of
performance objectively. This
information should include both
financial and non-financial elements,
and the usual balanced scorecard
approach is to report performance form
four separate perspectives:
1. The financial perspective report the
traditional information of profits,
capital employed, etc.
2. The customer perspective reports
how well customer wants have been
satisfied.
Balance Score Card
3. The internal perspective reports on the internal efficiency of the business.

4. The innovation perspective reports on the development of new products and
services.
Kanters 10 Rules for Stifling Initiative
Linked to Peters' exhortation to 'thrive in chaos' are Kanter's 10 rules for stifling initiative.
Regard any new idea from below with suspicion, because it is new and it is from below.
Insist that people who need your approval to act have to go through several levels of
authority to get to you.
 Ask departments or individuals to challenge each other's proposals.
 Express your criticisms freely and withhold your praise.
Kanters 10 Rules for Stifling Initiative
 Treat problems as a sign of
failure.
 Control everything that can be
controlled, and count anything
that can be counted,
frequently.
 Make decisions to reorganise
or change policies secretly.
 Wherever possible, withhold
information.
 Give lower level managers the
task of downsizing and
restructuring, and call it
participation.
 Never forget that those at the
top already know everything
important about the business.
Hofstede
Hofstede research finds out the national differences between over 100,000 of
IBM’s employees in different parts of the world. In an attempt to find aspects
of culture that might influence business behaviour.
He found five traits or cultural dimensions:
Individualism vs. Collectivism:-
Looks at the extent to which people are integrated into groups. Some cultures
are more cohesive than others. E.g. Anglo Saxon cultures are generally more
individualistic than the collectivist cultures of South American.
Uncertainty Avoidance Index:-
Deals with a society’s tolerance for uncertainty and
ambiguity e.g. France and Japan use bureaucracy to
reduce uncertainty because they dislike it.
Low uncertainty avoidance indicates a society that is
not rule-oriented and has greater tolerance for a
variety of ideas, thoughts and beliefs.
Power Distance Index:-
the extent to which the less powerful
members of organization and institutions
accept and except that power is distributed
unequally e;g. in South American society
differences s in poser were tolerated more
than in North European cultures.
Masculinity vs. Feminity:-
A masculine role in one where the distinction
between the role so the genders are large and
males focus on work, power and success.
(toughness and the desire for material wealth and
possessions) Like in Japan while nothing like this
in Finland.
Other society care for social value, relationship
and no discrimination between male and female
(value personal relationships, belonging and the
quality of life).
Q9:44FTC14: (Past Paper) Research has indicated that workers in
country A display characteristics such as toughness and the
desire for material wealth and possessions, while workers in
country B value personal relationships, belonging and the
quality of life.
According to Hofstede's theory, these distinctions relate to
which of the following cultural dimensions?
A. Masculinity-femininity
B. Power-distance
C. Individualism-collectivism
D. Uncertainty avoidance
44FTC14 :A
By definition.
Q10: 45FTC14: Consider the following cultural ‘dimensions’ as
popularized by Hofstede.
i. High uncertainty avoidance
ii. Masculinity
iii. Low power distance
iv. Individualism
In country A, most businesses are highly bureaucratic with many
defined rules for employees. However, even junior staff members are
usually involve in the creation of these rules, as they expect to have a
say in the running of the business.
Which TWO of the cultural dimensions identified above are shown to
exist in country A?
A. (i) and (ii) 45FTC14:B
B. (i) and (iii) Bureaucratic businesses are evidence as they give staff
C. (ii) and (iii) defined rules to work with. The fact that junior staff have a
D. (iii) and (iv) say in the running of the business is evidence of low power
distance.

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#31
1) Cultural Iceberg
2) Edger Schein
4) Cultural Web
 Hofestede Global Cultures

Hofstede
Hofstede research finds out the national differences between over 100,000 of
IBM’s employees in different parts of the world. In an attempt to find aspects
of culture that might influence business behaviour.
Looks at the extent to which people are integrated into groups. Some cultures
are more cohesive than others. E.g. Anglo Saxon cultures are generally more
individualistic than the collectivist cultures of South American.
Deals with a society’s tolerance for uncertainty and
ambiguity e.g. France and Japan use bureaucracy to
reduce uncertainty because they dislike it.
Low uncertainty avoidance indicates a society that is
not rule-oriented and has greater tolerance for a
variety of ideas, thoughts and beliefs.
the extent to which the less powerful
members of organization and institutions
accept and except that power is distributed
unequally e;g. in South American society
differences s in poser were tolerated more
than in North European cultures.
A masculine role in one where the distinction
between the role so the genders are large and
males focus on work, power and success.
(toughness and the desire for material wealth and
possessions) Like in Japan while nothing like this
in Finland.
Other society care for social value, relationship
and no discrimination between male and female
(value personal relationships, belonging and the
quality of life).
Q: (Past Paper) Research has indicated that workers in country A
display characteristics such as toughness and the desire for
material wealth and possessions, while workers in country B
value personal relationships, belonging and the quality of life.
According to Hofstede's theory, these distinctions relate to
which of the following cultural dimensions?
B. Power-distance
Q :A
By definition.
Q: Consider the following cultural ‘dimensions’ as popularized by
Hofstede.
ii. Masculinity
iv. Individualism
In country A, most businesses are highly bureaucratic with many
defined rules for employees. However, even junior staff members are
usually involve in the creation of these rules, as they expect to have a
say in the running of the business.
Which TWO of the cultural dimensions identified above are shown to
exist in country A?
A. (i) and (ii) Q:B
B. (i) and (iii) Bureaucratic businesses are evidence as they give staff
C. (ii) and (iii) defined rules to work with. The fact that junior staff have a
D. (iii) and (iv) say in the running of the business is evidence of low power
distance.
Long-term orientation versus short-term orientation.
In some countries, there is a greater focus on short-term goals and
short-term results, whereas in other countries there is a greater
willingness to consider the longer term. Short-termism is a feature of
organization culture in the US and much of Western Europe.
 Conflict & Conflict
Management

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#33
Conflict & Conflict Management
6. The financial function; conflict
• The Role of the Finance Function
• The Nature of Conflict
• Causes of Conflict
• Managing Conflict
Conflict & Conflict Management
Conflict
Overview-Causes of Conflict
Overview- Advantages of Conflict
Overview- Disadvantages of Conflict
Sources of Conflict
Intra-personal
Intra- group
Group Conflict in an organization
Minimize Conflict
Dealing with Conflict
Conflict:
'Conflict' means disagreement, opposition of any kind, argument,
antagonism or hatred between two persons or groups or among many
persons or groups.
Definition: Organizational Conflict or otherwise known as workplace

conflict, is described as the state of disagreement or misunderstanding,
resulting from the actual or perceived dissent of needs, beliefs,
resources and relationship between the members of the organization. At
the workplace, whenever, two or more persons interact, conflict occurs
when opinions with respect to any task or decision are in contradiction.
Overview-CAUSES OF CONFLICT
(i) Incompatibility of goals: The overlapping of formal objectives
The overlapping of role definitions, e.g. possible conflict for an
accountant between professional codes and organization needs
(ii) The contractual relationship is unclear, where parties may view
their priorities differently
(iii) The existence of concealed (hidden) objectives.
(iv) differences over interpretation of facts,
(v) disagreements based on expectations of the parties.
Overview-Benefits of Conflict: Advantages
Some of the benefits that can arise from conflict include:
Helping to bring about radical changes to alter existing power
Encourages innovation and testing of new ideas
Brings emotions in the open
Results in constructive levels of tension
Open communication and improved dialogue
Improved customer service and product design
Long-standing problems are brought to the surface and
resolved
An overview- Negative outcomes of conflict: Disadvantages
creation of an environment of distrust and suspicion
concentration of efforts within narrow group interests
undermining of team effort
weakening of communication between groups
Sources of conflict-
Intra-individual conflict
Conflict among staff can adversely affect the quality of service or product as personal effectiveness is
eroded and staff lose their motivation.
Some of the more common drivers of individual conflict might include:
 Blaming colleagues for past mistakes
 Employees feeling that favouritism has been shown by management in allocating work to
employees
 General disagreements – for example about the method for performing a particular task
 Non-congruent goals between personal goals and commercial goals
 Rivalry for scarce resource (e.g. bonus pool or hours) between management
 Poor personal hygiene
 The perception that someone is working harder, or longer hours, than other employees and not
being fairly rewarded
 Personality clashes – for example one employee being free thinking, creative, spontaneous and
unorganized compared to another who is more scientific, logical and organized
 Inappropriate dress for work – e.g. culturally or religiously unacceptable, unprofessional or simply
inappropriate for some other reason
Sources of conflict-
Inter-group conflict
Inter-group rivalry and conflict can arise through poor leadership and lack of effective
management. Some of the more common factors include:
Lack of Leadership – Leadership which is not able to articulate the goals and objectives
and provide a clear-cut sense of direction to the staff would create confusion within an
organization.
Lack of Coordination – Lack of proper control and coordination could result in loss of
focus creating conflict and affecting the performance of a team.
Unrealistic Targets –The targets may be unrealistic and over ambitious and not
attainable. This may adversely affect the motivation and morale of staff and create
internal conflicts which would adversely affect the quality of services rendered to the
customers.
Role Ambiguity – A team may be faced with problems of conflicting roles, lack of clear
job descriptions, or overlapping of responsibilities.
Sources of conflict- Inter-group conflict
Incompatibility among the Staff – When a team is resourced from multiple groups they
may struggle to work in a team environment due to their internal differences arising from
strong group affiliations and loyalties.
Biased attitude of management – Staff in one team or of a particular category of staff
may be treated in a biased manner affecting terms of rewards, perquisites, job
designations and working conditions.
Lack of Recognition – The management may not give due recognition or reward to those
employees who may have made significant contribution towards achievement of the
company’s goals in the past. They may, therefore, not be fully motivated.
Group Conflict-In Business
Group conflict, or hostilities between different groups, is a feature
common to all forms of human social organization, and also occurs
in social animals
Mubashir Wasim (MSc. Economics, MBA Marketing, MS-IT,

MPhil Business Management)
Inter-Departmental Conflicts in Business Organization
Other factors that can be responsible for creating group conflicts in business include:
 Interpersonal Differences/Group Politics – The inherent differences in personality,
temperament and outlook of individuals are often the main sources of interpersonal and
group conflicts. Discerning managers recognise these differences and make efforts to
create a conducive environment in which people with interpersonal differences are able
to work together as cohesive groups.
 Differences in Values and Beliefs – Values and beliefs of individuals are shaped by their
upbringing and life experiences and therefore differ considerably. Values such as
honesty, affiliations, beliefs and competitiveness are often deep rooted in individuals
and may at times result in discrimination, consciously or subconsciously, in their group
interactions which can cause conflicts.
 Differences in Allocation of Resources – Groups have different interests in the allocation
of resources such as salaries and perquisites, deployment of staff and equipment and
allotment of space. Each group has its own goals and perceptions of favouritism in
allocation of resources which gives rise to inter-group conflicts. Incompatibility of goals
and objectives and allocation of resources thus give rise to inter- group conflicts.
Inter-Departmental Conflicts in Business Organization
 Task Interdependence – In business organisations, various groups have to share
outputs and inputs from different departments/divisions for completion of their
allocated tasks. Inability to adhere to time schedules, quality of workmanship and
allocation of responsibilities can result in group conflicts.
 Ambiguous Roles – Uncertainty among the different departments about their specific
roles and authorities and responsibilities in the organisation can give rise to inter-
group conflicts. The ambiguities are often the result of weaknesses in organisation
structures.
 Communication Problems – Absence of an environment of open communications and
withholding of important information from others can affect the performance and
undermine the trust between groups and can give rise to group conflicts.
Dealing with Group Conflict
Minimizing the Negative Effects during the Conflict and
to avoid Conflict in general
(i) Task coordination – the departments/units may meet periodically

to discuss how each department can contribute more effectively
towards the achievement of organizational goals.
(ii) Information sharing – the members of both the departments
may meet to share and analyse factual data.
(iii) Problem solving – Face-to-face meeting of the conflicting
departments for the purpose of identifying the problem and
resolving it through open discussions.
(iv) Changing the human variable – using techniques of behavioural
change such as human relations training to alter attitudes and
behaviours that cause conflict.
Dealing with Group Conflict
Resolving Group Conflict:

The Leader/Manager can take the following steps to resolve the conflict
between two groups
(i) Collect information – The manager should collect information to
ascertain the underlying interests, needs and concerns of both the
departments and make efforts to understand their motivations and goals
(ii) Set the scene – The leader should listen actively to both the parties to
ensure that they understand the situation and have adequate awareness
of each other’s perceptions. The leader should establish ground rules for
resolution of the problem.
(iii) Develop consensus that there is a problem – The different underlying
concerns and interests may mean that the groups perceive the problem
very differently. It is essential to establish precisely where is the problem
which needs to be resolved.

Dealing with Group Conflict-Resolving Group Conflict:
(iv) Brainstorm possible solutions – As an effective facilitator, the manager

should encourage participative brainstorming to help ensure that both the
parties feel that their viewpoints are considered objectively. This will
significantly improve acceptance of the position of the parties and ensure
commitment towards a mutually acceptable resolution.
(v) Encourage a mutually acceptable solution. :-

 Conflict & Conflict
Management

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#34
Conflict and Conflict Management
Benefits of Conflict
Functional Conflict
Destructive Conflict
Challenges Associated with Conflict
Dealing with Conflict
Skills required to resolve conflict
Benefits and challenges of conflicts
Conflict can result in both positive and negative results for the business.
Benefits
Some of the benefits that can arise from conflict include:
 Helping to bring about radical changes to alter existing power structures and
entrenched attitudes which have led to complacency in the organisation.
 Encourages innovation and testing of new ideas and eliminate groupthink attitude.
 Brings emotions in the open and therefore result in release of internal hostile
feelings.
 Results in constructive levels of tension within the organization and motivates
individuals to work to their optimum levels.
Benefits and challenges of conflicts-Benefits
 Improved customer service and product design

 Long-standing problems are brought to the surface and resolved
 Sound viewpoints are clarified and accepted
 Interest and creativity is stimulated
 It generates an environment where employees can test their capabilities
Functional (constructive) conflict
Functional (constructive) conflict is a conflict which supports the goals of the group and
helps to improve its performance.
In functional conflicts, it is important to separate personalities of the parties from the
issues which cause or create conflicts. The individuals involved in functional conflict do not
take disagreements personally but in a spirit of harmony to examine and understand all the
aspects which have a bearing on the issue to achieve optimal results for achieving the goals
of the group.
Functional conflict can contribute to improving the performance in an organization by:
Evaluating the current position objectively and promoting reassessment of group
activities and goals as an on-going process.
Functional (constructive) conflict
Stimulating creativity and innovation among the participants who express their opinions
and views in an open and constructive manner.
Creating initiatives for changes in an orderly manner without causing disruptions or
affecting the smooth coordination of activities of the organization.
Releasing of pent-up tensions of the participants because the individuals feel that their
opinions have received consideration.
Providing opportunities to dissidents to self-evaluate their own analytical abilities and
the expertise they bring on important issues.
Introducing a culture in which groupthink or ‘rubber-stamping’(is discouraged) of
decisions taken by the comparatively more articulate or dominating personalities is
discouraged.
Challenges
Some of the challenges that can arise from conflict include:
 Demotivated staff
 Breakdown in communication
 Reduced quality of product or service
 Disciplinary action
 Internally-focused destructive decisions are taken rather than customer-focused
decisions
 Creation of an environment of distrust and suspicion
 Concentration of efforts within narrow group interests
 Undermining of team effort
Dealing with conflict
Thomas and Kilmann in their book “The Joy of having created the TKI (Thomas-Kilmann
Instrument) Assessment” (2015) stated no two individuals have exactly the same
expectations and desires, conflicts are a natural part of our interaction with others. Keeping
this view as a base, identified five key styles of dealing with conflict. The styles vary in the
degree of assertiveness and cooperativeness.
They argued that people typically have a preferred conflict resolution style although the
situation may be the overriding factor in determining the most effective resolution style to
adopt.
The styles are:
The styles are:

1- Competitive
Value of own issue/goal: High
Value of relationship: Low
Goal: I win, you lose
People take a firm stance and know what they want. Typically they are in a position of
power. A useful style in an emergency when a decision needs to be made quickly or when
the decision is unpopular.
This can however leave people feeling unsatisfied and resentful if used in less urgent
situations.
2- Compromising
 Value of own issue/goal: Medium
 Value of relationship: Medium
 Goal: I win some, you win some
This style attempts to find a ‘win-win’ solution that will keep everyone at least
partially satisfied. All parties need to relinquish something.
This approach is useful when the cost of conflict is greater than the cost of
compromise. Also when a deadline looms and the parties are in deadlock.
3- Avoiding
 Value of own issue/goal: Low
 Value of relationship: Low
 Goal: I lose, you lose
People naturally tend towards this style to avoid conflict altogether. Tactics might include
delegating controversial decisions, not wanting to hurt anyone’s feelings and accepting
default decisions.
May be appropriate where win-win is impossible, the issue is trivial, or when others are in
a better position to solve the problem. However, in many situations this is seen as an
ineffective and weak approach to take.
4- Collaborative
 Value of own issue/goal: High
 Value of relationship: High
 Goal: I win, you win
The collaborative style aims for win-win and often relies on strong leadership who
acknowledges that everyone is important.
Collaboration is necessary when there is a need to bring together a variety of viewpoints to
achieve the optimum solution, where there is a history of prior conflicts in the group, or
when the situation is simply too important to trade-off.
4- Collaborative
 Value of own issue/goal: High
 Value of relationship: High
 Goal: I win, you win
The collaborative style aims for win-win and often relies on strong leadership who
acknowledges that everyone is important.
Collaboration is necessary when there is a need to bring together a variety of viewpoints to
achieve the optimum solution, where there is a history of prior conflicts in the group, or
when the situation is simply too important to trade-off.
Accommodating
 Value of own issue/goal: Low
 Value relationship: High
 Goal: I lose, you win
This style indicates a focus on satisfying the needs of the counterparty ahead of one’s
own needs. The risk is that the accommodator can be persuaded to surrender a position
even when surrender is unwarranted.
Accommodating is appropriate when the issues are more important to the other party,
when peace is more valuable than ‘winning’, or when a favour is owed. However, the
approach is unlikely to consistently deliver the most favourable outcomes.
aggressive
❑ Negotiation and
Communication

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#35
❑ Negotiation and Communication
❑Skills of an effective negotiator
❑Consultant & Arbitrator
Skills of an Effective Negotiator for Members Involves in
Negotiation
The ability to negotiate requires a blend of interpersonal and
communication skills used together to achieve the desired result.
Explanation Problem Analysis
Good analysis issue-identify parties and their goals-understand interest
of stakeholders
Active listening –
It is necessary for ECL’s team to engage in active listening to be able to
understand the viewpoints of the representatives of the government
organisation, and read their body language and also understand the
underlying tone of their verbal communication.
Verbal Communication –
ECL team should be able to communicate effectively and make clear
statement of the case supported by sound arguments. Good
interpersonal skills also help to maintain a congenial working
relationship with the other party.
Skills of an Effective Negotiator for Members Involves in Negotiation
Ethics and reliability –

ECL team should adopt high standards of ethical integrity and reliability
to promote an environment of trust and confidence during the process
of negotiations
Emotional control
Ability to keep in control of their emotions during the negotiation.
Collaboration & Teamwork
Collaborative rather than hostile in a negotiation on both sides of the
issue to work together to reach the agreeable solution.
Decision making ability
Negotiation and actually make a decision-lead to a quicker and more
efficient agreement of a compromise to end the stalemate.

Skills of an Effective Negotiator for Members Involves in Negotiation
Ethics and reliability

Require high ethical integrity and reliability promotes a trusting
environment for negotiations. Both sides trust the other party to honour
their promises and agreements
Good posture and body language
Don’t be in a hurry to close the deal
In spite of losing everything by both parties- both gain some of
objectives.

Conciliation and Arbitration
At times parties to a conflict are unable to resolve
their differences through direct negotiations. In such
situations, they may induct a third party to help them
to find a solution.
Mediator
A mediator is a neutral third party who facilitates a
negotiated solution through reasoning and persuasion
and by offering suggestions for pursuing different
alternatives. -- In civil court disputes-- effective in
moderate level of conflict. Mediators are neutral and
not coercive.
Arbitrator
An Arbitrator is a third party with the authority to
dictate an agreement. Arbitration can be voluntary,
i.e. requested by the parties, or compulsory i.e. forced
on the parties by law or contract. Settlement is
essential. MPhil Business Management)
Conciliation and Arbitration
Conciliator
A Conciliator is a trusted third party who provides an
informal communication link between the opposing
parties. A conciliator also engages in establishing the
facts, interpreting messages and persuading the
disputing parties to reach agreement.
Consultant
A Consultant is a skilled and impartial third party who
attempts to facilitate problem-solving through
communication and analysis as he has specialized
knowledge.

❑ Negotiation and
Communication

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#35
❑ Negotiation and Communication
❑Communication
❑Communication Process Model
❑Directions of Formal Communication
❑Interpersonal Communication
❑Axioms of Interpersonal Communication
❑Non-verbal Communication
❑Communication Patterns
Communication:
Communication is the interchange of information, ideas, facts and

emotions by two or more people.
Communication Process Model
Communication Process Model
The stages of the communication process:
The communication process involves the following stages / elements:
Sender (encoder) – initiates the communication process. To encode is to put the message into
words or images.
Message – the information that the sender wants to transmit.
Channel – is the means of communication. It can be through as a sense or sometime message will
be transmitted as telecommunication, newspapers, radio, letter, poster or other media.
Receiver (decoder) – the person or group for whom the communication effort is intended.
Noise – anything that interfere with the communication or makes it difficult to understand
Q1: In the radio signal model, which of the following shows the
correct order in which a message is transmitted?
A. Feedback, Sender, Decoded message, Coded message, Receiver
B. Sender, Decoded message, Coded message, Feedback, Receiver
C. Coded message, Sender, Decoded message, Receiver, Feedback
D. Sender, Coded message, Decoded message, Receiver, Feedback
Q1: D
Q_ Communication process is consisted of sender, message, channel, receiver , noise.
Even though we consider communication process is consider in complete if we
exclude
a) Business environment
b) Network
c) Feedback
d) Consumer
Q_c) Feedback
Direction of communication
The concept of “direction of communication” can be applied to situations where some kind of
hierarchy or structure exists. This might be as equally relevant within a family or social group as
well as the business environment.
Vertical
Vertical
❖Managers communicate downwards when issuing instructions and briefing their teams.
❖Employees would communicate upwards when reporting back to their managers with updates and results
on work performed.
❖Vertical communication is typically more formal as it recognizes the different levels within the hierarchy.
However, there can be challenges in ensuring that upward communication is effective in large
organizations. For example:
❑Subordinates may consider that the seniors would not be interested in the opinions or information
given by the subordinates.
❑Subordinates may think that the seniors are busy and already facing information overload and would
not have time to consider the problems or suggestions provided by subordinates.
❑Subordinates may fear that reporting of a problem or communication of a grievance may result in
antagonizing (to make hostile or unfriendly) or disappointing the seniors which may have adverse
consequences.
❑Subordinates may fear that the upward communication may be considered by their colleagues as a
way of getting closer to their seniors and seeking favours.
Horizontal (also called ‘lateral’)
1- Horizontal communication occurs between peer groups and people of similar standing.
2- Horizontal communication may be formal or informal depending on whether it occurs
between colleagues and friends (more likely to be informal), or external to the organization or
group (more likely to be formal).
PQ1: Horizontal Communication can be defined as communication:
A Between two directors
B Between two managers
C Between two officers
D All of the above
PQ1: D A, B and C
Diagonal
1- Diagonal communication describes the simultaneous combination of vertical and horizontal
communication.
2- In a commercial environment this might involve cross-team communication when
co-ordinating projects, innovating new ideas or problem solving.
3- The technique can be used to by-pass blockages in the usual vertical reporting line such as
when a line manager is on holiday, or when technical input is required outside the usual sphere
of expertise.
In the given figure

direction of
communication shown in
number 1, 2, 3, and 4
Write down the
communication direction
of each
1 _____________
2 _____________
3 _____________
4 _____________
PQ2: Vertical communication can be defined as:
A Managers communicate downwards when issuing instructions and briefing their
teams.
B Employees would communicate upwards when reporting back to their managers with
updates and results on work performed.
C Vertical communication is typically more formal as it recognises the different levels
within the hierarchy.
D All of the above
PQ2: D A, B and C
PQ3: Horizontal communication is:
A Horizontal communication occurs between peer groups and people of similar
standing.
B Horizontal communication may be formal or informal
C Horizontal communication cannot be avoided
D All of the above
PQ3: D A, B and C
PQ4: Diagonal communication refers to:
A The simultaneous combination of vertical and horizontal communication
B Cross-team communication when coordinating projects, innovating new ideas or
problem solving
C Bypassing blockages in the usual vertical reporting line such as when a line manager is
on holiday, or when technical input is required outside the usual sphere of expertise
D All of the above
PQ4: D A, B and C
Main Types of Communication / Informal
Informal is communicated informally by means of face-to-face

conversations, telephone conversations, e-mails and text
message.
Grapevine management to give out information that it would not
wish to transmit formally.
Rumour grapevine which may or may not be true or both
Gossip little consequence.
Barriers to Communication/ General Faults in
Communication
Distortion Omission of Information by sender.
Misunderstanding lack of clarity or technical jargon
Non-Verbal Signs Mismatch gesture, facial expression mismatch..
Overload too much information
Social Difference: difference of social, racial or educational background.
Barriers to Communication/ Difficulties at Work
(a) Status (of the sender and receiver of information)
(i) A senior manager's words are listened to closely and a colleague's perhaps discounted.
(ii) A subordinate might mistrust his or her superior and might look for 'hidden meanings' in
the message.
(b) Jargon. People from different job or specialist backgrounds (eg accountants, personnel
managers. IT experts) can have difficulty in talking on a non-specialist's wavelength.
(c) Suspicion. (a feeling or thought that something is possible, likely, or true. )People discount information
from those not recognized as having expert power.
Barriers to Communication/ Difficulties at Work
(d) Priorities. People or departments have different priorities or perspectives so that one
person places more or less emphasis on a situation than another.
(f) Timing. Information which has no immediate use tending to be forgotten.
(i) Conflict. Where there is conflict between individuals or departments, communications
will be withdrawn and information withheld.
Interpersonal Communication
Interpersonal communication is the process by which people exchange information,

feelings, and meaning through verbal and non-verbal messages: it is face-to-face
communication.
Importance of Interpersonal Communication
Interpersonal skills are extremely important for creating and maintaining meaningful
personal relationships in the workplace. People with good interpersonal communication
skills can, therefore, build healthy relationships with their colleagues and work much
better as a team.
1. Personal relationship
2. Problem solving
3. Alignment with business goals
4. Trust
5. Change Management
6. Company Culture
1. Personal relationship
2. Problem solving
3. Alignment with business goals
4. Trust
5. Change Management
6. Company Culture
7. Work & employee recognition
8. Effective management skills
9. Effective leadership skills
10. Career success
11. Conflict management
Axioms of Interpersonal Communication
The axioms of communication attempt to explain how miscommunication can occur
if the communicators are not subconsciously aligned. Axiom theory argues that if
one of the axioms is disturbed, communication may fail.
A significant amount of
communication occurs
subconsciously. You
don’t need to think
about subconscious
communication – it
happens automatically.
Interpersonal Communication:
1) Inevitability of communication (one cannot not communicate) –

1) Inevitability of communication (one cannot not communicate) –

This refers to the fact that individuals cannot remain isolated without
communicating or being in an uncommunicative state.
An individual with an expressionless face may not appear to be
communicating with others in a group, but may by no means be
uncommunicative. The lack of interest is a message in itself and may
express boredom or a concern for something else.
2) Interpersonal Communication is Irreversible

2) Interpersonal Communication is Irreversible

A Russian proverb says, "Once a word goes out of your mouth, you can never swallow it
again.“
– Irreversibility of interpersonal communication means that what has once been said or
communicated cannot be retrieved, withdrawn or called back
However, the adverse impact of the message can subsequently be mitigated by sending a
qualified message or an apology – for example adding “only joking” after having criticized
someone.
Pr1: Inevitability of Communication refers to:
A Importance of communication
B Need of communication
C Unavoidability of communication
D All of the above
Pr1: C Unavoidability of communication

Pr2: Which statement is most appropriate for Inevitability of Communication is:
A It refers to the fact that individuals cannot remain isolated without communicating
B Adverse impact of the message can subsequently be somewhat mitigated
C Imposing obligation on the sender to exercise care
D All of the above
Pr2 A It refers to the fact that individuals cannot remain isolated without
communicating
Pr3: Irreversibility of Communication is:
A What has once been said cannot be called back
B Adverse impact of the message can subsequently be somewhat lessened (to
reduce severity later)
C Imposing obligation on the sender to exercise care for next time
D All of the above
Pr3: D A, B and C
Content and relationship dimensions of communication -
Content and relationship dimensions of communication -
In certain situations, aside from the content of the message, an understanding of the
differences in the nature of the relationship between the sender of the message and the
recipient could lead to a better understanding of the message.
A lack of understanding of the relationship dimension of communication could give rise to
conflict and misunderstanding in spite of the fact that the content dimension of the
communication may essentially be the same in similar situations.
The communication has a relationship dimension which exists between the parties in
terms of family ties, status and nature of association. This needs to be kept in mind when
interpreting the message and understanding the message that is actually communicated.
Pr4: Mark the most appropriate state for Content and Relationship
Dimensions of Communication
A Adverse impact of the message can subsequently be somewhat
mitigated
B Relationship dimension exists between the parties in terms of
family ties, status and nature of association which should be kept in
perspective for understanding of the implications of the message
C Imposing obligation on the sender to exercise care
D All of the above
Pr4: B Relationship dimension exists between the parties in terms of

family ties, status and nature of association which should be kept in
perspective for understanding of the implications of the message
Digital and Analogic –
Meaning in Computer Communication fully Digital_ Help to understand
Meaning in Computer Communication fully Digital_ Help to understand
This one needs a bit of translating! The term

"digital", which today usually refers either to
numbers, computers or fingers, is used in this axiom
to refer to discrete, defined elements of
communication. These are usually words, but very
specific gestures with generally agreed meanings
would also qualify.
The term "analogic" also needs some translation. It
is a variant of analogical, the adjective derived from
analogy. It therefore refers to a correspondence, in
certain respects, between things which are
otherwise different. In this case, it describes a type
of communication in which the representation to
some extent evokes the thing to which it refers.

Human communication involves both digital and analogic components.
‘Digital’ refers to discrete, defined communication elements such as
words and specific gestures with generally agreed meanings (e.g. the “V”
peace sign, Yes or No).

‘Analogic’ describes communication where the act ‘evokes’ a particular
inference. For example shaking a fist in someone’s face would evoke a
message of aggression and violence
Defining Relationships by Punctuation
This axiom describes how each person perceives (or punctuates) a communication sequence. Both
the sender and receiver of information structure the communication flow differently and
therefore interpret their own behaviour during communication as merely a reaction on the other's
behaviour.
The "punctuation" referred to is the process of organising groups of messages into
meanings. This is analogous to the punctuation of written language. In either case, the
punctuation can sometimes alter the meaning considerably.
To punctuate a communication means to interpret an on-going sequence of events by

labelling one event as the cause and the following event as the response. This means that
each party in the communication thinks the other one is the cause of a specific behaviour.
Symmetric or Complementary-
A "complementary" relationship here means one of unequal power, such as
parent-child, boss-employee or leader-follower.
These concepts manifest in two/three ways:
i) One-up – one party attempts to gain control of an exchange by dominating the overall
communication;
ii) One-down – one party attempts submit to another party
Symmetric or Complementary-
Symmetric: Symmetrical interaction describes interaction based on equal power
between the parties. A "symmetric" relationship here means one in which the parties
involved behave as equals from a power perspective.
iii) One-across communication is a transient state where the communication aims to
neutralize a situation. Where parties adopt the same style (one-up, one-own or
one-across) it is described as symmetrical.
Q: Which of the given options is NOT an axiom of interpersonal communication?
A. Inevitable & unrepeatable
B. Symmetrical or complimentary
C. Difference/disagreement/disorder in humans
D. Inevitability of communication
Q: C_ Difference/disagreement/disorder in human
Non- verbal communication
Non- verbal communication as it its name i plies communication without
words, or other" than by wore+s: for example; by tone of voice.
Facial expression
The eyebrows, eyes, nose, lips and mouth, jaw and head position all
contribute to the expression on someone’s face: lips can be tight or slack,
eyes narrowed or widened, the eyebrows lowered or raised, the whole face
moving or still, pale or flushed.
Gestures
People make gestures unconsciously: jabbing a finger in the air for
emphasis, tapping the fingers when impatient. They also make conscious
gestures – and not only impolite ones: a fingers against the lips for silence,
jerk of the head to indicate a direction, a shrug to indicate indifference.
Movement
Watch how people move, at what pace, and to what effect. Someone who
walks briskly coveys determination; someone who shuffles along, laziness or
depression; someone who can never sit still, nervousness or impatience.
Non- verbal communication
Positioning
You will probably find you sit closer to the people you like and trust, face them
directly, or even lean towards them. You may keep a ‘respectful’ distance
between yourself and someone with whom you have a more forma.
Relationship.
Contact
Shaking hands is acceptable for transmitting greeting in most contexts but, for
example, nudging or prodding for emphasis, or clapping on the back, implies
familiarity and ease.
Posture
Consider the way you sit and stand lounge, hunch or sit/ stand up straight and
you convey relaxation, negativity or alertness. Lean forward when you listen to
someone, and you transmit interest: lean well back and you convey wariness
or boredom.
Sounds
A skeptical grunt, a sympathetic murmur and a delighted whoop are useful non
– verbal feedback signals.
Communication Pattern
When we look beyond two-person communication to the linkage
among work groups, departmental or organizational members, we
are concerned with communication networks which are system of
communication lines linking various senders and receivers.
Five major types have been studied in depth: wheel, circle,

all-channels, chain and ‘Y’.
Wheel Circle All-Channel
Chain
“Y”
Communication Pattern
Strength & Weaknesses In the centralized networks (chain, wheel
and ‘Y’) In decentralized networks (channels and circle)
Comparison
►The wheel is always the quickest way to reach a conclusion and
the circle is slowest.
►For complex problem “All-channel” pattern is most likely process
to reach the best decision.
►The level of satisfaction for individuals in lowest in the circle,
fairly high in all – channels, mixed in the wheel, with the central
figures usually expressing greater satisfaction, and the rest feeling
isolated.
►Under time pressure the all-channels system are either
restructures, to become a wheel, or disintegrates.
Q4: Jared is the leader of a virtual team which stays in contact
via e-mail. Team members send all messages to Jared, who
forwards them to the rest of the network.
Which communication pattern is reflected in this situation?
A The circle
B The ‘Y’
C The wheel
D The all-channel
Q4: C
Q5: According to Leavitt, which one of the following
communication patterns is the fastest in terms of problem solving?
A Y
B Circle
C Chain
D Wheel
Q5: D
Q6: Research on communication networks has shown that the
quickest way to reach a conclusion is always through:
A. the Circle
B. the 'Y'
C. the wheel
D. the chain
Q6: C
Q6: Under time pressure, the all-channels system either:
A. delivers even better results
B. partially closes down or disintegrates
C. slows down or crashes
D. restructures or disintegrates
Q6: D
Q7: For complex problems the network most likely to facilitate the
best decision is:
A. circle
B. all-channel
C. wheel
D. 'Y'
Q7: B
 Internal Controls & System

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#38
4. Control
Internal Controls & System
What is control
Meaning of internal control
Purpose of internal control
Components of internal control
Types of internal control
Levels of internal control
Preventive, detective and corrective control
Implementing control
Six A’s
Difficulties in implementation
What is Control?
Control is an extremely wide concept and is difficult to define. One definition is:
• Control is a primary task and is the process of ensuring the operations proceed
according to plan.
Concept of Internal Control and Internal Check
Meaning of Internal Control
Internal Control is the process designed and affected by management to provide reasonable
assurance about the achievement of the entity's objective's with regard to:
Reliability of financial reporting
Effectiveness and efficiency of operations
Compliance with application laws and regulations.
Internal control
What are internal controls?
Internal control systems exist to enhance the achievement of organisational objectives.
They promote the orderly and efficient conduct of business, hep keep the business on
course, and help it change safely.
The control system is seen as consisting of:
The control environment – management philosophy, operating style and management
policies;
Control procedures – control mechanisms such as segregation of duties, authorisation,
reconciliation and so on.
Meaning of Internal Control and Internal Check
Purpose of Internal Control

The purpose of internal control is implied by the definition given earlier, to help
management achieve the entity's objectives, especially in terms of ensuring:
 The orderly and efficient conduction of the business
 The safeguarding of assets
 Identify the risk can stop business to achieve its objectives and execute its strategies
 The prevention and detection of fraud and error
 The accuracy and completeness of the accounting records.
 The timely preparation of reliable financial information.
Q: Which of the following is not an aim of internal controls?
A To enable the organization to respond appropriately to business, operational and
financial risks
B To eliminate the possibility of impacts from poor judgment and human error
C To help ensure the quality of internal and external reporting
D To help ensure compliance with applicable laws and regulations
Q: B
Q: It is the considered to be best practice for the internal auditors of a large company to
report to:
A. the board of directors
B. the external auditors
C. the shareholders
D. the audit committee
Q:D
The audit committee would act as an interface between the directors and internal auditors
to reduce the problem of independence.
The information
system relevant
to financial
reporting
The entity’s risk
Control
assessment
activities
process
Components
The control Monitoring of
of Internal
environment controls.
Control
Classifications of Internal Controls
Types of organisational control:
Personal centralised control
Small ownermanaged operations where there is a centralised decision making by the
owner
Bureaucratic control
formalised rules, procedures, standardisation and hierarchy
Output control
Measurement of outputs and the results achieved
Clan or cultural control
Semiautonomous working with very few formal controls, it depends upon on the common
agreement of objectives and shared cultural values.
Levels of Controls
(i) Strategic
This is the level of control operating at board level. It will
largely consist of the setting of the control environment:
Strategic planning – determining course to be taken
Board procedures – appointment of directors,
segregation of duties and so on
Setting and reviewing organisational structure
Policies on the conduct of the business, financial and
other performance measures, risk assessments,
environmental and ethical issues and so on
Monitoring achievement of and compliance with plans
and policies set
Levels of Controls
(ii) Tactical
This is the middle management. Controls at this level
include:
Tactical planning, determining the production
requirements and production schedule
Production budget
Procedures governing recruitment, training, and risk
management to name but a few
Monitoring the achievement to plans and policies set.
Levels of Controls
(iii) Operational
This occurs at the lower levels of the organisation.
Operational controls are designed to control structured

repetitive activities according to preset rules.
For example computerised stock control systems,

production scheduling and order processing systems.
Alternative Approach to Internal Control
Preventive Controls:- These are controls that prevent risks occurring . For example,
segregation of duties, recruiting and training the right staff and having an effective
control culture.
Detective Controls:- These controls are designed to pick up errors that have not been
prevented.
Corrective Controls:- These are controls that address any problems that have
occurred. So where problems are identified, the controls ensure that they are properly
rectified.
Implementing Internal Control
Risk is related with weakness of Assessment of Risk: What happens if control fail
Internal Controls or (Exposure of Risk)
Business Risk in which involve both
internal and external factor can stop
business to achieve its objective.
Selection of Internal Controls ( types- levels-
strictness)
Q: Which of the subsequent would be classed as a preventive control?
A. Having a supervisor present on the every shop floor at all times
B. Conducting regular receivables statement reconciliations
C. Monthly inventory checks
D. Establishing procedures for irrecoverable debt collection
Q:A
Q: Every night the last individual departure the office premises needs to switch on the
security alarm. This control belongs to which of the following categories?
A. Authorization
B. IT based controls
C. Reconciliation
D. Physical
Q:D
Physical controls also include
access controls,
key-locked cabinets,
CCTV and so on.
Q: Mr Jamil is the payables clerk in a large manufacturing organization Adam Motors. One of
her duties is to write up the purchase ledger but she is not authorized to make payments to
suppliers. This is an example of the important general principle known as:
A. controlled record access
B. segregation of duties
C. dual control
D. initiation control
Q: B
Enhance Your Knowledge – Contingency Control
Q: Which of the following would be classed as a contingency control in an information
system?
A Password-only access to the system
B System recovery procedures
C Audit trails
D Data validation procedures
Q:B
Internal Checks
Internal checks are defined as the checks on the day-to-day transactions whereby the work
of one person is proved independently or is complementary to the work of another, the
object being the prevention or early detection or errors and fraud.
A pre-list is a list that is drawn up before any processing takes place
A post-list is a list that is drawn up during or after processing.
A control total is a total of any sort used for control purpose by comparing it with another
total that ought to be the same.
Q: Which of the following is not an internal check?
A Separation of duties for authorizing, custody and recording
B Pre-lists, post-lists and control totals
C Bank reconciliations
D Systems for authorizing transactions within specified spending limits
Q: D
Q14: 197FTC17: The fact that managers are not aware of problems a company is facing, such
as not knowing that a major incident of fraud has recently taken place, would weaken which
of the following components of internal controls?
A. Control environment
B. Risk assessment process
C. Control activities
D. Monitoring of controls
197FTC14: A
Control environment refers to the overall attitude of managers to the importance of internal
controls.
Six A’s of effective control systems
1. Acceptable – to the people using it
2. Appropriate – for the people using it
3. Accessible – simple as possible, and only as technical as necessary
4. Action-oriented – timely corrective action should be taken
5. Adaptable – flexible to suit changing conditions
6. Affordable – cost beneficial
Practical difficulties with control
many systems are based on forecasting the future, the information is not available or too
expensive or time consuming to collect
it is not always easy to set the standard to be achieved
it is not easy to persuade the people of the need for action
control systems often bridge two or more areas of activity and it is difficult to provide
everyone with the information they need
the accurate, timely internal information that many controls rely on is difficult enough to
obtain
external information is even harder to obtain for benchmarking
it is not always easy to distinguish between controllable and uncontrollable aspects of
the operations
 Internal Controls & System

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#38
4. Control
Internal Controls & System
Potential for Fraud
Internal Controls to Prevent Fraud
What is Control?
Control is an extremely wide concept and is difficult to define. One definition is:
• Control is a primary task and is the process of ensuring the operations proceed
according to plan.
Internal control
What are internal controls?
Internal control systems exist to enhance the achievement of organisational objectives.
They promote the orderly and efficient conduct of business, hep keep the business on
course, and help it change safely.
The control system is seen as consisting of:
The control environment – management philosophy, operating style and management
policies;
Control procedures – control mechanisms such as segregation of duties, authorisation,
reconciliation and so on.
Fraud
Fraud is an intentional act involving the use
of deception to obtain a benefit. Fraud is a
criminal offence, punishable by fine or by
imprisonment.
Error is an unintentional mistake.
Irregularity is something contrary to a
particular rule or stander
Types of Fraud
In a corporate context fraud can fall into one of two main categories:
A- Removal of Funds or Assets from Business
B- Intentional Misrepresentation of Financial Position of Business
A- Removal of Funds or Assets from Business
Theft of cash.
Employees with access to cash may be tempted to steal it. A
prime example is theft from petty cash. Small amounts taken at
intervals may easily go unnoticed.
Theft of inventory.
Similarly, employees may pilfer items of inventory. The most
trivial example of this is employees taking office stationery,
although larger items may be taken also. These examples are of
unsophisticated types of fraud, which generally go undetected
because of their immateriality. On the whole, such fraud will tend
to be too insignificant to have any serious impact on results or
long-term performance
Payroll fraud.
Employees within or outside the payroll department can perpetrate payroll
fraud.
(a) Employees external to the department can falsify their timesheets,
for example by claiming overtime for hours which they did not really work.
(b) Members of the payroll department may have the opportunity
deliberately to miscalculate selected pay slips, either by applying an inflated
rate of pay or by altering the hours to which the rate is applied.
(c) Alternatively, a fictitious member of staff can be added to the payroll
list. The fraudster sets up a bank account in the bogus name and collects the
extra cash himself. This is most feasible in a large organization with high
numbers of personnel, where management is not personally acquainted with
every employee.
Skimming Schemes
In a skimming scheme the fraudster divert small amounts from a large
number of transactions, believing that no one will bother to investigate the
small differences
Individually, although in aggregate they can total to a worthwhile sum.
Teeming and lading.

This is one of the best known methods of fraud in the sales ledger area.
Basically, teeming and lading is the theft of cash or cheque receipts.
Setting subsequent receipts, not necessarily from the same debtor, against
the outstanding debt conceals the theft.
Fictitious customers.
This is a more elaborate method of stealing stock. Bogus orders are
set up, and goods are dispatched on credit.
The 'customer' then fails to pay for the goods and the cost is
eventually written off as a bad debt. For this type of fraud to work,
the employee must have responsibility for taking goods orders as
well as the authority to approve a new customer for credit.
Collusion with customers.
Employees may collude with customers to defraud the business by
manipulating prices or the quality or quantity of goods
dispatched.
For example, a sales manager or director could reduce the price
charged to a customer in return for a cut of the saving.
Alternatively, the employee could write off a debt or issue a credit
note in return for a financial reward.
Disposal of assets to employees.
It may be possible for an employee to arrange to buy
a company asset (eg a car) for personal use. In this
situation, there may be scope to manipulate the book
value of the asset so that the employee pays below
market value for it. This could be achieved by over-
depreciating the relevant asset.
Bogus supply of goods or services.
This typically involves senior staff who falsely invoice the firm for
goods or services that were never supplied. One example would
be the supply of consultancy services. To enhance authenticity, in
many cases the individual involved will set up a personal company
that invoices the business for its services. This type of fraud can be
quite difficult to prove.
Paying for goods not received.

Staff may collude with suppliers, who issue invoices for larger quantities of goods than were actually
delivered. The additional payments made by the company are split between the two parties.
Misuse of pension funds or other assets.
This type of fraud has received a high profile in the past. Ailing companies may raid the pension fund
and steal assets to use as collateral in obtaining loan finance. Alternatively, company assets may be
transferred to the fund at significant over-valuations.
Q1: Lack of control over which of the following activities can lead to the fraudulent activity
of teeming and lading?
A. Non-current asset register
B. Budgetary system
C. Inventory management
D. Sales ledger and receipts
Q:D
Q2: What is the term given to a method of fraud in the accounts receivable area, by which
cash or cheque receipts are stolen, and the theft concealed by setting subsequent receipts
against the outstanding debt?
A Collusion
B Misrepresentation
C Teeming and lading
D Fictitious sales
Q: C
Q3: Which of the following activities create vulnerability to fraud?
i. Calculating payslips
ii. Preparing delivery notes
iii. Paying supplier invoices
iv. Meeting budgets and performance targets
A (iii) only
B (i) and (iii) only
C (i) and (ii) only
D (i), (ii), (iii) and (iv)
Q: D
Q4: Which of the following internal controls might be least effective in preventing
fraud, if staff are in collusion with customers?
A Physical security
B Requiring signatures to confirm receipt of goods or services
C Sequential numbering of transaction documents
D Authorization policies
Q: B
Q5: Which of the following is a skimming fraud?
A. A large amount is 'skimmed' off the top of a large sales invoice as a kickback to the
purchaser
B. Small amounts are diverted from a large number of transactions
C. Invitation to pay a large amount up front to secure a large amount in the future
D. Submission of invoices which contain inflated amounts
Q: B
The fraudster hopes that no one will notice or bother to investigate the small differences
individually, although in aggregate they can total a worthwhile sum.
B) Intentional Misrepresentation of the Financial Position of the Business
Over-valuation of inventory.
Inventory is a particularly attractive area for
management wishing to inflate net assets
artificially. There is a whole range of ways in
which stock may be incorrectly valued for
accounts purposes.
(a) Inventory records may be
manipulated, particularly by deliberate
miscounting at stock counts.
(b) Deliveries to customers may be
omitted from the books.
(c) Returns to suppliers may not be Bad debt policy may not be enforced.
recorded. Aged receivables who are obviously not going to pay
(d) Obsolete inventory may not be should be written off. However, by not enforcing this
written off but rather held at cost on the policy management can avoid the negative effects it
balance sheet on). would have on profits and net assets.
Potential for fraud
There are three broad pre-requisites or 'pre-conditions' that must exist in order to make fraud a
possibility: dishonesty, motivation and opportunity. These are useful to know, because if one or
more of them can be eliminated, the risk of fraud is reduced!
Dishonesty
Motivation Opportunity
Honesty is a subjective quality, which is interpreted variously
according to different ethical, cultural and legal norms. However, we
may define dishonesty as an individual's pre-disposition or tendency
to act in ways which contravene accepted ethical, social,
organizational and legal norms for fair and honest dealing. This
tendency may arise from: A- Dishonesty.
(a) Personality factors: a high need for achievement, status or
security; a competitive desire to gain advantage over others; low
respect for authority;
(b) Cultural factors: national or familial values, which may be
more 'flexible' or anti-authority than the law and practice prevailing
in the organisation. (Cultural values about the ethics of business
‘bribes’ or 'gifts' - for example, vary widely. 'Lying' is also a very fluid
concept: some cultures value 'saving face' or agreeing over giving
strictly truthful responses.)
In addition to a general predisposition or willingness to
act dishonestly, should the opportunity arise, the
individual needs a specific motivation to do so. We will
be discussing the concept of motivation in Chapter 12,
but broadly, it involves a calculation of whether a given
action is worthwhile. Individuals weigh up:
(a) The potential rewards of an action: the
satisfaction of some need, or the fulfillment of some
goal; in relation to
(b) The potential sanctions or negative B- Motivation
consequences of an action, or the deprivations required
to carry it through.
Even if a person is willing to act dishonestly, and has
a motive for doing so, (s)he must still find an
opportunity or opening to do so: a 'loophole' in the
law or control system that:
(a) Allows fraudulent activity to go undetected,

or
(b) Makes the risk of detection acceptable,
given the rewards available.
C- Opportunity
Q6: Dishonesty is a _________to act in ways which contravene accepted ethical, social,
organizational or legal norms for fair and honest dealing.
Which word correctly completes this statement?
A Motivation
B Pre-disposition
C Opportunity
D Unwillingness
Q6: B
Q7: Which of the following are considered to be the three prerequisites for fraud to
occur?
1. Motive
2. Opportunity
3. Weak controls.
A. 1. and 2.
B. 2. and 3.
C. 1. and 3.
D. 1., 2. and 3.
Q7: A
The third prerequisite is dishonesty. An honest employee is unlikely to commit fraud even if
given the opportunity and motive.
Detection and prevention
A primary aim of any system of internal controls should be to prevent
fraud. However, the very nature of fraud means that people will find
ways to get around existing systems. It is equally important, therefore,
to have controls in place to detect fraud if and when it happens.
A) Honesty
i) Careful Recruitment and Selection Policy Dishonesty
ii) Verify and Record and Consult with Previous
Employees and Institute.
B) Motivation
i) High Ethical Values
ii) Be Aware of Employees Ambitions and Career
Expectations
Motivation Opportunity
C) Avoid to Provide Opportunity
Internal controls
Controls must be developed in a structured manner, taking account of the whole spectrum of risk and focusing
on the key risks identified in each area of the business.
We looked at internal controls generally in Chapter 21. Let us think about appropriate controls that could be
introduced to combat fraud.
Physical controls
Basic as it seems, physical security is an important tool in preventing fraud. Keeping tangible assets under lock
and key makes it difficult for staff to access them and can go a long way towards discouraging theft.
Segregation of duties
(a) Staff who have responsibility for a range of tasks have more scope for committing and concealing
fraud. Therefore the obvious way to control the risk is to segregate duties.
(b) If an employee's duties do not extend beyond one domain, it will be more difficult for an employee to
conceal a fraud. It is more likely that it will be picked up at the next stage in the process.
c) So, for example, the employee responsible for recording sales orders should not be the same person
responsible for maintaining stock records. This will make it more difficult to falsify sales or stock records, as a
discrepancy between sales figures and stock balances would show up.
(d) Segregating responsibility for packaging goods for delivery from either of the recording tasks would
also help to minimize the risk of theft and increase the likelihood of detection.
Authorization policies
Requiring written authorization by a senior member of staff is a good preventative tool. It increases
accountability and also makes it harder to conceal a fraudulent transaction.
Customer signatures
Requiring customers to inspect and sign for receipt of goods or services ensures that they cannot claim that
the delivery did not match their order.
It also provides confirmation that the delivery staff actually did their job and that what was delivered
corresponded to what was recorded.
Using words rather than numbers
Insist that all quantities be written out in full. It is much more difficult to change text than to alter a figure.
Documentation
Separate documents should be used to record sales order, Despatch, and delivery and invoice details. A simple
matching exercise will then pick up any discrepancies between them and lead to detection of any alterations.
Sequential numbering
Numbering order forms, delivery dockets or invoices makes it extremely simple to spot if something is missing.
Dates
Writing the date on forms and invoices assists in cut-off testing. For example, if a delivery docket is dated pre-
year end but the sale is recorded post-year end it is possible that results are being manipulated.
Holidays
As we have said, fraud is difficult to conceal. Enforcing holiday policy by insisting that all staff take their full
holiday entitlement is therefore a crucial internal control. A two-week absence is frequently sufficient time for
a fraud to come to light.
Q8: Consider the following two statements:
1) A comprehensive system of control will eliminate all fraud and error.
2) Employees working in departments other than Accounts have no responsibility for
reporting fraud.
Which of these options is / are correct?
A. Only 1
B. Only 2
C. Both
D. Neither
Q8: D
1- FALSE
In practice many organizations find that fraud is impossible eradicate.
With regards to error, as it is unintentional, it will be hard to prevent such
mistakes from taking place.
2- FALSE
There is an implied duty within an employment contract so as to
encourage staff to be honest and report any actual or suspected fraud.
Q9: In a limited company, or plc, it is the ultimate responsibility of the _______to take
reasonable steps to prevent and detect fraud.
Which word or phrase correctly completes this statement?
A The board of directors
B The fraud officer
C The external auditor
D The audit committee
Q9: A
Rationale: The directors are responsible for the conduct of the business, the deterrence and
detection of fraudulent (and other dishonest) conduct, and the reliable reporting of financial
information. Not all organizations have a fraud officer. The responsibility of the external auditor is
only to express an opinion on the financial statements, although audit procedures should have a
reasonable expectation of detecting misstatements arising from fraud. The audit committee reviews
the organization's performance in fraud prevention, but also reports to the board
Q10: Which two of the following stakeholders will be most directly affected if a business
overstates its financial position?
i. Staff
ii. Customers
iii. Investors
iv. Suppliers
A. i) and ii)
B. ii) and iii)
C. iii) and iv)
D. ii) and iv)
Q10: C
Q11: The incident of fraud indicates a weakness in:
A. Security arrangements
B. System procedures
C. Recruitment procedures
D. Organization control
Q11:D
The purpose of organizational control are to safeguard company assets, ensure efficiency
and prevent errors.
 Performance Management-
Controlling the individual

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#40
Performance Management-Controlling the
individual
Performance Appraisal
Performance Appraisal?
Performance appraisal can help improve the efficiency and
effectiveness of an organisation. The appraisal system is used by
organisations to review, change, inform, monitor, examine and
evaluate employees. Through evaluation, it plays a key role in
organisational control. It also serves to develop and motivate
employees.
Performance Management & Assessment
Performance management aims to get better results for the organization via the measurement and
evaluation of individual performance.
Performance Management
‘a process to establish a shared understanding about what is to be achieved(Goal), and an approach to
managing and developing people in order to achieve it ’.
A process to establish a shared understanding about what is to be achieved, and an approach to
managing and developing people in order to achieve it.
Make an
Set Targets Monitor Review
Action Plan
Q1: ___________ is ‘a process to establish a shared understanding about what is to be
achieved, and an approach to managing and developing people in order to achieve it ’.
Which two words correctly completes this definition?
A Performance appraisal
B Disciplinary action
C Performance management
D Peer appraisal
Q1: C
Rationale: This is the definition of performance management. It differs from performance
appraisal in its emphasis on collaboration, objective-setting and on-going management.
Method of Who to Interview & Barriers to
Purpose
Appraisal Assess Approach Overcome
Purpose of Performance Appraisal
Feedback about performance at work and an assessment of competence through

comparison of performance against established standards and agreed targets
Identifies work of particular merit done during review period
Provides a basis for remuneration
May be used as an opportunity to discuss future prospects and ambitions
Identifies training and development needs
Purpose of Performance Appraisal
The general purpose of any appraisal system is to improve the efficiency of the organization by
ensuring that the individuals within it are performance to the best of their ability and developing
their potential for improvement. This has three main components.
Reward Review (future remuneration) : Measure the extent to which an employee is deserving of
performance-related bonuses or pay increase. But there is no implied link between assessment
and reward
Performance Review / Identification of Training Needs : for planning and following-up training and
development programs identifying training needs, validating training methods and so on.
Potential Review / Succession Planning: as an aid to planning career development and succession,
by attempting to predict the level and type of work the individual will be capable of in the future.
Recognition of Work: Accomplishment of task having real work for the organization
Methods to Appraise an Employee
a) Overall Assessment: The manager writes in narrative form his judgment about the appraisee.
There will be no guaranteed consistency of the criteria and areas of assessment, however, and
managers may not be able to convey clear, effective judgments in writing.
b) Guided Assessment: Assessors are required to comment on a number of specified (defined list
of) characteristics and performance elements, with guidelines as to how terms such as
‘application’, ‘integrity’ and ‘adoptability’ are to be interpreted in the work context. This is more
precise, but still rather vague.
c) Grading/ Adjective Rating Scale Appraisal
A variety of appraisal techniques can be used to measure different criteria in a different ways.
A performance appraisal type in which a rater checks off those attributes of an employee
Employee factors/ Unsatisfactory Satisfactory Good Excellent

Quality of work    
Job Knowledge    
d) Result Oriented Scheme

This reviews performance against specific targets and standards of performance agreed in advance
by manger and subordinates together. There are significant advantages to such an approach.
i. The subordinate is more involved in approach because (s) he is able to evaluate his/her
progress in achieving jointly-agreed targets.
ii. The Manager is relieved of a critic's role, and becomes a coach.
iii. Clear and known targets help modify behaviour.
Q: In an organization a sales team is assessed according to the number of sales calls made,
number of leads generated, and number and value of sales made.
Which appraisal technique is described in this example?
A Behavioural incident
B Rating scale
C Guided assessment
D Results-oriented
Q: D
Q:A manager is assessing the performance of her team members. In accordance with the appraisal
system of the organization, she has been given a list of characteristics and performance elements,
with notes on how to interpret and apply the terms: ‘integrity ’, ‘punctuality ’ and so on. She is
required to comment on how each appraisee measures up in terms of each factor.
Which appraisal technique is this organization using?
A Overall assessment
B Grading
C Behavioural incident
D Guided assessment
Q: D .
Assessment of Condition
Who does the appraising?
1- Downward Appraisal:-
An oldest way, in which a superior appraise his/her subordinate.
2- Upward Appraisal:-
A notable modern trend is upward appraisal, whereby employees are not rated by their superiors but by their
subordinates. The followers appraise the leader.
3- Coworker Appraisal:-
4- Self-Appraisal:-
Self-appraisal occur when individuals carry out their own self-evaluation as a major input into the appraisal
process.
5- 360 Degree Feedback:- vs. Multi-source Feedback
New techniques of appraisal aim to monitor the appraisee’s effectiveness from a number of perspectives.
These techniques include upward, customer and 360 degree feedback.
6-Customer Appraisal:-
In some companies part of the employee's appraisal process must take the form of feedback from customers
(whether internal or external). This may be taken into account as a factor in remuneration. This is a valuable
development in that customers are the best judges of customer service, which the appraisee's boss may not
see.
Q: Which of the following is likely to be the most objective approach to appraisal?
A Self appraisal
B Peer appraisal
C Upward appraisal
D 360-degree feedback
Q: D Rationale:
Q: _________ is the name given to gathering of appraisals from the individual, superiors,
subordinates, peers and co-workers and customers.
Which word or phrase correctly completes this sentence?
A. Multi-source feedback
B. 360-degree management
C. Management by objectives
D. Performance management
Q: A
The Appraisal Interview
The appraisal interview is an important stage in the process, as it can be used to encourage
collaborative problem solving and improvement planning. A ‘problem-solving’ style is preferable to
a ‘tell and sell’ or ‘tell or listen’ style
a) Preparation for Interview

The appraisal interview is the point at which the employee and manager meet formally to discuss
performance and agree targets for the forthcoming period. The following are the documents that
may be available, and should have been read and copied for the interview.
 The job description
 A statement of performance such as the rating sheet or the appraisal form
 A record book which highlights the good and bad points of the employee’s performance over
the review period
 Comments from clients, customers or other outside agencies
 The employee’s self-assessment form
b) Selecting Interview Approach- Maier
(i) The tell and sell method. The manager tells the subordinate how he/she has been assessed, and then
tries to 'sell' (gain acceptance of) the evaluation and the improvement plan. This requires unusual human
relations skills in order to convey constructive criticism in an acceptable manner, and to motivate the appraise
to alter his/her behaviour.
(ii) The tell and listen method. The manager tells the subordinate how he/she has been assessed, and
then invites the appraise to respond. The manager therefore no-longer dominates the interview throughout,
and there is greater opportunity for counseling as opposed to pure direction.
(iii) The problem-solving approach. (opportunity to raise & resolve workplace) problems and issues The
manager abandons the role of critic altogether, and becomes a helper. The discussion is centered not on the
assessment, but on the employee's work problems. The employee is encouraged to think solutions through,
and to commit himself to the recognized need for personal improvement. This approach encourages intrinsic
motivation through the element of self-direction, and the perception of the job itself as a problem-solving
activity. It may also stimulate creative thinking on the part of employee and manager alike, to the benefit of
the organization’s adaptability and methods.
Q: In an appraisal interview, the manager tells the subordinate how he has been
assessed – good and bad – and then gives him a chance to put questions, suggest
improvement targets, explain shortcomings and identify problems.
Using Maier ’s classification, what is the name given to this approach to appraisal
interviewing?
A Tell and sell
B Tell and listen
C Problem solving
D Sell and listen
Q: B
262FTC14: Hans is an employee having an appraisal with his manger, Ali. Ali informs Hans
that his performance has been poor throughout the year, giving a number of incidents and
scenarios to back up her statements. She conclude that he needs additional training
during the following year in order to improve his performance.
What type of appraisal has Hans had?
A. Tell and Sell
B. Tell and Listen
C. Problem Solving
D. 360 degree
262FTC14: A
Approach is Tell and Sell because Manager has not invited any comments from Hans.
c) Conducting Interview
The first steps are to put the employee at ease, explain the purpose of the interview and then
discus the employee’s progress. Confidentiality is important. The following list of skills is a guide of
must do’s’ while conducting the interview
 Not Apply coercion
Allow time for the appraise to ask questions
 Build upon answers
 Refrain from talking too much
 Handle difficult or sensitive area carefully
 Be tolerant of pauses and silence
 Listen carefully; making sure that the interviewee knows you are listening.
 Keep the conversation from wandering off into irrelevant areas
d- Next Action Plan

d- Next Action Plan
1- Summarize and check understanding

2- Gain employee commitment
3- Agree plan of action
 Relevant to key task of the job
 Challenging to achieve
 Within the control of the individual
 Observable or measurable
Q: All of the following, except one, are sound principles for devising performance
measures. Which is the exception?
A They should be related to actual key tasks of the job
B They should be easily achievable
C They should be within the control of the individual
D They should be observable or measurable
Q: B
Q: Conducting an appraisal in a public place, such as staff canteen, may render it
ineffective because of:
A. lack of objective judgement
B. problems of confidentiality
C. there is no time to fill in appropriate paperwork
D. it will be effective as other members of staff could overhear the conversation and
contribute their views
Q: B
Barriers to Effective Appraisal
Appraisal Barriers Comments
Appraisal as Judgment The appraisal ‘is seen as a one-sided process in which the manager acts as judge, jury
and counsel for prosecution. It puts the subordinate on the defensive.
Appraisal as Chat Many managers, embarrassed by the need to give feedback and set stretching targets,
reduce the appraisal to a few mumbled “well dones” and leave the interview with a
briefcase of unresolved issues.
Appraisal as Unfinished Appraisal is ‘wrapping up’ the past years' performance issues while it should be future
Business focused.
Appraisal as Annual Many targets set at annual appraisal meetings become irrelevant or out-of-date.
Event and a HR Feedback, goal adjustment and improvement planning should be a continuous
procedure process.
Q: Which of the following is not a barrier to effective appraisal?
A Appraisal is seen as a way of wrapping up unfinished business for the year
B Appraisal is seen as conforming to Human Resource procedures
C Appraisal is seen as an opportunity to raise workplace problems and issues
D Appraisal is seen as an annual event
Q: C Rationale:
Overcoming the Barriers Appraisal-Luckett
The appraisal system was itself should be assessed and the claims made by Lockett will need to be
addressed ensure:
• Relevance – does the system have a useful purpose and is it relevant to the needs of both the organization
and the individuals?
• Fairness / Equality – is there reasonable objectivity and standardization of criteria throughout the
organization?
• Serious intent /Results – is the management committed to the system or has it been thrust in them by the
HR department? Do the appraisers have training in interviewing and assessment techniques? Is there a
demonstrable link between performance and reward?
• Co-operation – is the appraisal a participative, problem solving activity with the appraise, given time and
encouragement to prepare for it to be able to make a constructive contribution?
• Efficiency – is it costly and difficult to administer and does it seem too time consuming compared with the
value of its outcome?
Another way of ensuring effective appraisals is to apply the 4Fs:
Firm – managers should be willing to discuss negative as well as favourable aspects of
performance.
Factual – Subjective aspects should be avoided
Fair – all employees should be treated the same.
Frequent – appraisal should be held on a regular basis rather than when a problem arises.
Q: Which of the following are meaningful criteria for measuring the effectiveness of an
appraisal scheme?
i. Serious intent
ii. Fairness
iii. Efficiency
iv. Co-operation
v. Results
A. (ii), (iii) and (v) only
B. (iii) and (v) only
C. (i), (ii), (iii) and (iv) only
D. (i), (ii), (iii), (iv) and (v)
Q: D Rationale: These are all valid criteria.

Q: Which one of the following criteria would not be suitable for evaluating an appraisal
system?
A Serious intent
B Fairness
C Bonuses awarded
D Equality
Q: C
Q: Which of the following is not a key feature of effective appraisal?
A. Firm
B. Factual
C. Frequent
D. Formal
Q: D
Appraisal do not have to be formal to be effective. The final “F” is fair.
Appraisal and pay
• (a) Funds available for pay rises rarely depend on one individual's performance
alone: the whole company has to do well.
• (b) Continuous improvement is always necessary: many firms have 'to run to stand
still'. Continuous improvement should be expected of employees as part of their
work, not rewarded as extra.
• (c) There is no implied link between assessment and reward
Separation from Job (Serious Dissatisfaction)
Reasons Comments
Discharge or Serous violation
dismissed by Behaviour not acceptable for organization
employer Serious incompetency
Unavoidable Family Reasons
Personal Reasons
Avoidable Low Pay
Behaviour of Supervisor
Working Conditions
Q: The reasons for staff leaving fall into three categories:
1) Discharge
2) Unavoidable
3) Avoidable
Which of the above option is / are correct?
A. 1) and 2)
B. 1) and 3)
C. 2) and 3)
D. 1), 2) and 3)
Q: D
264FTC14: Mary has recently been told that she is being dismissed from her job due to her
no longer having the required skills for her role. Which of the following reasons for staff
leaving would this be classified as?
A. Discharge
B. Avoidable
C. Redundancy
D. Unavoidable
264FTC14:A
Rationale: This is an example of discharge as Mary is being dismissed. ‘Avoidable’ would
involve issues with pay or condition, while ‘unavoidable’ would be include illness or death.
Average Employees Left Job
Employee Turn Over=
Average Employees in Year
Q: Staff turnover can be calculate by dividing ______ by _____ and expressing the result
as a percentage.
1) The total number leaving the organization
2) The total number in the workforce
3) The average number in the workforce
4) The weighted average number leaving the organization
Which of the above options should be inserted into the gaps IN THE CORRECT ORDER to
complete the calculation?
A. 1) then 2)
B. 1) then 3)
C. 4) then 2)
D. 4) then 3)
Q: B
 Governance, Corporate
Social Responsibility &
Stakeholders

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#41
Governance, Corporate Social Responsibility
& Stakeholders
Corporate Social Responsibility
Stakeholders
Types of stakeholders
Conflict between stakeholders
Stakeholders Management Theory
Corporate Social Responsibility
Social responsibility is an ethical or ideological theory that an entity whether it is a
government, corporation, organisation or individual has a responsibility to society. This
responsibility can be "negative", meaning there is a responsibility to refrain from acting
(resistance stance) or it can be "positive," meaning there is a responsibility to act
(proactive stance).
Stakeholders
Stakeholders are any entity (person, group or possibly non-human entity) that can affect or be
affected by the achievements of an organization’s objectives. It is a bi-directional relationship.
Each stakeholder group has different expectations about what it wants and different claims upon
the organization.
Types of Stakeholders
Employees and managers are internal stakeholders. Connected stakeholders are shareholder and
external stakeholders are those people and /or organizations outside the organization that have an
interest in activities, although without right of ownership.
External Stakeholders:-
1. Environment Connected Stakeholders:-
Pressure Groups 1. Shareholders Internal Stake
2. Government 2. Customers Holders:-
3. Trade Unions 3. Suppliers 1. Employees
4. Finance Providers 2. Managers/
Directors
Which one of the following are examples of internal stakeholders?
A. Shareholders
B. Employees
C. Suppliers
D. Financiers
Test Your Understanding – B

Which of the following would not be described as a connected stakeholder?
A. Shareholders
B. Customers
C. Suppliers
D. Managers
Correct Answer is D:
Managers are an internal stakeholder
Which of the following would be described as an external stakeholder?
A. Customer
B. Supplier
C. Trade Union
D. Competitor
Correct Answer is C:
The other stakeholders are example of connected stakeholders
Complete the statement given below by using one of the words in the list below.
‘Shareholders are _________ stakeholders.’
A. External
B. Community
C. Internal
D. Connected
Correct Answer is D:
Connected
Q: Secondary stakeholders is another term for which group of stakeholders?
A Internal stakeholders
B Connected stakeholders
C External stakeholders
D Contractual stakeholders
Q: C
Q: Employees and finance providers belong to which two of the following stakeholder
groups?
A. Internal, Connected
B. External, Internal
C. Connected, Outsiders
D. Internal, Suppliers
Q: A
1- Boundary Management:-
Managing the relationship with stakeholders is called boundary management. Because the
directly or indirectly concerned with the success of the origination. To fulfilling their demands and
expectation firm ‘gauge’ its objectives.
2- Objectives of Stakeholders:-
Every stakeholder has its own objectives and aims
i) Manager:-
►Size and growth of organization
►Profitability
►Job Security
►Status
►Power
►Prestige
ii) Non-Managerial Employees:-

►Improving pay & conditions
►Job security
►Safety
►Freedom from Security
►Industrial Democracy
►Increase in salary
iii) Lenders and Bankers:-

►Security of loans
►Return on loans
iv) Employees:-
►Job Security
►Pay & Conditions
►Job Satisfaction.
v) Customers:-
►Interested in value of money
►Advertising with Ethics
►Consumer Protection
vi) Customers:-
►Interested in value of money
►Advertising with Ethics
►Consumer Protection
vii) Lenders and Bankers:-

►Security of loans
►Return on loans
viii) Employees:-
►Job Security
►Pay & Conditions
►Job Satisfaction.
xi) Trade Unions:-

►Taking active part in decisions.
►Ensure more benefits
x) Trade Unions:-
►Taking active part in decisions.
►Ensure more benefits
Let Discuss
In an article on stakeholders, Mr. Saleem is surprised at how many stakeholders there are
and the ‘stake’ they have in the organization. He is finding it difficult to distinguish between
the various groups. What are the needs/expectations of the following stakeholders and
which of the following would not be described as a connected stakeholder?
A. Customers
B. Suppliers
C. Employees
D. Shareholders

Customers – want product and services.
Suppliers – will expect to be paid and will be interest in the future
Employees – want security of income and interesting work.
Shareholders – want a return on their investment.
Employees are not connected stakeholders.
Stakeholders Conflict:-
Stakeholders Conflict
Employees versus managers Job/wages versus bonus (Cost efficiency)
Customers versus shareholders Product quality/service levels versus profits/dividends
General Public versus Effect on the environment versus profit/ dividends
Shareholders
Managers versus shareholders Growth versus independence
Mendelow’s Power and Interest Matrix
Interest
Low High
Low A-Minimal Effort B- Keep Informed
Power
High C- Keep Satisfied D- Key Players
Interest
Low High
Power
Interest
Low High
Power
Interest
Low High
Power
If a stakeholder has high interest but low power, then according to Mendelow’s matrix the
strategy management should follow in relation to that stakeholders is:
A. Minimal effort
B. Keep satisfied
C. Keep informed
D. Fully consider the stakeholder i.e. key player
Solution
The other options relate to the other quadrants in Mendelow’s
If a stakeholder has high interest but low power, then according to Mendelow’s matrix the
strategy management should follow in relation to that stakeholders is:
A. Minimal effort
B. Keep satisfied
C. Keep informed
D. Fully consider the stakeholder i.e. key player
Solution
The other options relate to the other quadrants in Mendelow’s
Social Responsibility

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#42
& Stakeholders
Corporate Social Responsibility
Business Ethics & CRS
Levels of Corporate Social Responsibility
Sustainability
Irresponsible behaviour and public reaction
Approaches to Ethics & CRS
Importance
(proactive stance).
Business Ethics & CSR
How do the Rules Fit Together
There are three main sources of rules that regulate behaviour of individual and businesses. There
are
a) The Law
b) Non-legal Rules and Regulations
c) Ethics
Q: Of the three main sources of rules that regulate the behaviour of businesses, the
minimum level of acceptable behaviour is set by which?
A Non-legal rules and regulations
B Ethics
C The law
D Society
Q: C
Two Approaches to Managing Ethics & CRS
Ethics Law
An Integrity-Based Approach combines a concern A Compliance-Based Approach is

for the law with an emphasis on managerial primarily design to ensure that the
responsibility for ethical behaviour. Integrity company acts within the letter of the
strategies strive to define companies guiding values, law, and violations are prevented.
aspiration and patterns of thought and conduct.
When integrated into the day –to-day operations of
an organization, such strategies can help prevent
damaging ethical lapses, while tapping into
powerful human imposes for moral thought and Law
action
Q:Which of the following is an approach to ethics which combines a concern for the law
with an emphasis on managerial responsibility?
A. Compliance based
B. Integrity based
C. Environment based
D. Sustainability
Q:B
Corporate Social responsibility and Awareness
An increasing concern about green house gasses and the ozne layer, testing of products
on animals and generally greater social awareness could spell disaster in the future for
those firms unwilling to embrace this culture shift.
This is because companies that fail to look after their environment can often expect as
strong negative responses from their key stakeholders, such as government and
consumers.
Corporate Social responsibility and Awareness
Irresponsible behavior and cost
Business effect Environment Environment Effect on Business

Pollution, such as production of rubbish or Changing environment effect number of businesses
harmful emissions.
Wastage of resources, such as food water or Lack of resources increase in the cost of raw material
other raw materials
Destruction of natural habitats Loss of sale – if a business has poor environmental
record, customers may no longer wish to trade with it.
Loss of plant and animals species Trigger legislation by government for penalties and stop
business practice
Test of General Understanding
Q: Which of the following is not a way in which business can reduce the amount of damage
they cause to the environment.
A. Rebranding of products
B. Recycling
C. Redesigning products to use fewer materials
D. Careful production planning.
Q: A
Merely rebranding a product unlikely to reduce a company’s impact on its environment. The
other three, however, should all help.
Sustainability
Nowadays business should look to be environmentally sustainable.
Sustainability means that organization should use resources in such a
way that they do not compromise the needs of future generations.
Taking this approach will benefit a range of stakeholders
Carbon footprint refers to the volume of

carbon emissions produced by the
company. The goal of social responsibility
is to be conscious of the impact
operations have on the environment and
the planet. It is possible for the firm's
products to be boycotted if customers
believe that it acts in a socially
irresponsible way.
Sustainability
Stakeholder Benefit
Workers / Local Reduced waste and pollution will lead to a more pleasant, healthier environment.
Community
Customers Many customers prefer dealing with businesses that look after the environment as
they are seen as being more ethical
Shareholders Reduction of waste and increased efficiency can improve business profits. This could
lead to higher long term returns for investors.
Public Reduced pollution can lead to fewer environmental problems, such as acid rain and soil
erosion.
Q: Organization should use resources in such a way that they do not compromise the needs
of future generations?
What is this definition of?
A. Environmentalism
B. Sustainability
C. Future-focus
D. Redesign
Q: B
This is the official definition of sustainability
Reaction to Irresponsible Behavior
These are a few examples in which consumers have been successful

in applying pressure to seek changes in business practices.
a) Consumers began boycotting Shell filling stations in large
numbers, leading the company to reverse its policy on a
controversial environmental subject concerning the disposal of
an oil drilling platform.
b) Pressure was applied to change the Nestle’ company’s practices
of exploiting the market for processed milk in developing
countries.
c) Similar campaigns have targeted Nike (alleged exploitation of
overseas garment-trade workers)
d) McDonalds alleged contribution to obesity and related illnesses.
Q: What change in people's attitudes has put additional pressure on businesses to become
more socially responsible?
A. The disposable income is growing as people have fewer children
B. Urbanization encourages companies to build more compact offices
C. Fashion changes rapidly therefore frequently change of suppliers becomes a necessity
D. People are more aware of the 'carbon footprint' left by a company's operations
Q: D
X company is a commercial fishing organization. It owns several large trawlers that
it uses to catch large volumes of fish that are then sold onto supermarkets in
country Y. Once a certain part of the ocean has been trawled, X ensures that no
further fish are caught therefore at least one year to allow fish stocks to replenish.
What is this an example of
A. Efficiency
B. Sustainability
C. Recycling
D. Preservation
Answer
B
Sustainability is the use of resources in such a way that it does not compromise
the needs of future generations.
Ethics is the analysis of right and wrong, and associated responsibility.
Business ethics is the application of ethical values to business behaviour.
Two Important View
Absolutism :- an ethical condition true in one situation is true in all other situations: Certain
Actions are inherently right or wrong
Two Important View
Relativism:- An ethical condition or act can be seen in light of circumstances and situation
Q: Jamila is an accountant for LGH plc, a large multinational organization. She has recently
been accused of theft form the company. She has argued that the theft was justified as she
needed the money to care for her mother, who is seriously ill.
A. Pluralist
B. Utilitarianism
C. Absolutist’
D. Relativist
Q: D
Two Important View
Utilitarianism:- Greatest good for the greatest number of people.

Two Important View

Two Important View
Egoist:- Self-centered or selfish person (opposed to altruist). an arrogantly conceited person;

egotist. One devoted to one's own interests and advancement; an egocentric person. An egotist.
Q: What is the name given to an approach to ethical decision-making which considers the
‘right ’
decision to be the one which results in the greatest good to the greatest number of
people in a given situation?
A Utilitarianism
B Deontology
C Virtue ethics
D Corporate social responsibility
Q: A
Q: Feroz is an employee in BBB Ltd. He has been offered a bribe by an existing supplier to continue
buying a raw material used in BBB’s manufacturing process form them, in spite of a his new rival
company offering the same material at a significantly lower price.
Which of the following statements regarding Q’s decision is correct?
A. If Feroz is a egoist, he will most likely accept the bribe
B. If Feroz is a relativist, he would refuse the bribe as bribery is always worng
C. If Feroz is a utilitarian, he would reject the bribe as it does not benefit to all stakeholders
D. If Feroz is an absolutist, his decision would depend on the circumstances
Q: A
Egoists will choose the option that most benefits themselves
Why Business Ethics & CSR are Important?
Businesses are part of society. Society expects its individuals to behave properly and similarly
expects companies to operate to certain standards.
Business ethics is important to both the Organization and the Individual.
For the Organization: For The Individual:
 Good ethics should be seen as a driver of Consumer and employee expectations have
profitability rather than a burden on business. increase about ethics over recent years.
An ethical framework is part of good corporate Consumers may choose to purchase ethical
governance and suggests a well-run business. items (e.g. Fair-trade coffee and bananas),
Investors are reassured about the company’s even if they are not the cheapest.
approach to (ethical) risk management. Employees will not blindly accept orders to
Employees will be motivated in the knowledge act in a manner that they personally believe to
that they operate in an environment of good be unethical. (especially professional like
ethical corporate behaviour. accountants, lawyers or doctors)

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#42
& Stakeholders
Importance
Responsibility to deal with Frauds
What is a Profession?
Ethics Codes
 Moral and Ethical Threats
Characteristics of Good Accountant &
Auditor
(proactive stance).
What is Profession
A profession (as opposed to other types of occupation) is characterized by the following
factors:
The mastering of specialized skills during a period of training
Governance by a Professional Association
Compliance with an ethical code
A process of certification before being allowed to practice.
Q: Which of the following would be seen as a difference between a profession and an
occupation?
A. An occupation is governed by a professional body
B. Member of a profession must comply with relevant legislation
C. To be classified as an occupation, members must follow an ethical code
D. Member of a profession must go through a process of certification.
Q: D
Fiduciary Duties
‘Fiduciary ’
means 'of trust‘. it addresses the important point that all managers (and
organizations) are accountable to some external entity and purpose.
Q: Managers are said to have a ______responsibility (or duty of faithful service) in respect
of the entities whose purposes they serve.
Which term correctly completes this sentence?
A. Financial
B. Ethical
C. Fiduciary
D. Fiscal
Q: C
What to Do if any Fraudulent Activity Uncovered
•First raise the issue with in charge of ethics or

Compliance
Officer
governance within the organization.
•Secondly Accountant can get legal /

Profession
Body professional advice
•Finally uncover and report to relevant

Whistle
Blowing
authorities.
Q: B has uncovered fraudulent activity within the company she works for. Who should she
alert about this matter first?
A. Her professional accountancy body?
B. The company’s major shareholders
C. Her company’s Compliance Officer
D. The relevant authority
Q: C Rationale:
Q2: Farrah works in the sales tax section of the accounts department of BCD Co. When the finance
director is on holiday, Farrah notices that BCD Co has not been paying the correct quarterly
amounts to the authorities. She has pointed it out but find no response, even a senior member
called her offer bonus in return if she kept herself silent. Farrah had suspected this for some time
and decides to contact the authorities to tell them about the fraud.
This disclosure is known as
What two words correctly complete the sentence?
A Organizational accountability
B Confidentiality breach
C Corporate conscience
D Whistle blowing
Q2: D
Accountant’s Code of Ethics & Social Responsibility
Integrity Professional
behavior
Objectivity Confidentiality
Professional
Competence and due care
Professional Members have a continuing duty to maintain professional knowledge and skill at a
Competence and Due level required to ensure that a client or employer receives competent professional
service based on current developments in practice, legislation and techniques.
Care Members should act diligently and in accordance with applicable technical and
professional standards when providing professional services.
Integrity Member should be straightforward and honest in all business and professional
relationships.
Confidentiality Members should respect the confidentiality of information acquired as a result of
professional and business relationships and should not disclose any such
information to third parties without proper or specific authority or unless there is a
legal or
professional right or duty to disclose. Confidential information acquired as a result
of professional and business relationships should not be used for the personal
advantage of members or third parties.
Professional Behaviour Members should comply with laws and regulations and should avoid any action
that discredits the profession.
Even some he / she is the only person in BODs who is professional (more
responsible to take care of the interest of shareholder, stakeholders and society).
Objectivity Members should not allow bias, conflicts of interest or undue influence of others
to override professional or business judgements.
Q: ICMAP members are required to comply with five Fundamental Principles. Which of the
following contains three of these principles?
A. Integrity, Objectivity, Honesty
B. Professional competence and due care, Professional behaviour, Confidentiality
C. Social responsibility, Independence, Scepticism
D. Courtesy, Reliability, Responsibility
Q: B
.
1) All ICMAP members must comply with the Fundamental Principles, whether or not they are in
practice.
2) Professionals owe an obligation to society above their duty to their client.
Which of these two statements is/are correct?
A. Only 1
B. Only 2
C. Both
D. neither Q: C
TRUE
Those failing to observe the standards expected of them may be called
before the ACCA's Disciplinary Committee and required to explain their
conduct
TRUE
The IFAC code (which is the basis of the ACCA code) states in its
introduction that 'a professional accountant's responsibility is not
exclusively to satisfy the needs of an individual client or employer.'
Ethical threats to compliance with the fundamental Principles for
Accountant in Practice
Certain ethical threats to compliance with the Fundamental principles.
Threats Examples
Self Interest Having a financial interest in a client.
Financial interests, loans and guarantees, incentive compensation arrangements, personal use of
corporate assets, external commercial pressures.
Self Review Auditing financial statements prepared by the firm.
Business decisions being subject to review and justification by the same accountant responsible for
making those decisions or preparing the data supporting them.
Advocacy Advocating the client's case in a lawsuit.
Furthering the employer's cause aggressively without regard to reasonableness of statements made.
Familiarity Audit team member having family at the client.
Making a business decision that will benefit a close family member, long association of a business
contact, acceptable of a gift.
Intimidation Threats of replacement due to disagreement.
Threats of dismissal from employment, influence of a dominant personality
Q: H is an ICMAP member. Last year one of her clients, C, asked her to value a business that he
wished to purchase. She did so and informed C that the business was competitively priced. C
subsequently bought the business for its full asking price of several million pounds. This year, C has
become concerned that the business has been underperforming and has asked H to review its
performance and long-term prospects.
Which type of ethical threat is H facing?
A. Self-interest
B. Self-review
C. Advocacy
D. Intimidation
Q: B
H recommended the purchase of the business and is now having to review the quality of that
decision. This makes it difficult for her to be objective and criticize the prospects of the business.
Safeguards against ethical threats – professional bodies
In response to the ethical threats outlined above, the ACCA, along with other professional bodies,
have put in place several safeguards to try to reduce or eliminate such threats.
These include
Ethics training for all professional accountants – both as part of their initial training and on an
ongoing basis.
Creation of corporate governance requirement
Professional or regulatory monitoring and disciplinary procedures
Setting of professional standards.
Qualities Expected of an
Accountant
Personal Qualities Professional Qualities

Personal Qualities of an Accountant
In meeting the fundamental principles, certain qualities are expected you.
Quality Detail
Reliability When taking on work, you must ensure that it gets done and meets
professional standards
Responsibility In the workplace you should take ‘ownership’ of your work.
Timeliness Client and work colleagues rely on you to be on time and produce
work within a specified time frame.
Courtesy You should conduct yourself with courtesy and consideration towards
clients and colleagues
Respect As an accountant, you should respect others by developing
constructive relationship and recognizing the value and rights of
others.
Professional Qualities of an Accountant
Quality Detail
Independence You must be able to complete your work without bias or prejudice and
you must also be seen to be independent.
Scepticism You should question information given to you so that you from your
own opinion regarding its quality and reliability.
Accountability You should recognize that you are accountable for your own
judgments and decisions.
Social Responsibility Accountants have a public duty as well as a duty to their employer or
client. Audit work, accountancy work and investment decisions may
all affect the pubic in some way.
Ethical Problem Facing Managers
Managers have a duty (in most enterprises) to aim form profit. At the same time, modern ethical stands
impose a duty to guard, preserve and enhance the value of the enterprise for the good of all touched by
it, including the general public.
Another ethical problem concern payments by companies to government or municipal official who have
power to help or hinder the payer’s operations.
Extortion: Foreign officials have been known to threaten companies with the complete closure of their
local operations unless suitable payments are made.
Bribery: This refers to payments for services to which a company is not legally entitled. There are some
fine distinction to be drawn; for example, some mangers regard political contributions as bribery.
Grease Money: Multinational companies are sometimes unable to obtain services to which they are
legally entitled because of deliberate stalling by local officials. Cash payments to the right people many
then be enough to oil the machinery of bureaucracy.
Gifts: In some cultures (such as Japan) gifts are regarded as an essential part of civilized negotiation, even
in circumstances where to Western eyes they might appear ethically dubious. Manager operating in such
a culture may feel at liberty to adopt the local custom.
Q: X plc is trying to get a trading permit, for which it qualifies. Unfortunately, there is a backlog at
the issuing office, and X plc has been notified that there will be a delay in the processing of its
permit. The divisional manager offers a donation to the issuing office’s staff welfare fund, if the
official concerned will expedite the paperwork.
Which of the following statements is true of this action?
A It is not unethical, because the money is offered for positive purposes.
B It is not unethical, because X plc is legally entitled to the benefit it is claiming.
C It constitutes bribery.
D It constitutes grease money.
Q: D
Q:Academic- A Co. and B Co. are competitors in the oil industry who, between them, have
a 90% market share. The chief executive of the two companies meet a t a conference and
have a private meeting at which they make several agreements.
Which of the following agreements would represent unethical business practice?
A- An agreement to set prices at a particular level
B- An agreement to commerce research into environmental issues.
C- An agreement to transport oil across a shared pipeline
D- An agreement to develop joint technology for future
Q- “A” This is an effort to monopolies the environment.

Test of General Knowledge
Q: Which of the following would raise ethical issues for a manufacturer of fast-moving consumer
goods?
i. The materials used in manufacture of the goods
ii. The quality of the goods
iii. How the goods are advertised
iv. How much its raw materials suppliers pay their staff
v. How the goods are packaged
B. (i), (ii) and (iii) only
C. (ii), (iii) and (v) only
D. (i), (ii), (iii), (iv) and (v)
Q: D Rationale

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#42
& Stakeholders
Importance
Responsibility to deal with Frauds
What is a Profession?
Ethics Codes
 Moral and Ethical Threats
Characteristics of Good Accountant &
Auditor
(proactive stance).
What is Profession
A profession (as opposed to other types of occupation) is characterized by the following
factors:
The mastering of specialized skills during a period of training
Governance by a Professional Association
Compliance with an ethical code
A process of certification before being allowed to practice.
Q: Which of the following would be seen as a difference between a profession and an
occupation?
A. An occupation is governed by a professional body
B. Member of a profession must comply with relevant legislation
C. To be classified as an occupation, members must follow an ethical code
D. Member of a profession must go through a process of certification.
Q: D
Fiduciary Duties
‘Fiduciary ’
means 'of trust‘. it addresses the important point that all managers (and
organizations) are accountable to some external entity and purpose.
Q: Managers are said to have a ______responsibility (or duty of faithful service) in respect
of the entities whose purposes they serve.
Which term correctly completes this sentence?
A. Financial
B. Ethical
C. Fiduciary
D. Fiscal
Q: C
What to Do if any Fraudulent Activity Uncovered
•First raise the issue with in charge of ethics or

Compliance
Officer
governance within the organization.
•Secondly Accountant can get legal /

Profession
Body professional advice
•Finally uncover and report to relevant

Whistle
Blowing
authorities.
Q: B has uncovered fraudulent activity within the company she works for. Who should she
alert about this matter first?
A. Her professional accountancy body?
B. The company’s major shareholders
C. Her company’s Compliance Officer
D. The relevant authority
Q: C Rationale:
Q2: Farrah works in the sales tax section of the accounts department of BCD Co. When the finance
director is on holiday, Farrah notices that BCD Co has not been paying the correct quarterly
amounts to the authorities. She has pointed it out but find no response, even a senior member
called her offer bonus in return if she kept herself silent. Farrah had suspected this for some time
and decides to contact the authorities to tell them about the fraud.
This disclosure is known as
What two words correctly complete the sentence?
A Organizational accountability
B Confidentiality breach
C Corporate conscience
D Whistle blowing
Q2: D
Accountant’s Code of Ethics & Social Responsibility
Integrity Professional
behavior
Objectivity Confidentiality
Professional
Competence and due care
Professional Members have a continuing duty to maintain professional knowledge and skill at a
Competence and Due level required to ensure that a client or employer receives competent professional
service based on current developments in practice, legislation and techniques.
Care Members should act diligently and in accordance with applicable technical and
professional standards when providing professional services.
Integrity Member should be straightforward and honest in all business and professional
relationships.
Confidentiality Members should respect the confidentiality of information acquired as a result of
professional and business relationships and should not disclose any such
information to third parties without proper or specific authority or unless there is a
legal or
professional right or duty to disclose. Confidential information acquired as a result
of professional and business relationships should not be used for the personal
advantage of members or third parties.
Professional Behaviour Members should comply with laws and regulations and should avoid any action
that discredits the profession.
Even some he / she is the only person in BODs who is professional (more
responsible to take care of the interest of shareholder, stakeholders and society).
Objectivity Members should not allow bias, conflicts of interest or undue influence of others
to override professional or business judgements.
Q: ICMAP members are required to comply with five Fundamental Principles. Which of the
following contains three of these principles?
A. Integrity, Objectivity, Honesty
B. Professional competence and due care, Professional behaviour, Confidentiality
C. Social responsibility, Independence, Scepticism
D. Courtesy, Reliability, Responsibility
Q: B
.
1) All ICMAP members must comply with the Fundamental Principles, whether or not they are in
practice.
2) Professionals owe an obligation to society above their duty to their client.
Which of these two statements is/are correct?
A. Only 1
B. Only 2
C. Both
D. neither Q: C
TRUE
Those failing to observe the standards expected of them may be called
before the ACCA's Disciplinary Committee and required to explain their
conduct
TRUE
The IFAC code (which is the basis of the ACCA code) states in its
introduction that 'a professional accountant's responsibility is not
exclusively to satisfy the needs of an individual client or employer.'
Ethical threats to compliance with the fundamental Principles for
Accountant in Practice
Certain ethical threats to compliance with the Fundamental principles.
Threats Examples
Self Interest Having a financial interest in a client.
Financial interests, loans and guarantees, incentive compensation arrangements, personal use of
corporate assets, external commercial pressures.
Self Review Auditing financial statements prepared by the firm.
Business decisions being subject to review and justification by the same accountant responsible for
making those decisions or preparing the data supporting them.
Advocacy Advocating the client's case in a lawsuit.
Furthering the employer's cause aggressively without regard to reasonableness of statements made.
Familiarity Audit team member having family at the client.
Making a business decision that will benefit a close family member, long association of a business
contact, acceptable of a gift.
Intimidation Threats of replacement due to disagreement.
Threats of dismissal from employment, influence of a dominant personality
Q: H is an ICMAP member. Last year one of her clients, C, asked her to value a business that he
wished to purchase. She did so and informed C that the business was competitively priced. C
subsequently bought the business for its full asking price of several million pounds. This year, C has
become concerned that the business has been underperforming and has asked H to review its
performance and long-term prospects.
Which type of ethical threat is H facing?
A. Self-interest
B. Self-review
C. Advocacy
D. Intimidation
Q: B
H recommended the purchase of the business and is now having to review the quality of that
decision. This makes it difficult for her to be objective and criticize the prospects of the business.
Safeguards against ethical threats – professional bodies
In response to the ethical threats outlined above, the ACCA, along with other professional bodies,
have put in place several safeguards to try to reduce or eliminate such threats.
These include
Ethics training for all professional accountants – both as part of their initial training and on an
ongoing basis.
Creation of corporate governance requirement
Professional or regulatory monitoring and disciplinary procedures
Setting of professional standards.
Qualities Expected of an
Accountant
Personal Qualities Professional Qualities

Personal Qualities of an Accountant
Quality Detail
Reliability When taking on work, you must ensure that it gets done and meets
professional standards
Responsibility In the workplace you should take ‘ownership’ of your work.
Timeliness Client and work colleagues rely on you to be on time and produce
work within a specified time frame.
Courtesy You should conduct yourself with courtesy and consideration towards
clients and colleagues
Respect As an accountant, you should respect others by developing
constructive relationship and recognizing the value and rights of
others.
Professional Qualities of an Accountant
Quality Detail
Independence You must be able to complete your work without bias or prejudice and
you must also be seen to be independent.
Scepticism You should question information given to you so that you from your
own opinion regarding its quality and reliability.
Accountability You should recognize that you are accountable for your own
judgments and decisions.
Social Responsibility Accountants have a public duty as well as a duty to their employer or
client. Audit work, accountancy work and investment decisions may
all affect the pubic in some way.
Ethical Problem Facing Managers
Managers have a duty (in most enterprises) to aim form profit. At the same time, modern ethical stands
impose a duty to guard, preserve and enhance the value of the enterprise for the good of all touched by
it, including the general public.
Another ethical problem concern payments by companies to government or municipal official who have
power to help or hinder the payer’s operations.
Extortion: Foreign officials have been known to threaten companies with the complete closure of their
local operations unless suitable payments are made.
Bribery: This refers to payments for services to which a company is not legally entitled. There are some
fine distinction to be drawn; for example, some mangers regard political contributions as bribery.
Grease Money: Multinational companies are sometimes unable to obtain services to which they are
legally entitled because of deliberate stalling by local officials. Cash payments to the right people many
then be enough to oil the machinery of bureaucracy.
Gifts: In some cultures (such as Japan) gifts are regarded as an essential part of civilized negotiation, even
in circumstances where to Western eyes they might appear ethically dubious. Manager operating in such
a culture may feel at liberty to adopt the local custom.
Q: X plc is trying to get a trading permit, for which it qualifies. Unfortunately, there is a backlog at
the issuing office, and X plc has been notified that there will be a delay in the processing of its
permit. The divisional manager offers a donation to the issuing office’s staff welfare fund, if the
official concerned will expedite the paperwork.
Which of the following statements is true of this action?
A It is not unethical, because the money is offered for positive purposes.
B It is not unethical, because X plc is legally entitled to the benefit it is claiming.
C It constitutes bribery.
D It constitutes grease money.
Q: D
Q:Academic- A Co. and B Co. are competitors in the oil industry who, between them, have
a 90% market share. The chief executive of the two companies meet a t a conference and
have a private meeting at which they make several agreements.
Which of the following agreements would represent unethical business practice?
A- An agreement to set prices at a particular level
B- An agreement to commerce research into environmental issues.
C- An agreement to transport oil across a shared pipeline
D- An agreement to develop joint technology for future
Q- “A” This is an effort to monopolies the environment.

Test of General Knowledge
Q: Which of the following would raise ethical issues for a manufacturer of fast-moving consumer
goods?
i. The materials used in manufacture of the goods
ii. The quality of the goods
iii. How the goods are advertised
iv. How much its raw materials suppliers pay their staff
v. How the goods are packaged
B. (i), (ii) and (iii) only
C. (ii), (iii) and (v) only
D. (i), (ii), (iii), (iv) and (v)
Q: D Rationale
 Corporate Governance
(Part1)

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#44
Corporate Governance Part-1
Separation of Ownership & Governance

Corporate Governance in Brief
Benefits of Corporate Governance
Principles-based versus rules-based
approaches to corporate governance
Executive & Nonexecutive Directors
Separation of Ownership & Governance
Owner Controllers
One set of individual own the Another set of individual run the
Note: CG are the Principles of
business business
best Practice not Rules or Laws
 Put their own money into the  Make all decisions for the
business business.
 Own all assets of the business.  Manage operations of the
business.
Q1: Where there are a large number of external shareholders who play no role in the
day-today running of a company, there is a situation that is described as:
A. Detached corporate ownership
B. Uninvolved external ownership
C. Dividend based shareholding
D. Separation of ownership and control
Q1: D
Corporate Governance
The main purpose of corporate governance is to align the interest of managers, executive and the board
of directors with those of the shareholders and made
Strategic Decisions Represents the set of polices and procedures that determine how a organization is
directed, administered and controlled.
System by which Contents

Extend to
corporations Accountability: towards shareholders
organization’s
directed and Compliance: with all laws and regulations
shareholders and
controlled Transparency: in financial information
stakeholders
Integrity: ethical actions and decision.
Risk Management,
Internal Controls
Corporate Governance Theoretically Speaking
Corporate governance can be described as ‘the system by which companies are directed
and controlled in the interests of shareholders and other stakeholders'.
Governance is an issue for all organisations, however the corporate governance rules
covered in this chapter would principally be applied to large quoted companies. In large
quoted companies the owners of the company (the shareholders) are often distinct from
the people running the company (the directors).
There has been an increased emphasis on governance regulations over the last 20 years as
a result of a number of high profile scandals and corporate failures over that period.
Benefits of Corporate Governance
Good corporate governance should:

Reduce risk. It helps to ensure that the personal objectives of the board and the
company’s strategic objectives are brought into line with those of stakeholders. It can help
to reduce the risk of fraud.
Improve leadership. It allows increased expertise to be brought to bear on strategic
decision-making, through the influence of nonexecutive directors (NEDs), and because all
board members are encouraged to examine board decisions critically.
Enhance performance. It institutes clear accountability and effective links between
performance and rewards which can encourage the organization to improve its
performance.
Improve access to capital markets. It reduces the level of risk as perceived by outsiders,
including investors.
Benefits of Corporate Governance
• Enhance stakeholder support by showing transparency, accountability and social responsibility.

• Enhance the marketability of goods and services. It creates confidence among other
stakeholders, including employees, customers, suppliers and partners in joint ventures.
Principles-based versus rules-based approaches to corporate governance
There are two different approaches to corporate governance; principles-based and rules-
based. In the UK there is a principles-based approach (The UK Corporate Governance
Code), while in the USA there is a rulesbased approach (Sarbanes-Oxley). A rules-based
approach will provide a set of rules which must be followed in all circumstances. A rules-
based legislation will also include punishment for non-compliance.
Principles-based versus rules-based approaches to corporate governance
A principles-based approach is not a rigid set of rules, but consists of principles, which
should be followed unless there is a justifiable explanation as to why not. The UK code
adopts a ‘comply or explain’ approach – the main principles of the code should be adhered
to, however some of the provisions to the code may not be followed exactly providing the
departure can be justified and if it can be shown that good governance can still be
achieved.
Q: The following question is taken from the December 2008 exam paper.
1- In most countries , what is the usual purpose of codes of practice on corporate governance?
A- To establish legally binding requirements to which all companies must adhere
B- To set down detailed rules to regulate the ways in which companies must operate
C- To provide guidance on the standards of the best practice that companies should adopt
D- To provide a comprehensive framework for management and administration
Q:- C
Shareholders
Appoint the Board of Directors
Chairman
CEO & Executive Directors Non-Executive Directors
Joint
1- Set long term objectives of business for the 1- Bring extra-knowledge

organization 2- Care of highly risky and ethical issues
2- Hire the executive and managers 3- Hiring and liaison with auditors
3- Are responsible for an overall performance of 4-Renumeration of directors.
the organization. (must not own large number of company shares
Annual Performance of the Organization
Review of Annual Performance

Q3: Which of the following would render a non-executive director of a company
unsuitable for this post?
A. The person has enough time to carrying out the duties
B. The person is financially independent of the remuneration received for this post
C. He/she also runs his/her own company at the same time
D. The person owns a large number of the company's shares
Q3: D
Five principles of corporate governance
The OECD (Organisation of Economic Cooperation and Development) identifies five
principles of corporate governance:
• the rights of shareholders.
• the equitable treatment of shareholders.
• the role of stakeholders.
• disclosure and transparency.
• the responsibility of the board.
(Part1)

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#45
Principles of Corporate Governance

Agency Problem
Stakeholders Theory
Stewardship Theory
Agency Theory
Public Oversight Board
Principles of Governance
To minimize risk, especially financial, legal and reputational risks, by requiring compliance with
accepted good proactive in the jurisdiction in question and ensuring appropriate systems of financial
control are in place
To ensure adherence to and satisfaction of the strategic objective of the organization, thus aiding
effective management.
To fulfill responsibilities to all stakeholders and to minimize potential conflicts of interest.
To establish clear accountability at senior levels within an organization.
Independence is particularly important for non-executive directors, and internal and external
auditors.
To provide accurate and timely reporting of trustworthy / independent financial and operational
data to both the management and owners / members of the organization to give them a true and
balanced picture what is happening in the organization. + Operating and Financial Review (OFR) To
set out the directors analysis of the business, in order to provide investors with a historical and
prospective view through the eyes of management.
To encourage more proactive involvement
Q4:: Michael has been asked to prepare a presentation for the company directors on good
corporate governance. Which one of the following is he likely to exclude from his
presentation?
A Risk management
B Internal controls
C Maximizing shareholder wealth
D Accountability to stakeholders
Q: C
Q5: Which of the following are advantages of having non-executive directors on the company
board?
1 They can provide a wider perspective than executive directors.
2 They provide reassurance to shareholders.
3 They may have external experience and knowledge which executive directors do not
possess.
4 They have more time to devote to the role.
A 1 and 3
B 1, 2 and 3
C 1, 3 and 4
D 2 and 4
Q5: B
Agency Problem
This creates what is known as the agency problem. The shareholders employ the
directors to run the company on their behalf. In return the directors are accountable to
the shareholders for their actions
Theories
Stewardship Theory Agency Theory. Stakeholder Theory
Stewardship theory views the Agency theory suggests that Stakeholder theory argues that
managers as stewards of the managers will look after the managers have a duty of care
assets of the firm. performance of the company if to a range of organizational
doing so serves their own stakeholders.
interests: hence performance Not only to maximize the
incentives and rewards.. shareholder's wealth
Q6: The 'agency problem' refers to which of the following situations?
A. Shareholders acting in their own short-term interests rather than the long-term interests of
the company
B. A vocal minority of shareholders expecting the directors to act as their agents and pay
substantial dividends
C. Companies reliant upon substantial government contracts such that they are effectively agents
of the government
D. The directors acting in their own interests rather than the shareholders' interests
Q6: D
Directors, who are placed in control of resources that they do not own and are effectively agents
of the shareholders, should be working in the best interests of the shareholders. However, they
may be tempted to act in their own interests, for example by voting themselves huge salaries. The
background to the agency problem is the separation of ownership and control - in many large
companies the people who own the company (the shareholders) are not the same people as those
who control the company (the board of directors).
Q7: The 'agency problem' refers to the fact that shareholders cannot legally be the
directors of an organization.

A. TRUE
B. FALSE
Q: B FALSE
Q8: Calum, Heidi and Jonas are managers for Zip Co. They have been told that their salary
will be based on company performance and that a bonus scheme will also be introduced.
The bonus will also be related to company performance. Which of the following best
describes the approach to governance that Zip Co is using?
A Stewardship theory
B Agency theory
C Stakeholder theory
D None of above
Q8: B
Public Oversight Board
Independent body created to oversee the governance
and financial reporting of public organizations. Its main
role is to protect the interest of investors and the public
at large.
Concern with: Publication of the Annual Report and
Accounts
Q9: To encourage Executive Directors to operate in the best interests of the company, they
could:
A. Be given a high basic salary
B. Receive bonuses based on both individual and company's performance
C. Be entitled to large payment on resignation
D. Be asked to attend AGMs
Q:B
Q10: 145FTC14: An audit committee should:
A. Comprise at least three NEDs
B. Include at least one senior member of the internal audit team
C. Include one member from the external audit firm
D. Carry out a detailed review of critical elements of the balance sheet
Q10:A
Q11: The most obvious means of achieving public oversight of corporate governance is via:
A. The company establishing a comprehensive web site
B. Publication of the Annual Report and Accounts
C. Press announcements of all significant developments
D. Shareholder access to the Annual General Meeting
Q11: B
(Part1)

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#46
Committees
•Introduction to •Purpose of •Responsibilities of

Committees Committees Chairperson &
•Types of Committees •Characteristics of Secretary
•Examples of Successful Committees •Review of in the end
Committees
•Advantages and
•Disadvantages of
Committees
What is a Committee?
• A committee is a group of people to which some matter is committed.
• Committee has more authority

1
• Follow well established procedures

2
• Can take difficult decisions because all individuals and

3 department are formally involved in the decision making process.
Purpose of Committees in an Organization
Replaying
Brainstorming-
Decision Making Decisions and
New Ideas
Instructions
Consultation,
Participative
Providing Advice
Problem Solving
& Information
What are the types of Committee?
• A committee is a group of people to which some matter is committed.
Committees
Ad hoc Standing
Committees Committees
Ad hoc committees are usually temporary, as they are created for a specific purpose
or to solve short-term problems, like committee to investigate a specific fraud.
Formal committees are established as pat of the organizational structure, with
specifically delegated duties and authority.
Q1: Which of the following types of committee is often temporary in nature:
A. Ad-hoc committee
B. Standing committee
C. Executive committee
D. Work safety committee
Q1: A
Q2: Saleem, Danish and Deawan work in different departments in the firm Black Horse Pvt. Limited
a paint producing company. They are members of the permanent ‘staff committee’ which meets
on the a monthly basis to discuss staff issues such as pensions and benefits. Their purpose is to
listen to communication from staff which their department and raise issues on behalf of their
department at committee meetings. Which the name given to this committee?
A. Joint committee
B. Task force
C. Ad hoc committee
D. Standing committee.
Q2: D
Examples of Committees
Board of Directors
A board of directors is a group of people legally charged with

the responsibility to govern a company
Steering Committee
The purpose of a steering committee is to oversee a major

project, generally IT based, within an organization. It is often
involve in deciding how to allocate scarce IT resources and
planning for future system development.
Work Safety Committee
This is an advisory committee, which meets regularly to discuss

action required about unsafe working conditions or methods.
Ethics Committee
An increasing number of organizations have instituted ethics committees,

which oversee the working practices and procedures in an organization
with respect to:
•Confidential of Interest
•Confidential Information
•Complaints of Customer
•Transactions involving related parties of the company
Remuneration Committee
The remuneration committee is neutral committee usually focused on

Director’s remuneration package. So that they cannot enhance their
salary package and benefits by their own.
Q3:151FTC14: As a requirement of the Combined Code of Corporate Governance, the
remuneration committee of a large company determines the:
(1) rates of pay
(2) grades
for all of the company's staff.
Which of the two options given are correct?
A. (1) Only
B. (2) Only
C. Both
D. Neither
Q3: D
Advantages of Committees
• Responsibilities are shared
• Ability to undertake a larger volume of work than individuals working
alone
• Decisions are based on a group’s assessment of facts and ideas
• Pools talent, judgment and allows specialization
• Improves coordination between work groups
• Provides a focal point for information and action within organization.
• Improves communication and better delegation
Disadvantages of Committees
• Slower decision making
• Decision may represent compromise solutions rather than optimum
solutions
• Waste Time and Resources
• Managers may abdicate their personal responsibility for decision making
• Some ‘experienced’ committee members may dominate.
• Excess procedural matters reduces the time available for the discussion
of substantive matters.
Q4: Managers Dawood and Saeed are talking about how to resolve a business problem. Dawood
suggests that a committee should be formed to discuss the issues. Saeed argues that committee
are:
(i) time-consuming and expensive
(ii) they invite a compromise instead of a clear-cut decision
Which of these statements is true?
A. Both (i) and (ii)
B. (i) only
C. (ii) only
D. Neither statement is true
Q4: A
Q5: Committees may fail to recommend decisive action where needed, due to the need
for compromise between members:
A. True
B. False
Q5:A- TRUE
Q6: Committees typically make decisions more quickly than individuals as they create a
larger pool of skills and knowledge:
A. True
B. False
Q:B- FALSE
Committee tend to be slower at decision making than individual as there is more
conflict/disagreement between individual members.
The Size and Success of a Committee-
Optimum in Size
Too large a committee

Too few in the group
may not give
may mean a lack of
individual time to give
breadth of expertise.
their point of view
The Size and Success of a Committee
• Be representative of all interests
• Chair person of good leadership skills
• Choose suitable subjects for action and precise proposal by agenda
• Circulate reports prior to the meeting
• Have necessary skills and experience
• Be worth the cost of its operation.
Responsibility of Secretary & Chairperson- Before Meeting
Responsibility of Secretary & Chairperson-
Before Meeting
•Keeping the meeting to a •Fixing the date and time of the

schedule and to the agenda – to meeting
ensure issues relevant to the •Booking the venue
purpose are discussed. •Prepare and issuing the agenda
and other relevant documents.
During Meeting
•Maintaining Order. Only on

person at a time should speak •Keep remember all the points
•Giving all parties a reasonable in agenda and intimate chair if
opportunity to express their forget any thing
view •Take notes
•Ascertaining ‘the sense of the •Support to chairman
meeting’ result oriented.
After Meeting
•Preparing Minutes
•Checking and correcting the •Acting on and communicating
minutes of meeting decisions
•Signing the minutes of meeting •Dealing with Correspondence
Q7: The duties of the committee secretary include which of the following?
A. Making notes/Issuing documents/Fixing date, time, location/Deciding who is to speak
B. Fixing date, time and location/Making notes/Issuing documents/Preparing minutes
C. Making notes/Issuing documents/Preparing minutes/Maintaining order
D. Issuing documents/Fixing date, time, location/Ascertaining the consensus
view/Preparing minutes
Q7: B
Other duties of the committee secretary include preparing the location; assisting the
chair; acting on and communicating decisions.
Q8: Which of the following would normally be included in the role of a Committee
Chairman?
A. Making administrative arrangements
B. Dealing with correspondence
C. Issuing agenda
D. Ensuring correct procedures are followed
Q8: D
Q9: : The rules of procedure are designed for a number of purposes, including:
1) helping to minimize the effect of bullying tactics
2) ensuring that consistency and fair play are maintained
Which of the above statement is/are correct?
A. 1) only
B. 2) only
C. Both
D. Neither
Q9 : C
Committees
Remuneration Nomination Audit Risk

Committee Committee Committee Committee
The remuneration Committee A nomination Consisted of at least Ensure that
plays the key role in committee three system in place
establishing remuneration should be in  Liaison with external identify, assess,
arrangement. In order to be place for auditor manage and
effective, the committee selecting board  Review of Internal monitor
needs both to determine the members and Controls financial risks.
organization’s general policy making  Investigations
on the remuneration of recommed-  Review of Risk
executive directors and ation to the Management.
specific remuneration package board.
for each director.
(i) Remuneration committee
Made up wholly of independent nonexecutive directors.
Objectively determine executive remuneration and individual packages for each
executive director.
Directors' remuneration
A clear policy on directors' remuneration and details of each director's remuneration
stated in the annual report.
Directors not to be involved in determining their own remuneration.
Adequate remuneration, without overpaying, to attract and keep quality directors.
Part of remuneration to be performance related as an incentive to achieve corporate
objectives.
(iii) Audit committee
 Made up of nonexecutive directors.

 Have formal terms of reference.
 Meet at least once every quarter.
 At least once a year, have a meeting with the external auditors without the presence
of any executive directors; discuss any significant matters that arose on the audit.
 Recommend appointment and removal of external auditors and set audit fee after
discussion with external auditors.
 Review internal audit programme and significant findings of internal auditors.
 Keep nature and extent of nonaudit services of external auditors under review.
(iv) Risk Committee
1. Policies and procedures establishing risk management governance, risk management

procedures, and risk control infrastructure for global operations; and
2. Processes and systems for implementing and monitoring compliance with such policies
and procedures, including:
 Identifying and reporting of risks and risk management deficiencies, including
emerging risks, and ensuring effective and timely implementation of actions to
address emerging risks and risk management deficiencies for the Corporation’s global
operations;
 Establishing managerial and employee responsibility for risk management;
 Ensuring the independence of the risk management function;
 Integrating risk management and associated controls with management goals and
the Corporation’s compensation structure for its global operations.
 Introduction to
International Business

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture48
International Business & Finance
 Introduction to International Business

 Globalization
 History of Globalization
 Drivers of Globalization
Mubashir Wasim (MSc. Economics-

Banking & Finance, CFAc, MBA
Marketing, MS Business Management,
MS-IT) Mubashir Wasim - ecotechmanage
Global Environment & International Business
Definition of International Business
International business is defined as commercial transactions that occur across country
borders. When a company sells products in the US, Japan and throughout Europe, this is
an example of international business.
International business comprises of all transactions that take place between two or
more regions, countries and nations beyond their political boundaries.
Mubashir Wasim - ecotechmanage

Contents of the Chapter

 What is Globalization?
 The emergency of global institutions
 Drives of globalization
 The globalization debate, unemployment,
globalization of production.
 Managing in the global marketplace

Globalization
The process by which businesses or other organizations develop international influence or
start operating on an international scale.
Globalization is the word used to describe the growing interdependence of the world's
economies, cultures, and populations, brought about by cross-border trade in goods and
services, technology, and flows of investment, people, and information.

THE HISTORY OF GLOBALIZATION IS DRIVEN BY TECHNOLOGY,
TRANSPORTATION, AND INTERNATIONAL COOPERATION
First era, Since ancient times, humans have sought distant places to settle, produce, and
exchange goods enabled by improvements in technology and transportation. But not until
the 19th century did global integration take off.

ecotechmanage
THE HISTORY OF GLOBALIZATION IS DRIVEN BY TECHNOLOGY, TRANSPORTATION, AND INTERNATIONAL COOPERATION
Second era, following centuries of European colonization and trade activity, that first “wave”
of globalization was propelled by steamships, railroads, the telegraph, and other
breakthroughs, and also by increasing economic cooperation among countries.

Third, the globalization trend eventually disappeared and crashed in the catastrophe of
World War I.

Fourth, followed by postwar protectionism, the Great Depression.

Fifth, World War II in the mid-1940s.

Finally after World War II the United States led efforts to revive international trade and
investment under negotiated ground rules, starting a second wave of globalization, which
remains ongoing, though buffeted by periodic downturns and mounting political scrutiny.

ecotechmanage
Globalization Today
Globalization also isn't a static force. We associate globalization today with the shipping
container, the 1960s invention that increased the efficiency and lowered the cost of the
global trade in goods. Or with the outsourcing of jobs in advanced economies and the
rebirth of great trading economies like China's.

Drivers of Globalization
1- Technological advancement
Technological advancement drives globalization by making it easier for people, goods, and
ideas to move across borders. For example, advancements in transportation have made it
possible to move vast amounts of people and product around the world in just short span of
time.

2- International trade
International trade drives globalization because it encourages and strengthens
interdependence between countries. It is very difficult for any nation to be self-sufficient.
They must import goods, services, and capital to maintain a certain standard of living for
their citizens. As a result, many countries and international organizations have enacted
economic policies that fuel globalization. For example, the elimination of trade barriers and
the reduction of foreign investment restrictions has helped to create a global marketplace

3- International investment
International investment drives globalization by increasing economic integration. In recent
years, there has been an uptick in international investment, including commercial loans,
foreign direct investment (FDI), and foreign portfolio investment (FPI). Many countries have
encouraged this to reap the benefits of international investment, which include the creation
of productive enterprises, jobs, and new sources of income.




3- International investment Drivers of Globalization


4- Communication:
With the major advances in technology in the past years, we are now able to pick up the
phone or send a message within seconds across the globe. With the internet, consumers
have access to any company with a website. Consumers are able to research trends and
products available thousands of miles away.
5- Reduction in government control:
With free trade agreements, countries import and export goods on a more regular basis.
Businesses are encouraged to search outside of their immediate area for business partners.

6- Consumer demands:
As the population of the world increases and consumers have access to more goods,
companies are finding customers outside of their local region. As more and more people are
exposed to media coverage, movies, and television, their exposure to goods, and thus their
desire for these products, is increasing.
7- Cost:
Due to the advances in communication and transportation, companies may open locations in
areas where their supplies and work force are less expensive. They can take advantage of
low production costs and then transport their goods throughout the world to meet their
consumer needs.

8- Competitive Business Environment

To remain competitive, global rivals have to intensify their marketing everywhere by
attempting to sustain advantages that, if weakened, could make them susceptible to market
share erosion worldwide. Competitive companies introduce, upgrade, and distribute new
products faster than ever before. A company that does not remain ahead of the competition
risks seeing its carefully researched ideas picked off by other global players.
9- Transport Technology
 Boeing Jet
 Huge Ships and naval movement
 Containerization

10- Change of role and new players
Country 1963 2008
United States 40% 9.3%
Germany 9.7% 8.7%
France 6.3% 3.8%
China NA 8.4%
Business Environment Analysis-
1_PEST
2_Diamond Portal Model
This is to identify potential threats and opportunities base on following
factors
1- Political Factors & Legal
2- Economic Factors
3- Social Factors & Environmental
4- Technological Factors
 Global Business
Environment- Ecological
Factors

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#51
An increasing concern about green house gasses and the one layer, testing Environment
of products on animals and generally greater social awareness could spell
disaster in the future for those firms unwilling to embrace this culture
shift.
This is because companies that fail to look after their environment can
often expect as strong negative responses from their key stakeholders,
such as government and consumers.
Environment
Business effect Environment Environment Effect on Business

Pollution, such as production of rubbish or Changing environment effect number of businesses
harmful emissions.
Wastage of resources, such as food water or Lack of resources increase in the cost of raw material
other raw materials
Destruction of natural habitats Loss of sale – if a business has poor environmental
record, customers may no longer wish to trade with it.
Loss of plant and animals species Trigger legislation by government for penalties and stop
business practice
Q: Which of the following is not a way in which business can reduce the amount of damage
they cause to the environment.
A. Rebranding of products
B. Recycling
C. Redesigning products to use fewer materials
D. Careful production planning.
Q: A
Sustainability
Nowadays business should look to be environmentally sustainable.
Sustainability means that organization should use resources in such a
way that they do not compromise the needs of future generations.
Taking this approach will benefit a range of stakeholders
Sustainability
Stakeholder Benefit
Workers / Local Reduced waste and pollution will lead to a more pleasant, healthier environment.
Community
Customers Many customers prefer dealing with businesses that look after the environment as
they are seen as being more ethical
Shareholders Reduction of waste and increased efficiency can improve business profits. This could
lead to higher long term returns for investors.
Public Reduced pollution can lead to fewer environmental problems, such as acid rain and soil
erosion.
Q: Organization should use resources in such a way that they do not compromise the needs
of future generations?
What is this definition of?
A. Environmentalism
B. Sustainability
C. Future-focus
D. Redesign
Q: B
Case Study
These are a few examples in which consumers have been successful
in applying pressure to seek changes in business practices.
a) Consumers began boycotting Shell filling stations in large
numbers, leading the company to reverse its policy on a
controversial environmental subject concerning the disposal of
an oil drilling platform.
b) Pressure was applied to change the Nestle’ company’s practices
of exploiting the market for processed milk in developing
countries.
c) Similar campaigns have targeted Nike (alleged exploitation of
overseas garment-trade workers)
d) McDonalds alleged contribution to obesity and related illnesses.
 International Business
Environment_
Technological Factors

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#52
Technological changes can affect a firm in many different ways
1- organization e.g. employees working form home but still able to access files and systems at work.
2- Product developments, e.g. turntables were effectively replaced by CD players which in turn are
being replaced by mp3 players.
3- Production changes, e.g. computer-controlled machinery.
4- Marketing, e.g. using the internet to sell the product.
Delayering
Often linked to downsizing, delayering is the process of removing
the layers of management
This is usually to change the organization form one with a rigid
hierarchical framework with numerous layers of supervisory
grades into a ‘flatter’ organization with minimal layers of
management. Such organization tend to emphasis team working,
with people taking on different roles in different teams.
Impact on Organization Structure
1- Some of the administrative rules are replaced by
more effective IT System
2- Some of the production rules are changed by the
use of Robots and Automated Production Lines
3- Improvement in communication through e-mail,
wireless.
Impact on Organization Structure
Impact of Technology & Downsizing

Downsizing is a term used for reducing the number of
employees in an organization without necessarily reducing
the work or the output.
Downsizing has been a feature of the 1980s and 1990s
and many organizations, large and small alike, believe that
they have become ‘fitter’ as a result
Testing Your Understanding
Downsizing is the process of:
A. Reducing the number of employees
B. Reducing the number of layers of management
C. Contracting out aspects of the organization operations
D. Reducing the price charged for products
A
Reducing the number of levels of management is delayring. Controlling out some
of the organization's operations is outsourcing
Which of the following is likely to be an advantage of an organization outsourcing
some of its less important operations?
A. Increase level of skills within the organization.
B. Increase workload for the directors and senior managers
C. Increase time for management to focus on core operations
D. Increase control over the outsource functions
C
By outsourcing non-core operations, management time can be freed up… this will allow
manger to focus more time on the on the core operations of the organization. This will,
however, normally lead to a reduction in the amount of control that the organization has
over the operation that have been outsourced.
Q: The stationary and printing company S Co. has recently upgraded its computes and
printers so that more production has become automated. Many middle managers will now
be made redundant. This is known as:
A. Downsizing
B. Delayering
C. Outsourcing
D. Degrading
Q: B
Information technology has enabled manager or staff ‘lower down’ the hierarchy to make
decisions previously made by middle management. This is known as delayering.
Q: Three of the following strategies are closely related. Which is the exception?
A. Downsizing
B. Delegating
C. Delayering
D. Outsourcing
Q: B _ Delegating
Impact of Technology & Outsourcing
 Outsourcing means contracting-out aspects of the work of the
organization, previously done in-house , to specialist providers.
 In some cases suppliers are given access to the firm’s records
so they can review production schedules and stock records to
ensure that suppliers are delivered before they run out.
Q: Introduction of a new technology means that a company can streamline its operations.
This impacts organisational structure by:
A. Encouraging managers to spend more time controlling staff activities
B. Allowing the company to reorganise itself into a taller structure
C. De-layering by widening a manager's span of control
D. Proving an opportunity for a company trading on the internet as well as on the High
Street
Q: C
De-layering refers to the reduction in the number of levels of management, making
organizational structure flatter. Managers can use technology to help keep in touch with
staff, thus freeing more time for more urgent tasks. Option D is not directly relevant to
organizational structure.
Information technology has encourage which three of the following?
A. Flattening of organization hierarchies
B. Widening spans of controls
C. Smaller volumes of routine processing
D. More flexible working arrangements.
A, B, D
Information technology means that greater volumes of data can be processed
more quickly and with greater accuracy
Technological Changes & Products
Product Sophistication
Technology advances allow many products to
become increasingly more sophisticated e.g.
mobile phones are now smaller, can record
images and video and e used to access the
internet.
Emergence of Substitute
• New technology can lead to the emergence of substitutes, e.g. the
cinema industry went into decline in the early 1980s as a result of the
emergence of the video.
• Similarly now a days demand small torch and batteries are reduced
due to mobile phone has afford as one of its additional feature.
Change in Business Model
Some industries have seen
their business model
completely transformed, e.g.
online baking has reduced
barriers to entry allowing
supermarkets, among others, to
move into banking.
Customer Support
Customer support is often provided by call
centers in countries where wage rates are
lower. However some firms have reinstated
call centers into their home countries after
concerns over customer care.
Q: Outsourcing is often associated with which business processes?
A. Allowing employees to work from home
B. Sourcing data from outside the company
C. Transferring call centers oversees
D. Sending staff on foreign assignments
Q: C
Outsourcing means that some of the processes previously undertaken by the company itself
are now being transferred to an external supplier.
Q: A recent trend in organization and management is the rise in ‘virtual organization’ and
‘virtual team working’. To which of the following environmental (PEST) factors is this most
directly attributed?
A. Economic
B. Socio-cultural
C. Technological
D. Political
Q: C
Virtual organization is the collaboration of geographically dispersed individuals and teams,
specifically using the latest information and communication technology (ICT) enables: the
internet, web-conferencing and so on.
Environment_ Economic
Factors

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#53
Content to be discussed
1. Macroeconomic Policy
2. Economic Growth
3. Economic Development
4. Role of Expectations
5. Aggregate Demand
6. Inflation
7. Types of Inflation
8. Business Cycles
9. Unemployment
10. Types of Unemployment
Macroeconomic Policy
Objective 1: Economic Growth
How to increase productive capacity? (GDP)
Objective 2: Inflation
How can we ensure that general priced levels do not increase?
Objective 3: Unemployment
.
How to ensure every that every one who wants a job has one?
Objective 4: Balance of Payment

How should we manager our relationship and trade with other countries?
Which of the following is NOT an objective of macroeconomic policy?

A. Economic Growth
B. Control on Inflation
C. Lower levels of Taxation
D. A balanced balance of payment
Correction Option is C
Lower taxation is not a policy objective. Rather it is a policy instrument that could
be used to encourage economic growth.
Which of the following is not one of the four macroeconomic policy objectives of
government?
A. Economic Growth
B. Inflation
C. Unemployment
D. Balance of Trade
Correction Option is D
Balance of trade should be Balance of Payments
Q: Which of the following are the goals of macroeconomic policy?
1 Encouraging economic growth
2 Low and stable inflation
3 Achievement of a balance between exports and imports
4 Encouraging stagnation
A 1 and 2
B 2 and 3
C 2, 3 and 4
D 1, 2 and 3
Q: D
Q: Which of the following list four typical macroeconomic policy objective of government.
i) Economic Growth
ii) Money supply management
iii) Management of Inflation
iv) Creation of a trade surplus
A. ii) & iii)
B. i) & iii)
C. i) & iv)
D. ii) & iv)
Q: D
Objective #1 : Economic Growth
A- Economic Growth:-
Government want to increase the economic growth which means
More good and services are produced
 More goods and services are affordable and being purchased
 more job are available.
In the initial stage of the growth accompanied with following problems

Exceed inflation rate
 Gap between rich and poor may grow
 Leads to increase in imports
Growth of demerit goods
B- Economic Development:-
Economic Development not only means growth but also
 Proper distribution of National Income
 Reduce gap between the poor and the rich
 Change in the way of thinking people think in the scientific way.
People leave the dogmas and motivated towards self-development and self-esteemed not only at
an individual level but also as a nation.
Q: The disadvantages of growth include which one is exception of the following:
A. Growth rates may exceed inflation rates
B. The gap between rich and poor may narrow
C. Growth may exceed population growth
D. Growth may be in 'demerit' goods
Q: D
'Demerit' goods are such things as illegal drugs. A, B and C are examples of the positive
aspects of growth. A = real growth. B = the benefits of growth are being evenly distributed.
C = the population, on average, is better off.
C- Confidence or Positive Expectations
Greater Consumer Confidence wills result in higher demand for products
 Higher Business confidence will result in higher levels of investment in new factories,
machinery etc. and new firms being set up by entrepreneurs.
Confidence can be reduced by a wide rang of factors such as political instability, disasters.
D- Aggregate Demand
Aggregate demand is the total demand for a country's output and consists of Consumer Spending (C)
+ Investment Spending (I) + Government Spending (G) + Demand from foreign (Xn)
AD = C + I + G + X – M
 Higher demand can result increase output
 Injection in economy are G, I and X – M
Q: Which of the following would best summarize the effect of expectations on a country's
economy?
A. Expectations effect has no influence of the economic development
B. If a government is expecting the citizens' incomes to rise, it will try to adjust the
taxation levels as to decrease the amount to be collected
C. If a company expects its trade contract to be terminated, it will take actions to find
another customer
D. If people collectively expect the economy to develop in a certain way, they will act in a
manner that will facilitate this change
Q: D
Injection into the economy are

A. Consumer and Investment
B. Consumption, Investment and Government Expenditure
C. Investment, Government Expenditure and Export Demand
D. Consumption, Investment, Government Expenditure and Export Demand.
Correction Option is C
Objective# 2: Controlling Inflation
Inflation
“Too much money chasing too few goods”
Types of Inflation
Demand-Pull Inflation
Demand for goods increase due to

i) Spent thrift society
ii) Demonstration effect
iii) None developing expenditures
Can be resolved by
i) Increase Tax
ii) Cut in Government Expenditure
iii) High Rate of Interest
Inflation
“Too much money chasing too few goods”
Types of Inflation
Cost-Push Inflation
Reason of cost push inflation is increase in the

cost of production which leads to cut down the
profit margin due to
i) Increase in the prices of raw material
ii) Increase in the salaries and wages
iii) Increase in the price of energy
iv) Increase in the price of fuels
Imported Inflation
In an economy in which imports are significant, a
weakening of the national currency will increase
the cost of imports and could lead to domestic
inflation.
This can be reduced by policies to strengthen the
national currency by
i) Increase in the production of import
substitute
ii) Increase in the production of export to
earn more foreign currency.
Wage Price War (Expectations)

If anticipated levels of inflation are built into
wage negotiations and pricing decisions then it
likely that the expected ratio of inflation will
arise a converted into the wage price war or
wage price spiral.
P3
W2
P2
W1
P1
Monetary Inflation
Increase in money supply leads to decrease in the purchasing power in the economy,
boosting demand for goods and services. If this expansion occurs faster than expansion in
the supply of goods and services inflation can arise.
Identify which type of inflation is being described in the following statements
A. Worker seek above inflation pay rises
B. Growth in demand for new homes has outstripped supply
C. Retailers have increased their prices in advance of inflation figures to be published next
month.
D. Copper prices have more than doubled on the world market this year, increasing the cost of
electrical cables.

A. Cost Push
B. Demand Pull
C. Expectations
D. Imported Inflation
Q: Inflation hits which group the hardest?
A. The poor and those on fixed incomes
B. Individuals with substantial share portfolios
C. Small businesses
D. Large businesses
Q: A
.
Business Cycle
“A business cycle is an interaction of good and bad business activity”
Business Cycle
Boom
i) Expectation are very high
ii) Demand is very high
iii) Price are high (Inflation)
iv) Employment level high ( full-employment)
v) Production level is high
Business Cycle
Recession
i) Expectation are falling
ii) Demand is decreasing
iii) Prices are decreasing
iv) Employment level is decreasing
v) Production is declining
Business Cycle
Depression
i) Expectation are very low
ii) Demand is very low
iii) Price are low (deflation)
iv) Employment level is low ( unemployment)
v) Production level is low
Business Cycle
Recovery
i) Expectation are improving
ii) Demand is improving
iii) Price are rising
iv) Employment level is increasing
v) Production level is Increasing
Q: Increases in unemployment, reduced demand, falling household incomes and low
business confidence and investment are associated most strongly with which of the
following?
A. High interest rates
B. Increase in the money supply
C. A budget deficit
D. Recession
Q: D
Q: the main determinants of the level of business activity in the economy are
A. Consumer price index
B. Employment rates
C. Gross Domestic product
D. Divorce Rate
Answer: GDP
Objective# 3: Controlling Unemployment
Unemployment
Number of Jobs
Number of Job Jobs are not according to the abilities and
Seekers > skills of the job seekers
Job seekers got jobs temporary and seasonal
jobs
The types of Unemployment are

1. Cyclical Unemployment
2. Frictional Unemployment
3. Structural and Technological Unemployment
4. Seasonal Unemployment
5. Real Wage Unemployment
Academic Q: Unemployment is said to exist when
A. The supply of labour exceeds the demand for labour
B. The demand for labour exceeds the supply of labour
C. The supply of labour equals the demand for labour
D. None of above
Answer: Unemployment occurs when there are individual who are willing and able to work
but cannot find full time employment.
1- Cyclical Unemployment
A Keynesian view of unemployment that is, due to, lack of aggregate demand in the economy.
Mean goods remain in unsold and employer don’t like to hire or contain workers. Workers find to
opportunities to be employed.
Its solution is to apply Fiscal Policy by starting more development expenditure and projects. In the
view of Monetarist there is no such type Unemployment exists in the economy
2- Frictional Unemployment
Refers to those people who are short-term unemployed as the move form one job to another.
Problem can be solved by the provision of better information through job centers and other
supply-side policies.
3- Seasonal Unemployment
Seasonal unemployment is the problem of workers related with agriculture, tailors etc.
4- Structural & Technological Unemployment
This is caused by structural change in the economy. Leading often to both a change in the skills
required and location where economic activity takes place. Remedies are:-
1. Government Funding Training Program
2. Grant and Aid to relocation of industry
3. Business Start up Advice
4. Improve information on available employment opportunities.
5- Real Wage Unemployment

Q: Which of the following is the name given to unemployment which is the result of
aggregate demand in the economy being too small to create employment opportunities
for all those willing, and able, to work?
A. Structural unemployment
B. Cyclical unemployment
C. Frictional unemployment
D. Transitional unemployment
Q: B
Identify which type of unemployment is being described in the following statements
A. A worker loses their job because of the introduction of new technology.
B. After the wall street crash, million of American unable to find work.
C. Jobs in the car industry have been reduced due to a strong union and high wages
D. A management accountant has just been made redundant is due to start a new job in three
weeks’ time.
E. Bar staff are out of work I November in a Spanish holiday resort.

A. Structural / Technological Unemployment
B. Cyclical
C. Real Wage
D. Frictional
E. Seasonal
Q: Which of the following would be an example of cyclical unemployment?
A. The entry of school leavers into the labour pool each year
B. Lay-offs among agricultural labourer in winter
C. Automation of ticketing service in tourism
D. Recession in the building industry
Q: D:.
Q: Are the following statements true or false?
1 Frictional unemployment will be short term
2 Governments can encourage labour mobility if they want to reduce
unemployment
A Both statements are true
B Statement 1 is true and statement 2 is false.
C Statement 1 is false and statement 2 is true.
D Both statements are false.
Q: A
Which of the following are consequences of unemployment?
A. Less pressure for government to increase taxes.
B. Reducing economic output.
C. Greater inflationary pressure in the economy.

A. No: During periods of unemployment government tax receipts will be low but its expenditure (on
unemployment and other benefits) will be high. There is therefore increased pressure on government to
raise taxes to fund these obligations.
B. Yes: Unemployed people are not economically active and are not adding to the output from the
economy. Further, their longer-term ability to contribute may decline as their skills become outdated.
C. No: Lower levels of demand for goods and services are unlikely to put upward pressure on the price of
goods and services. Equally, unemployment reduces upward pressure on wages as there is in affect an
oversupply of labour.
Environment_

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#54
1. Fiscal Policy
2. Budget
3. Monetary Policy
4. Stagflation
5. Balance of Payment
6. Exchange Rate
Objective# 3: Controlling Inflation & Unemployment by Fiscal Policy
Fiscal Policy
“The government policy of income and expenditure”
“Fiscal policy refers to a government’s taxation and spending plans and is usually
understood”: Why Taxes are require?
1. Raise revenue for the government
2. Redistribution on income or effect demand in economy
3. Discourage the activity which socially undesirable.
4. To price certain products so as to take into account their social cost.
5. Protect domestic industry from foreign industries
6. Change in aggregate demand.
Direct and Indirect Tax.
A government must decide how it intendeds to raise tax revenues, form direct or indirect taxes, and
in what proportion tax revenues will be raised from each sources
Indirect Tax:
Specific Tax Charged as a fixed sum per unit sold
Ad Valorem Tax Charged as a fixed percentage of the price of the good
Fiscal Policy
“The government policy of income and expenditure”
“Fiscal
Direct and policy
Indirect refers to a government’s taxation and spending plans and is usually
Tax.
A government must decide howunderstood”:
it intendeds toWhy
raiseTaxes are require?
tax revenues, form direct or indirect taxes, and
in what proportion tax revenues will be raised from each sources
Direct Tax.
Regressive Tax Takes a high proportion of a poor person salary than of the a rich
person’s.
Television license and road tax are examples of regressive taxes since
they are the same for all people.
Proportional Tax Takes the same proportion of income in tax from all levels of income.
Progressive Tax Take a higher proportion of income in tax as income rises. Income tax as
a whole is progressive
Direct Tax.
Regressive Tax
Proportional Tax
Progressive Tax
A tax which takes a higher proportion of a poor person’s salary than of a rich person
is:
A. Proportional tax
B. Regressive tax
C. Progressive tax
D. Indirect tax
Correct Option is B
The disincentive effect refers specifically to the disincentive of individuals to work.
The government of a certain country decides to introduce a poll tax, which will
involve a flate rate levy of $200 on every adult member of the population. This new
tax could be described as:
A. Regressive
B. Proportional
C. Progressive
D. Ad Valorem

Correct Option is A
Which of the following government aims might be achieved by means of fiscal policy?
1. A redistribution of income between firms and households.
2. A reduction in aggregate monetary demand.
3. A change in the pattern of consumer demand.
A. Objective 1 and 2 only
B. Objective 1 and 3 only
C. Objective 2 and 3 only
D. Objective 1, 2 and 3

Correct Option is D
Budget
Policy of income and expenditure Type of Effect Result Expected Ideal to Control
budget
Govt. income < Govt. Expenditure Deficit Leads Increase in Deflation +
Budget to Aggregate Unemployment
Demand
Govt. income = Govt. Expenditure Balance Leads - -
Budget to
Govt. income > Govt. Expenditure Surplus Leads Decrease in Inflation +
Budget to Aggregate Expectations
Demand
Q: What fiscal policy would be best used when trying to address a deflationary gap?
A. Running a budget surplus
B. Having a budget deficit
C. Lowering interest rates
D. Raising interest rates
Q: B
Objective# 3: Controlling Inflation & Unemployment by Monetary Policy
Monetary Policy
“Monetary policy refers to the management of the money supply in the economy and is usually
understood within the context of monetarism”
20%
Monetary Policy
Interest Rate Policy

By increasing rate of interest we can decrease the
demand for loan for buying and investment.
20%
80%
Monetary Policy
Reserve Requirement
Typical banks operate a fractional reserve system, i.e. only a
part of their deposits are kept in cash on the assumption that
not all customers will want their money back at the same
time. The proportion deposits retained in cash is known as 20%
the reserve asset ratio or liquidity ratio.
In this sense if liquidity ratio is 20% it means by the deposited
of $1000/- there will be 80%
Monetary Policy
Open Market Operations

By buying and selling its own bonds the government
is able to exert some control over the money supply
20%
80%
Government policy on taxation, public borrowing and public spending is:

A. Monetary Policy
B. Fiscal Policy
Correct Option is B
Q: Which of the following is not an element of fiscal policy?
A Government spending
B Government borrowing
C Taxation
D Exchange rates
Q: D
Q: Monetary policy is a government economic policy relating to:
1. Interest rates
2. Taxation
3. Public borrowing and spending
4. Exchange rates
Which of the above are correct?
A 1 and 4
B 2 and 3
C 2 and 4
D 3 and 4
Q: A
Q: If a government has a macro-economic policy objective of expanding the overall
level of economic activity, which of the following measures would not be consistent with
such an objective?
A Increasing public expenditure
B Lowering interest rates
C Increasing taxation
D Decreasing taxation
Q: C
Stagnation + Stagflation
An economy facing inflation and unemployment together
“Economic Stagflation means a prolonged period of significant slower than potential economic
growth. It is said to occur in an economy when GDP is declining. Research tells that economic
growth less than 2% is considered as stagnation.
This will typical translate into reduced job opportunities and income in a period when the price
of goods and service is on the rise. (generally considered if more than 3%)”
20%
80%
Given the statistical data
Country Northland South. Eastland Westland
Change in GDP (%) – 0.30 + 2.51 – 0.55 + 2.12
Balance of payment current account ($m) + 5550.83 – 350.47 – 150.90 + 220.39
Change in consumer prices (%) + 27.50 + 15.37 + 2.25 + 2.15
Change in working population employed – 4.76 + 3.78 + 1.76 – 8.76
Which country experienced stagflation in the relevant period?
A. Northland
B. Southland
C. Eastland
D. Westland
Test Your Understanding: A
Objective# 4: Faviourable Balance of Payments
Balance of Payment
“Balance of payment is a comprehensive record of economic transactions of the residents of
country with the rest of the world during particular year.”
It is further subdivided into three accounts.
Current Account The balance on current account relates only to current transactions. It
includes trade balance of visible exports and imports as well as the
services or invisible items.
Capital Account Transaction consisted of more than one year period, likewise services or
installment of loans, or business returns, etc.
Monetary Account Normally BOP is consisted of two accounts only but in case of
unfavourable BOP an adjustment account is also added called Monetary
Account either finance by reserves of previous time periods or loan from
IMF etc.
96FTC15: The balance of payment surplus will result in:
A. lower rate of economic growth
B. inflation
C. unemployment
D. budget deficit
96FTC15: B
The country is exporting too much, which means that factors of production could be fully
utilized, therefore the costs of an additional unit of output will be higher than the costs of
previous units, thus prices will be raised causing inflation.
Balance of Payment Deficits
Expenditure Reducing Expenditure Switching
Strategies Strategies
1. Reduction Demand for Import 1. Direct imposition of tariff or
2. Reduction Inflationary Pressure quotas (Protectionism)
to Increase Exports 2. Revenue can be used for the
3. Increase Interest Rate to payments of imports bills
Decrease Demand 3. Lowering exchange rate by which
exports are increased and
imports are decreased.
Which of the following policies for correcting a balance of payments deficit is an

expenditure reducing policy?
A. Cutting the level of public expenditure
B. Devaluation of the currency
C. The imposition of an import tax
D. The use of import quotas
Correction Option is A
The other three are expenditure-switching policies which will make imported goods
either more expensive or hard to obtain.
Foreign Exchange Rate
“the price of unit of foreign currency in terms of a standard unit of local currency”
$1 = Rs 80
Nature of Change Export Import

Appreciation in the foreign exchange rate ($1 = Rs  
40)
Depreciation in the foreign exchange rate ($1 = Rs  
Direct and Indirect Tax.
120)
Test Your Understanding FTC#15 (Page:208)
Which of the following would not correct a balance of payments deficit?

A. Revaluing the currency
B. Raising domestic interest rates
C. Deflating the economy
D. Imposing imports controls

Correction Option is A
Revaluing the currency would worsen the balance of payments deficit by making
exports more expensive and imports cheaper.
Environment_ Diamond
Porter Model

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#54
1. Fiscal Policy
2. Budget
3. Monetary Policy
4. Stagflation
5. Balance of Payment
6. Exchange Rate
Porter’s Diamond
• Why a nation become the home base for successful international
competitors in an industry?
• Germany Car Manufacturer
• Japan Home of Electronics
Porter’s Diamond
• This the environment that makes a country home of the many best
industries
• It creates and sustain competitive advantage against the world’s best
competitor’s in a particular field.
Factor
Condition
Demand Porter’s Related

Condition Diamond Industries
Firm’s
Strategy
Porter’s Diamond
• Factor Conditions: Availability of raw materials and suitable
infrastructure.
• Demand Conditions: Good demand base in the home country, start
intentional success.
• Related & Supported Industry: Material, Component and Knowledge
Sharing
• Firm Strategy, Structure and Rivalry: If the home market is very
competitive, a company is more likely to become world class.
Factors Conditions
i) Physical Resources such as land, minerals and weather
ii) Capital
iii) Human Resources such as skills, motivation, price and industrial relations
iv) Knowledge that can be used effectively
v) Infrastructure.
Demand Conditions
• Demand Conditions: there must be a strong home market demand for
the product or service. This determines how industries perceive and
respond to buyer needs and creates the pressure to innovate. A
complaint domestic market is a disadvantage because it does not force
the industry to become innovate and excellent.
Develop
A strong Pressure for Something
demand Innovation & Extra-Ordinary
base Creativity
Relating and Supporting Industries
• The success of an industry can be due to its suppliers and related
industries, Sweden’s global superiority in its pulp and paper industries is
supported by a network of related industries including packaging,
chemicals, wood processing, conveyor systems and truck manufacture.
S S
u u
p p
p p
o Main
Industry o
r r
t t
Firm Strategy, Structure and Rivalry
• Organization goals can determine by ownership structure. Unquoted
companies may have slightly longer time horizons to operate in because
their financial performance is subject to much less scrutiny than quoted
companies. They may also have different ‘return on capital requirement’.
Convergence in Industries
• Today industries are becoming like a junction, in which one industry

linked with other.
• Nokia Pocket PC can replace a lab top etc.

• Impact of one industry on another industry

• An interest rate rise is likely to affect a business selling car
…purchasing are postponed
• Same increase in interest rate may not impact on the Food Industry
because it cannot be delayed
• Definition
• Industry
• Sector
Supply-led
Convergence
Convergence Convergence
in
Substitute
in Industries in
Complement
Market-led
 Micro-Business
Environment

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#56
Business
Environment
Business
Environment
Macro- Micro-
business business
Environment Environment
Contents to be covered today
1- Porter Five Force Model
2- Convergence Industries
3- SWOT Analysis
We can analyze the profit potential
in an industry.
Can Organization sustain in an Threat of
industry New
Entrants
Competitive Threat of
Rivalry Substitute
Porter’s Five
Forces
Power of Power of
Supplier Buyer
Which of the following is not one of the ‘five forces’ as depicted in Michael Porters model
of the Industry.
A. Competitive rivalry
B. Power of supplier
C. Power of buyer
D. Threat of substitute
E. Barrier to Entry

Correct Answer is E:
Porter talked about the threat of new entrants as one of his five forces. Discussing barriers
to entry is a factor to consider when assessing the force but is not a force itself.
Q: Porter ’s five forces model identifies factors which determine the nature and
strength of competition in an industry. Which of the following is not one of the five forces
identified in Porter ’s model?
A Substitute products or services
B New entrants to the industry
C Bargaining power of customers
D Government regulation of the industry
Q: D
Rationale: The other forces are bargaining power of suppliers and rivalry amongst current
competitors in the industry.
1- Power of Supplier
The power of supplier to change higher prices will be
influenced by following:
The presence of one or two dominant suppliers controlling
prices- Monopoly
The degree to which switching costs apply and substitute are
available
The extent which products offered have a uniqueness of
brand, technical performance or design not available
elsewhere.
2- Bargaining Power of Customers
Powerful customers can force price cuts and/or quality improvements. Either way, margins are
eroded. Bargaining power is high when a combination of factor arises.
A buyer purchases high proportion of supplier-
Similar alternative of products available from other suppliers.
Quality purchases is unimportant, Delivery timing is irrelevant, and prices will be forced down.
3- Threat of New Entrants
New entrants into a market will bring extra capacity and intensify competition. The threat from new entrants will
depend upon the strength of the barriers to entry and the likely response of existing competitors to a new entrant.
Barriers to entry are factors that market it difficult for a new entrant to gain an initial foothold in a market. Major
sources of barrier to entry are.
Economies of Scale, where the industry is one where unit costs decline significantly as volume increases, such
that a new entrant will be unable to start on a comparable cost basis.
Product Differentiation, where established firms have good brand image and customer loyalty.
Capital Requirements, where the industry requires a heavy initial investment (e.g. steel industry, rail transport).
Access to Distribution Channels may be restricted. It is difficult for a new product or manufacturer to gain shelf
space.
Know-how, it is much more difficult to penetrate a business where considerable know-how and skills are needed
than to enter a simple, basic market.
Regulation. Government or professional bodies might supervise and limit new entrants.
New Entrant
4- Competitive Rivalry
• Competitors are balance in size are few just
follower
• Fixed Costs of the Industry. may cause low profit
margin but price war
• Industrial Growth can minimize the competitive
rivalry
• Barriers on Exist can cause tough Competition
• Product Differentiation can reduce competition
Intensity
Substitute of Cameras
5- Threat of Substitute Products / Other Products

Product to product substitute or just an additional feature in a product
Extend to which Substitute
Price and Cost Comparison.
Q: In Porter's five forces model, the fact that other products offer high quality at a
comparable price, would be included under the heading of:
A. Barriers to entry
B. Power of suppliers
C. Threat of substitutes
D. Power of buyers
Q: C
Threat of substitutes refers to people's tendency to replace one product with another.
Q: Porter's five forces collectively determine which of the following:
A. The degree of competition new entrants will face
B. The profitability of existing firms in the industry
C. The overall growth of the industry
D. The overall profit potential of the industry
Q: D
Looking at an individual firm, its ability to earn higher profit margins will be determined by
whether or not it can manage the five forces more effectively than competitors.
Q: When assessing an organization's ability to compete, the main issues to consider are
whether:
A. The industry is growing or in decline
B. The profitability of the industry is sufficient to sustain new entrants
C. New entrants out number those leaving the industry
D. The firm has a sustainable competitive advantage
Q: D
The assessment will be in three steps, analysing how the firm can achieve a competitive
advantage, the main competitive forces in the industry and how parts of the firm
contribute to its competitiveness.
• Impact of one industry on another industry

• An interest rate rise is likely to affect a business selling car
…purchasing are postponed
• Same increase in interest rate may not impact on the Food Industry
because it cannot be delayed
• Definition
• Industry
• Sector
Supply-led
Convergence
Convergence Convergence
in
Substitute
in Industries in
Complement
Market-led
• Today industries are becoming like a junction, in which one industry

linked with other.
• Nokia Pocket PC can replace a lab top etc.

Understand SWOT
This is an integral part of strategic analysis. Unlike PEST analysis, which focuses on external
environmental issues. SWOT analysis is used to view the internal and external situation that an
organization finds itself in. strengths and weaknesses examine what an organization internally does
well or badly, while opportunities and threats look at positive and negative factors that might
impact on the organization externally.
External Internal
Analysis Analysis
Opportunities Strengths Methods of
Matching strengths removing
to opportunities weaknesses or
may highlight new dealing with the
areas for threats the
organizational
Threats Weaknesses
organization faces
development
Q: What is an acronym used to describe the key elements of an organization's external
environment?
A. SWOT
B. SMART
C. PEST
D. WTO
Q: C
Rationale: PEST stands for Political, Economic, Socio-cultural and Technological.
Q: A plc is performing a SWOT analysis and discovers that it has a large cash balance.
Which of the SWOT headings would this be most likely to fall under?
A. Strengths
B. Weaknesses
C. Opportunities
D. Threats
Q: A
It is likely to be a strength. It’s clearly not a weakness or threat and given that is an internal
issue, it should not be classed as an opportunity- although it may enable A to pursue any
opportunity it identifies.
 Micro-Business
Environment

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#57
Business
Environment
Business
Environment
Macro- Micro-
business business
Environment Environment
Contents to be covered today
1- Competitive Strategy
Competitive Forces
Part of a firm’s external analysis will involve assessing the degree and source of competition within
the industry. The key issues here is whether the firm has a sustainable competitive advantage.
This will be analyzed in three steps
•The different ways a firm can achieve a competitive advantage
•The main competitive forces in an industry
•How different activities and development within the firm contribute to its competitiveness.
Bases of Competition
Lower Cost Differentiation
Broad Target Cost Leadership Differentiation

Competitive
Advantage Target Cost Focus Differentiation Focus
Professor Micheal Porter identified three generic strategies through which an
organization could achieve competitive advantage.
Cost Leadership:-
Set out to the lowest cost producer in an industry. By producing at the lowest possible cost the
manufacturer can compete on price with every other producer in the industry and earn highest unit
profits.
For example: Suzuki, Toyota, Honda, Ford
Quality Leadership:-
Generate a unique value chain for extra quality and charge extra mark-up with price against good
quality.
Innovative companies with large marketing budgets.
For example: Mercdes, Jaguar, BMW
Focus:-
Position oneself to uniquely serve one particular niche in the market. A focus strategy is based on
fragmenting the market and focusing on particular market segments. The firm will not market it s products
industry-wide but will concentrate on a particular type of buyer or geographical area.
Small business with entrepreneurial flair, strong market knowledge and risk taking attitude ( often new
starts)
For example: Ferrari, Rolls Royce
Focus Differentiation :-
Position oneself to uniquely serve a
further small segment in one
particular niche in the market. A
focus strategy is based on fragmenting
the market and focusing on sub- Large Passenger
segment of a particular market Aircraft
segments.
For example: Rolls Royce company
selected aircraft manufacturing, in
which they have selected big
passenger aircraft and then finally
Boeing
selected Boeing Engine…..
Aircraft Manufacturing
Q: Jelly Fish ltd is a retailer, selling surf-wear through a small chain of sea-side shops. If the
owners wish to obtain a competitive advantage over the company's rivals, which of
Porters' generic strategies would be most appropriate to follow?
A. Differentiation
B. Cost leadership
C. Cost focus
D. Differentiation focus
Q: D
Jellyfish are restricting their activity to only part of the market (a segment) in selling surf
wear. The product itself is differentiated.
Which of the following is not a Generic Strategy as described by Michael Porter:
A. Cost focus
B. Differentiation
C. Diversification
D. Differentiation Focus

Diversification
Fundamental of Management
International Business An
Introduction
(MSc. Economics-Banking & Finance, MBA Marketing,

MS Business Management, MS-IT)
International Business

 Globalization
 History of Globalization
 Drivers of Globalization
Mubashir Wasim (MSc. Economics-

Banking & Finance, CFAc, MBA
Marketing, MS Business Management,
MS-IT) Mubashir Wasim - ecotechmanage
Global Environment & International Business
Definition of International Business
International business is defined as commercial transactions that occur across country
borders. When a company sells products in the US, Japan and throughout Europe, this is
an example of international business.
International business comprises of all transactions that take place between two or
more regions, countries and nations beyond their political boundaries.

Contents of the Chapter

 What is Globalization?
 The emergency of global institutions
 Drives of globalization
 The globalization debate, unemployment,
globalization of production.
 Managing in the global marketplace

Globalization
The process by which businesses or other organizations develop international influence or
start operating on an international scale.
Globalization is the word used to describe the growing interdependence of the world's
economies, cultures, and populations, brought about by cross-border trade in goods and
services, technology, and flows of investment, people, and information.

THE HISTORY OF GLOBALIZATION IS DRIVEN BY TECHNOLOGY,
TRANSPORTATION, AND INTERNATIONAL COOPERATION
First era, Since ancient times, humans have sought distant places to settle, produce, and
exchange goods enabled by improvements in technology and transportation. But not until
the 19th century did global integration take off.

ecotechmanage
Second era, following centuries of European colonization and trade activity, that first “wave”
of globalization was propelled by steamships, railroads, the telegraph, and other
breakthroughs, and also by increasing economic cooperation among countries.

Third, the globalization trend eventually disappeared and crashed in the catastrophe of
World War I.

Fourth, followed by postwar protectionism, the Great Depression.

Fifth, World War II in the mid-1940s.

Finally after World War II the United States led efforts to revive international trade and
investment under negotiated ground rules, starting a second wave of globalization, which
remains ongoing, though buffeted by periodic downturns and mounting political scrutiny.

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Globalization Today
Globalization also isn't a static force. We associate globalization today with the shipping
container, the 1960s invention that increased the efficiency and lowered the cost of the
global trade in goods. Or with the outsourcing of jobs in advanced economies and the
rebirth of great trading economies like China's.

1- Technological advancement
Technological advancement drives globalization by making it easier for people, goods, and
ideas to move across borders. For example, advancements in transportation have made it
possible to move vast amounts of people and product around the world in just short span of
time.

2- International trade
International trade drives globalization because it encourages and strengthens
interdependence between countries. It is very difficult for any nation to be self-sufficient.
They must import goods, services, and capital to maintain a certain standard of living for
their citizens. As a result, many countries and international organizations have enacted
economic policies that fuel globalization. For example, the elimination of trade barriers and
the reduction of foreign investment restrictions has helped to create a global marketplace

International investment drives globalization by increasing economic integration. In recent
years, there has been an uptick in international investment, including commercial loans,
foreign direct investment (FDI), and foreign portfolio investment (FPI). Many countries have
encouraged this to reap the benefits of international investment, which include the creation
of productive enterprises, jobs, and new sources of income.






4- Communication:
With the major advances in technology in the past years, we are now able to pick up the
phone or send a message within seconds across the globe. With the internet, consumers
have access to any company with a website. Consumers are able to research trends and
products available thousands of miles away.
5- Reduction in government control:
With free trade agreements, countries import and export goods on a more regular basis.
Businesses are encouraged to search outside of their immediate area for business partners.

6- Consumer demands:
As the population of the world increases and consumers have access to more goods,
companies are finding customers outside of their local region. As more and more people are
exposed to media coverage, movies, and television, their exposure to goods, and thus their
desire for these products, is increasing.
7- Cost:
Due to the advances in communication and transportation, companies may open locations in
areas where their supplies and work force are less expensive. They can take advantage of
low production costs and then transport their goods throughout the world to meet their
consumer needs.

8- Competitive Business Environment

To remain competitive, global rivals have to intensify their marketing everywhere by
attempting to sustain advantages that, if weakened, could make them susceptible to market
share erosion worldwide. Competitive companies introduce, upgrade, and distribute new
products faster than ever before. A company that does not remain ahead of the competition
risks seeing its carefully researched ideas picked off by other global players.
9- Transport Technology
 Boeing Jet
 Huge Ships and naval movement
 Containerization

10- Change of role and new players
Country 1963 2008
United States 40% 9.3%
Germany 9.7% 8.7%
France 6.3% 3.8%
China NA 8.4%

 Foreign Direct Investment
& Multinational Companies
(MNCs)

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#60
Global Business
Fundamentals of Management (ICMAP)
FDI & MNCs
 MNCs
 FDI

Course Outline
9. Social, political and economic context
• The Global Business Environment
• International Environment Influences
• Economic Context
• Emerging Economies
10. Type of organization
• Different Types of Organization
• Culture and the Global Organization
ecotechmanage-Mubashir Wasim
The Foreign Direct Investment
A foreign direct investment is an investment in the form of a controlling ownership in a
business in one country by an entity based in another country. It is thus distinguished
from a foreign portfolio investment by a notion of direct control.
Multinational Corporations
A corporation that has its factories and other assets in at least one country other than it’s home
country, it coordinate it s global management form central head office while offices and factories
in different countries.
TNC: Transnational Company not have

any particular home, it spread its
operation into many countries.
Globalisation and developing countries
In the past, many companies located much of their manufacturing in the developing
countries of Asia and Latin America.
Now they are increasingly locating service and knowledge based jobs there too, e.g.
telesales, research and development.
This is because many countries in Asia and Latin America now produce a massive
number of well educated and well trained individuals.
Transition economies have been triggered into growth by a number of factors. For
example:
Foreign direct investment (FDI) – overseas companies want to share in the growth of
these countries and may invest by acquiring a local company or by creating new facilities
in the host country to take advantage of local conditions.
Offshoring (see earlier discussion).
The Multinational Enterprises
 90% of world’s 500 largest MNCs are in

North America, Japan and Europe.
Country Number
 300 Largest firms control 25% world’s
Mexico 3 productive resources
Chile 5  50 Largest MNCs from developing
countries
Brazil 4
Argentina 2
South Africa 3
Suadi Arabia 2
South Korea 6
China 15
Malaysia 2
India 1
World Business Today-FDI
Foreign Direct Investment (FDI)
Another Definition: Funds invested by an MNC and one nation for starting, acquiring or
expending an enterprise in another nation.
Three reasons
1- To seek access to new markets
2- To grow beyond a small domestic market
3- To achieve cost and other competitive advantage over competitor.
40% Developing Nations
1% Least Developing Nations
Developed Nations
59%
Advantages and Disadvantages of MNC’s and FDI
Advantages
1- Advantage in product development
2- Enhance Domestic Market
3- Improve Technology plus Research & Development
4- Remove Technology & Wealth Gap b/w Development & LED
5- Improve Market & Supportive Industry
6- More Employment
7- Less Costly Production
8- Export Production to Foreign Market
Positive Effects FDI in Less Developing Countries
MNCs are for profit entities and seek an adequate return.
Investment is significant for LDCs Economy
MNCs made policies of economy by suggestions more attractive for LDCs
International community now adopt pragmatism rather hostile attitude.
Advantages and Disadvantages of MNC’s and FDI
Disadvantages
1- They claim that Multinational rise to large merged conglomerations that reduce competition and free
enterprise.
2- Raise Capital in host countries but export the profit.
3- Exploit countries for their natural resources
4- Limit workers wage
5- Erode Traditional Culture
6- Challenge National Sovereignty.
Negative Effects of FDI on Less Developing Countries
Monopolize domestic market by merger and alliances
Local residents get limited benefits and profit is sent to home country
Social impact change effect culture.
Involve in human rights abuses, labour abuses and environmental crimes
Technology Transfer & MNCs
1- This clear from empirical and theoretical literature that MNC move technology to LDCs.
2- Enhance local capabilities but depends on interaction between MNCs government.
3- Sales and support emerging technology and their application.
4- Bring LDC near the internationalization.
Technology Transfer
Innovate Production
New ways of Distribution Channels
Modeling Analytical Tools
Training & Development
Management Standard
New Knowledge & Learning
Technology Transfer & MNCs
1- This clear from empirical and theoretical literature that MNC move technology to LDCs.
2- Enhance local capabilities but depends on interaction between MNCs government.
3- Sales and support emerging technology and their application.
4- Bring LDC near the internationalization.
Drawback to be Addressed
Impact on greenhouses effect on the
environment
Violation of local labour law
Create monopolies
Go for cartels by mergers and
acquisitions
Political Influences,
MNCs Issues Related with Pricing & Regulations
Competition Policy and market power. Alliances violate anti-monopoly laws.
Tax Avoidance billions of dollars. Unethical way.
Who to regulate
• Domestic Government
• Multinational Institutions
• Country in which to Operate
 Exploit Labour & Environment related laws. Took benefit of flex. Environment energy-fossil
fuels.
 Governing economies directly & effecting culture
 Avoid H&S measures
 Violate Human Rights, Child Labour, Cheeper Labour.
 Lobbying to keep pressure and benefit from local officials.
 Africa government tried to produce cheaper medicine for AIDS lobbying to stop.
Collaboration & Strategic-Alliances
Strategic Alliance Collaboration
A strategic alliance is an agreement Two or more companies launch a joint
between two or more MNCs (or parties) venture to achieve set goals within some
to pursue set agreed objective while specific budget or resources
remaining independent organization.
Results into
Global Competition: Large player combined to face tough competition like Mitsubishi +
Caterpillar, Philips + Mitsubishi.
 Industry Convergence: Where application & production of two industries overlaps
 Economies of Scale:
 Reduce Risk:
Characteristics of Multinational Enterprises
1. Large size
Multinational companies are large-sized business organizations. They have huge resources in
terms of capital, technology, people and information. They are highly efficient and complex
1. Large size
2. Multi-country operations
Multinational companies operate in several countries. They can have production, marketing and
service type of operations. They cover large geographical areas. They have assets and activities in
two or more countries.
1. Large size
2. Multi-country operations
Multinational companies operate in several countries. They can have production, marketing and
service type of operations. They cover large geographical areas. They have assets and activities in
two or more countries.
3. Various objectives
Multinational companies pursue various objectives like:
-Access to new market opportunities to expand market size.
-- Access to cheap raw materials to reduce costs and increase competitive capacity
-- Access to cheap source of labor to reduce costs of labor and energy
4. Various environments
Multinational companies operate in various environments. The political, legal, economic, social,
cultural and technological forces differ from country to country.
5. Centralized ownership and control
The ownership and control of multinational company is centralized in the home country. They
provide share ownership to local people in host countries.
6. Multiple currencies
Multinational companies deal in currencies of several countries. The risk is high because of
changing values of currencies in host countries.
6. Multiple currencies
Multinational companies deal in currencies of several countries. The risk is high because of
changing values of currencies in host countries.
7. High efficiency
Multinational companies are highly efficient due to:
-Mass production leading to economic of scale
-- Use of advanced technology to increase speed of production
-- Professional management and marketing skills to use resources effectively
Benefits of going multinational
Ownership advantages
Ownership of superior technology – this will enhance productivity and result in
superiorquality products.
Research and development (R&D) capacity – multinationals can invest heavily in R&D
since they can spread the cost over a large output.
Product differentiation – can combine innovation with successful product differentiation.
Managerial skills – managers of multinationals are more innovative in the way that they do
things.
Location advantages
Multinationals will take advantage of the most appropriate location to make their products
or services. Can locate:
where the required resources can be found.
where labour is relatively cheap
where the quality of the resources is better.
in a foreign country to avoid transport costs and tariffs.
in a foreign country to take advantage of government incentives.
Why Firms Become Multinational
1- Procure New Resources
2- Increase Market Share for Companies
3- Increase Assets Value
4- Improve Knowledge & Technology
5- Greater Operational Efficiency
6- More Competition and Advantages and Learning
7- Risk Environment with more Reward.
8- International Business Opportunities
9- More skills and training
10- International Finance, Management and Marketing
Types of Foreign Direct Investment
Horizontal FDI arises when a firm duplicates its home country-based activities at the same value
chain stage in a host country through FDI.
Horizontal FDI horizontal FDI When a company is trying to open up a new market that is similar
to its domestic markets. occurs when a company is trying to open up a new market - a retailer,
for example, that builds a store in a new country to sell to the local market.
Platform FDI Foreign direct investment from a source country into a destination country for the
purpose of exporting to a third country.
Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains
i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country
Vertical FDIvertical FDI When a company invests internationally to provide input into its core operations
usually in its home country. A firm may invest in production facilities in another country.
If the firm brings the goods or components back to its home country (acting as a supplier), then it is called
backward vertical FDI. If the firm sells the goods into the local or regional market (acting more as a
distributor), then it is referred to as forward vertical FDI. is when a company invests internationally to
provide input into its core operations - usually in its home country. A firm may invest in production
facilities in another country.
When a firm brings the goods or components back to its home country (i.e., acting as a supplier), this is
referred to as backward vertical FDI. When a firm sells the goods into the local or regional market (i.e.,
acting as a distributor), this is termed forward vertical FDI. The largest global companies often engage in
both backward and forward vertical FDI depending on their industry.
Many firms engage in backward vertical FDI. The auto, oil, and infrastructure (which includes industries related
to enhancing the infrastructure of a country - that is, energy, communications, and transportation) industries
are good examples of this. Firms from these industries invest in production or plant facilities in a country in
order to supply raw materials, parts, or finished products to their home country. In recent years, these same
industries have also started to provide forward FDI by supplying raw materials, parts, or finished products to
newly emerging local or regional markets.
There are different kinds of FDI, two of which - greenfield and brownfield - are increasingly applicable to global
firms.
Greenfield FDIs greenfield FDIAn FDI strategy in which a company builds new facilities from scratch. occur when
multinational corporations enter into developing countries to build new factories or stores. These new facilities are
built from scratch - usually in an area where no previous facilities existed. The name originates from the idea of
building a facility on a green field, such as farmland or a forested area. In addition to building new facilities that best
meet their needs, the firms also create new long-term jobs in the foreign country by hiring new employees.
Countries often offer prospective companies tax breaks, subsidies, and other incentives to set up greenfield
investments.
A Brownfield FDI; Brownfield FDI An FDI strategy in which a company or government entity purchases or leases
existing production facilities to launch a new production activity. is when a company or government entity
purchases or leases existing production facilities to launch a new production activity. One application of this strategy
is where a commercial site used for an “unclean” business purpose, such as a steel mill or oil refinery, is cleaned up
and used for a less polluting purpose, such as commercial office space or a residential area. Brownfield investment is
usually less expensive and can be implemented faster; however, a company may have to deal with many challenges,
including existing employees, outdated equipment, entrenched processes, and cultural differences.
Implications for Managers
A manager has to know is the opportunity for investment is worthwhile or not, managers can access the
opportunity by following indicators or watchful about following factors.
Net Present Value

The first thing a manager must consider when looking at an investment in a business in another country is
net present value. Managers must determine whether cash inflows are larger than cash outflows. If net
present value is negative, managers should seek other foreign opportunities, because risks can be high with
foreign investments, and a company with negative cash flow presents the highest risk possible.
Risk of Nationalization
Managers should evaluate the risk of having the business seized by the foreign government. Undertake this
evaluation by looking at the country’s history of seizing companies and making them state property. In
addition, managers should examine whether new factions in the country threaten to take over the
government and seize private property. Countries with no history of nationalization of businesses present
the least risk.
Development Assistance
Some countries offer assistance to foreign investors who want to operate businesses. This assistance
can take the form of tax breaks as well as offering expert assistance in negotiating the maze of
regulations a foreign investor can face. Some countries even offer grants and loan guarantees to help
an investor finance a new operation or purchase of an existing business. If a manager finds a country
that offers development assistance, this can help mitigate some of the risk of investing in that country.
Local Tax Laws
A manager considering a foreign direct investment should understand tax laws in the area. Taxes can
eat away profits, and if the foreign country or municipality heavily taxes businesses, this should be
part of the manager’s consideration of the potential for profits.
Exchange Rates
Exchange rates for foreign currencies can affect profitability of a company. The investment will earn
income in the local currency, and in order for that income to flow to the parent company, it will have
to be converted. A favorable exchange rate can boost profits, whereas a negative one can siphon off
profits. A manager must consider the exchange rate when considering the value of a foreign direct
investment.
Outsourcing and Licensing Options
Managers should consider whether offering to be an outsourcing company could be a greater
advantage than investing in a foreign country. This arrangement can produce immediate profits with
no need to invest in the foreign business. Also, a small business can license software or the company
name to allow the foreign entity to improve business. Licensing produces immediate revenue for the
small business without any need to invest funds.
 Off-shoring Outsourcing
and Global Culture

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#61
Global Business
FDI & MNCs
 MNCs
 Outsource
 Off-shoring
 Culture

Multinationals
A multinational business owns or controls foreign subsidiaries in more than one country,
i.e. it has production or service facilities in more than one country.
Diversity among multinationals
Ownership advantages
Ownership of superior technology – this will enhance productivity and result in superior
quality products.
Research and development (R&D) capacity – multinationals can invest heavily in R&D
since they can spread the cost over a large output.
Product differentiation – can combine innovation with successful product differentiation.
Managerial skills – managers of multinationals are more innovative in the way that they
do things.
Locational advantages
Multinationals will take advantage of the most appropriate location to make their products
or services. Can locate:
where the required resources can be found.
where labour is relatively cheap.
where the quality of the resources is better.
in a foreign country to avoid transport costs and tariffs.
in a foreign country to take advantage of government incentives.
Outsourcing and Off-shoring
Outsourcing
Outsourcing means contracting-out aspects of the work of the organisation, previously
done inhouse, to specialist providers. Outsourcing has become increasingly common in
organisations. The advantages and disadvantages are as follows:
Outsourcing and Off-shoring
Advantages
Reduced costs
Increased capacity, leading to faster and more flexible supply
Reduced capital expenditure
Reduced headcount
Greater focus on core business activities
Access to suppliers’ expertise
Can be used to overcome skills shortages
Disadvantages
No control over future price rises
Loss of in-house expertise
Risk to continuity of supply
Risk of loss of confidentiality
Off-shoring
Off-shoring is the relocating of corporate activities overseas. The bulk of offshored
activities include call centres, IT enabled services (e.g. software development) and
business process operations (e.g. human resource management and payroll processing).
Obtaining information – most US companies now put out their press releases on the
internet, just as the stock market opens. Therefore, the journalists in Multan can access
the same basic information as their colleagues in the US.
Sending information – the reduced cost of telecommunications links means that the
news written in Faisalabad can be sent around the world as quickly as the news written in
New York.
Off-shoring
Benefits
Benefits of offshoring for the recipient countriesThe benefits of off shoring for the
recipient countries, such as Pakistan, include:
Much needed jobs
Improvement in skills
Advances in infrastructure and technology
Off-shoring
Disadvantages
Disadvantages of off shoring for the home country
The disadvantages for the home country include:
Differences cultural, language and time differences between the home country and the
recipient country may make off shoring difficult.
 Technical issues
Brand image
Customer satisfaction
Organization Culture
Culture is the collective programming of the mind which
Chapter Summary distinguishes the members of one category of people
Definition:- from another.
Culture is expressed by Handy as being:
By this Handy means the sum total of the belief, knowledge, attitudes, norms and
customs that prevail in an organization.
Culture Difference in the Different Firms:-Distinguish one group from other:-
Every organization has its distinguish culture, one behavior which is acceptable in one
organization, may not be acceptable for another firm in the same field.
Develop Over Time:-
Culture is developed overtime but can be changed with a single event. Likewise Death of
company founder, or threat from new innovation from competitor.
Elements of Organization Culture
SYMBOLS AND
A SET OF NORMS SYMBOLIC
OF BEHAVIOR ACTIONS
Organizational
Culture
A Set of Shared Values and Beliefs

Shared values and beliefs
These underlie the culture by specifying what is important and needs to be shared by
everyone in the organisation. For example:
a belief in the importance of people as individuals.
a general objective, e.g. valuing innovation, and believing we are the most innovative in
our field.
an operational objective, e.g. valuing customer service, and believing therefore we
should attempt delivery on time, every time.
a focus on output, e.g. valuing high quality, and believing that we should strive for zero
defects in our products.
Symbols or symbolic actions
There are many examples, including:
the organisation's unique roots established by the personal style and experience of the
founder; for instance, think Virgin Group and the effect the style of Richard Branson has
had on this organisation.
the organisation's logos, slogans and jingles; for instance Asda and Walmart with ‘Roll
Back’, the smiley face, and ‘That’s Asda Price’.
the activities of an executive, e.g. visiting the factory floor to speak to employees.
National culture influences the way that people behave at work, and the expectations
that they have of their colleagues, careers and organisations.
Today’s global business economy has resulted in managers having to work with, or within,
many different national cultures. Business success will, in part, be driven by an
understanding by managers of these different national cultures.
Hofstede
Hofstede research finds out the national differences between over 100,000 of IBM’s employees in
different parts of the world. In an attempt to find aspects of culture that might influence business
behaviour.
Looks at the extent to which people are integrated into groups. Some cultures are more cohesive than
others. E.g. Anglo Saxon cultures are generally more individualistic than the collectivist cultures of South
American.
Deals with a society’s tolerance for uncertainty and ambiguity e.g.
France and Japan use bureaucracy to reduce uncertainty because they
dislike it.
Low uncertainty avoidance indicates a society that is not rule-oriented
and has greater tolerance for a variety of ideas, thoughts and beliefs.
the extent to which the less powerful members of
organization and institutions accept and except that power
is distributed unequally e;g. in South American society
differences s in poser were tolerated more than in North
European cultures.
A masculine role in one where the distinction between the role so
the genders are large and males focus on work, power and success.
(toughness and the desire for material wealth and possessions)
Like in Japan while nothing like this in Finland.
Other society care for social value, relationship and no
discrimination between male and female (value personal
relationships, belonging and the quality of life).
Long-term Orientation vs. Short term Orientation
Long-term orientation is when you are focused on the future. Short-term orientation is
when you are focused on the present or past and consider them more important than the
future. If you have a short-term orientation, you value tradition, the current social
hierarchy and fulfilling your social obligations.
Q1: Research has indicated that workers in country A display characteristics such as
toughness and the desire for material wealth and possessions, while workers in
country B value personal relationships, belonging and the quality of life.
According to Hofstede's theory, these distinctions relate to which of the following
cultural dimensions?
B. Power-distance
Q1 :A
By definition.
Q2: Consider the following cultural ‘dimensions’ as popularized by Hofstede.
ii. Masculinity
iv. Individualism
In country A, most businesses are highly bureaucratic with many defined rules for employees.
However, even junior staff members are usually involve in the creation of these rules, as they
expect to have a say in the running of the business.
Which TWO of the cultural dimensions identified above are shown to exist in country A?
A. (i) and (ii)
B. (i) and (iii)
C. (ii) and (iii)
D. (iii) and (iv) Q2:B
Bureaucratic businesses are evidence as they give staff defined rules to work
with. The fact that junior staff have a say in the running of the business is
evidence of low power distance.
 Foreign Direct Investment
& Multinational Companies
(MNCs)

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#62
Global Business
Role of International Financial Institution

in Globalization
 Balance of Payment
 Restriction of Free Trade
 Revise Argument for Free Trade

Balance Payment
Generally government keeps track of the transaction among countries to
know what is happening to the course of international trade. These
records of deals are made in the balance of payment.
It is the economic transactions between the residents of the country
with the rest of the world in a particular period generally for a year.
1- Current Account:
The current account include following items
Trade in goods: Items that include the import and export of finished
goods, semi-finished goods, and component parts for assembly
Trade in services: These services include tourism, financial services and
consultancy
Investment income: Overseas activity that leads to a flow of money
back to the country. For example, interest received from domestic
investment, the activities of subsidiaries, and dividends earned from
owning shares in foreign firms
Transfers Items moved between countries such as overseas aid.
2- Capital Account :
Real foreign direct investment: a domestic firm setting up a factory
in another country, and earning money from that
Portfolio investment: a domestic investor buying shares in a
business that is already established. They have no control over these
companies
Financial derivatives: financial instruments where the underlying
value is based on another asset
Balance of Payment (in billion rupees)
Current Account
Merchandise exports + 500
Merchandise Imports – 660
Trade Balance – 160
Service exports + 200
Service imports – 140
Services Balance + 60
Net investment income – 20
Unilateral transfer – 35
Balance on Current Account – 155
Capital account
Net change in Pakistan investment from abroad
[increase/capital outflow (–)] –45
Net change in for investment in Pakistan [Increase / capital
inflow (+)] + 200
Balance on Capital Account + 155
Balance on Current plus Capital Account 0
3- Financing Accounts
Reserve assets: a Central Bank will use foreign financial assets to cover
deficits and imbalances.
Balance of Payments Deficit Balance of Payment Surplus
The amount by which the money The amount by which the money
coming into a country is less than coming into a country is more than
the money going out in a the money going out in a
particular period of time. In this particular period of time. In this
case country need to barrow from case country keeps the surplus for
others. future.
This might be a strategy for This might be result of self-
economic growth and buy sustainable policy rather relying on
technological and development export led growth.
capital from abroad.
Balance of Payment vs. Balance of Trade
Balance of payments is the complete record of all economic transactions
of a country with the rest of the world. It includes both visible and
invisible goods.
Balance of trade is the difference in the value of exports and imports of
only visible items. We can say that balance of trade includes imports and
exports of goods alone i.e., visible items.
Visible Goods: Visible goods include import and export, the exchange of
tangible goods.
Invisible goods: While the invisible goods include consultation fee,
income from foreign investments, shipping services and tourism.
Causes of Current Account Deficit:
There are many reasons of increase in current account deficit, a few of the given below
Economic Growth and Highly Inelastic Demand for Imports
If there is an increase in GDP, people will tend to have more disposable income to consume
goods and services. If domestic producers cannot meet the domestic demand, consumers
will have to import goods from abroad.
Decline in Competitiveness.
In the country like Pakistan there has been a decline in the exporting manufacturing sector,
because it has struggled to compete with countries like India, Korea, and China. This has led
to a persistent deficit in the balance of trade.
Sick industrial units. Large number of industrial units especially textile mills have been
closed due to global recession. Cotton and Textile are the major exports of Pakistan which
consist of 62% of the total exports. The sick textile units have reduced our exports which
cause deficit in BOP current account.
Causes of Current Account Deficit:
Higher inflation
This makes exports less competitive and imports more competitive. However this factor may be
offset by a decline in the value of sterling.
Borrowing money
If country export raw material which prices decreased and import technology which prices rise
dramatically. It will negatively affect the term of trade and then current account
Child labour propaganda: Pakistan has enjoyed comparative advantage in the production of
carpets and sports goods. The propaganda of child labour by American and European countries
in these industries has reduced Pakistan's exports of carpets and sports goods which lead to BOP
deficit.
High population growth rate: The population of Pakistan is increasing at a higher rate than its
economic growth rate. Therefore, the increasing output resulted from the economic growth rate
is eaten up by the fast growing population which left nothing for exports.
Restricting free trade (protectionism)
In theory, free trade between nations is desirable, but often in practice various forms
of protection are used.
Protectionism is where one country, or group of countries, attempts to restrict trade
with another country, to protect their producers from competition.
There are a number of ways in which markets can be protected:
Import controls
Tariffs
If a country imposes tariffs (a tax on imports) on various imports, then
their prices will rise as compare to the home produced goods and so
the demand for imports should fall and switch to locally produced
goods. But today,, the World Trade Organization (WTO) would raise
objection because it is against the policy of free flow of resource across
the borders..
Import Quota
Another option is fixed the quantity of import of product, we called
Quotas, will reduce the supply in the market and leads rise in price of
product in local market, which makes locally produced product
compete-able.
Embargoes ban on certain imports or exports.
Illustration 3 Embargoes
In 2006, a European Commission ban on British beef exports officially ended, 10
years after it was imposed to prevent the spread of mad cow disease.
Subsides on domestic products to give them a price advantage over imports.
Administrative regulations designed to deter imports, e.g. excessive paperwork.
Government Measures to Current Account Deficit
Monetary Measures
Exchange rate depreciation: This is where the rate of exchange of, say Rs. for US$ increases. The
concept of exchange rates is explained in greater detail in the following section.
Deflation: By bringing down the price level domestically, this can increase the attractiveness of
goods on the international market, thereby increasing exports.
Exchange control: Tool can be used in short-term. In an extreme version, a monetary authority
may command that exporters relinquish foreign exchange reserves to the central bank. This has
the effect of restricting the level of imports that are possible.
Non-Monetary Measures:
Arrange exhibition: In the short-term government should organization of exhibitions and trade
fairs to create awareness among overseas importers.
Tax rebates for exporters: Provision of tax rebates and other reforms to exporters can also be
used in the short-run
Subsidized interest rates for exporters: In the short-term Provision of finance at subsidized
interest rates to exporters is also a good strategy
Export Promotion and Import Substitute:
i) Government should the export industry by searching new markets for export, organizing
export product exhibitions, and giving rebates on raw materials.
ii) Similarly develop import substitutes by technical guidance, funding or suppressing the
demand for imported goods through media campaign.
Arguments for restricting free trade
Protection for infant industries likely in developing countries where new industries are
too small to have gained economies of scale, workers will be inexperienced and there is
inadequate finance for expansion.
Prevents dumping a country may produce an excess of a good, e.g. wine or beef and in
order to get rid of the excess they may export it at a low price. The countries receiving
the dumped goods would therefore be facing unfair competition from abroad.
Prevents the establishment of a foreign based monopoly competition from abroad
could drive domestic producers out of business. The foreign company, now having a
monopoly, could charge high prices for substandard products.
To reduce the influence of trade on consumer tastes for example, the developing
countries may object to the influence of Western consumerist values expounded by
companies such as Starbucks and McDonalds.
Arguments for restricting free trade
To prevent the import of harmful goods the import of goods, such as drugs or live
animals, may be barred.
Self-sufficiency the country may wish to maintain a degree of self-sufficiency in case
trade is cut off in times of war.
Revise Case for Free Trade
1. The theory of comparative advantage
This explains that by specializing in goods where countries have a lower
opportunity cost, there can be an increase in economic welfare for all countries.
Free trade enables countries to specialize in those goods where they have
a comparative advantage.
2. Reducing tariff barriers leads to trade creation

Trade creation occurs when consumption switches from high-cost producers to
low-cost producers.
3. Increased exports
As well as benefits for consumers importing goods, firms exporting goods where
the Pakistan has a comparative advantage will also see a significant
improvement in economic welfare. Lower tariffs on Pakistan exports will enable a
higher quantity of exports boosting jobs and economic growth of Pakistan.
4. Economies of scale
If countries can specialize in certain goods they can benefit from economies of
scale and lower average costs; this is especially true in industries with high fixed
costs or that require high levels of investment. The benefits of economies of
scale will ultimately lead to lower prices for consumers and greater efficiency for
exporting firms.
5. Increased competition
With more trade, domestic firms will face more competition from abroad.
Therefore, there will be more incentives to cut costs and increase efficiency. It
may prevent domestic monopolies from charging too high prices.
6. Trade is an engine of growth.

World trade has increased by an average of high percentage growth since 1948
of Pakistan during Korean War, causing this to be one of the significant
contributors to economic growth.
7. Make use of surplus raw materials

Middle Eastern countries such as Qatar are very rich in reserves of oil, but
without trade, there would be not much benefit in having so much oil.
Japan, on the other hand, has very few raw materials; without trade, it would
have low GDP.
8. Tariffs may encourage inefficiency

If an economy protects its domestic industry by increasing tariffs industries
may not have any incentives to cut costs.
 Emerging Economies

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#63
Global Business
Emerging Economies & Economic System
 Globalization & Super Markets

 Emerging Economies
 BRIC Countries

Globalization & Super Markets
The expansion of European and American grocer retailers into global markets has been
underway for a number of years. Limited growth opportunities at home resulted in the
major players expanding their overseas operations with mixed success. Tesco entered the
Thai market in 1998 and now has over 500 stores. The advantage for these international
retailers was expertise in systems, distribution and the range of products. However, the
businesses have had to learn to adapt to local conditions, e.g. Walmart sells whole
roasted pigs and live frogs in its Chinese stores.
Globalisation and developing countries
In the past, many companies located much of their manufacturing in the developing
countries of Asia and Latin America.
Now they are increasingly locating service and knowledge based jobs there too, e.g.
telesales, research and development.
This is because many countries in Asia and Latin America now produce a massive
number of well educated and well trained individuals.
These workers are cheap to employ compared to those in the US and Europe, resulting
in lower costs and increased profits for companies.
The developing countries have also benefited with economic growth and wage rises as
a result of globalization.
Emerging Economy
An emerging market economy is transitioning from a low income, less developed, often
pre-industrial economy towards a modern, industrial economy with a higher standard of
living.
Emerging Economy
Main Points
An emerging market economy is an economy that is in the process of becoming a

developed economy.
Emerging market economies typically feature a unified currency, stock market, and
backing system, and are in the process of industrializing.
Emerging market economies can offer greater returns to investors due to rapid growth,
but also offer greater exposure to some inherent risks due to their status.
Emerging Economy
What Is an Emerging Market Economy?
An emerging market economy is the economy of a developing nation that is becoming
more engaged with global markets as it grows.
Countries classified as emerging market economies are those with some, but not all, of
the characteristics of a developed market.
As an emerging market economy progresses it typically becomes more integrated with
the global economy, as shown by increased liquidity in local debt and equity markets,
increased trade volume and foreign direct investment, and the domestic development of
modern financial and regulatory institutions.
Currently, some notable emerging market economies include India, Mexico, Russia,
Pakistan, Saudi Arabia, China, and Brazil. (Investopedia- 2018)
Emerging Economy
Emerging Markets
An emerging market is a market that has some characteristics of a developed market,
but does not fully meet its standards. This includes markets that may become
developed markets in the future or were in the past.
Emerging Economy
BRIC Countries
A recent trend has been a rise in multinational companies from the emerging 'BRIC'
economies.
Emerging Economy
BRIC are the world’s largest emerging economies.
Fast growth, strong economic foundations and large populations have made BRIC into the world’s
most promising economies.
By 2050, the combined BRIC economies are expected to outstrip the G6 economies (Germany,
France, Italy, Japan, UK and the USA).
At this point, China is predicted to become the world’s largest economy.
In June 2009, the first summit of heads of state of the BRIC countries was held. The forming of an
alliance will help to increase their economic and political power.
Organisations in BRIC economies are moving from being recipients of foreign direct investment to
actually investing in and even becoming owners of major Western businesses.
Economic Systems
There are three basic economic systems:
capitalism,
socialism,
mixed.
However, for the purposes of our analysis it is more helpful to classify these systems in terms of resource
allocation (market-driven versus centrally determined) and property ownership (private versus public).
In a market-driven economy goods and services are allocated on the basis of demand and supply. If
consumers express a preference for cellular telephones, more of these products will be offered for sale. If
consumers refuse to buy dot-matrix printers, these goods will cease to be offered.
The US and EU nations have market-driven economies. In a centrally determined economy goods and
services are allocated based on a plan formulated by a committee that decides what is to be offered. Cuba
and to a large degree China are examples. In these economies people are able to purchase only what the
government determines should be sold.
Economic Systems-Market Economy
Market-driven economies are characterized by private ownership. Most of the assets of production are in
the hands of privately owned companies that compete for market share by offering the best quality goods
and services at competitive prices. Centrally determined economies are characterized by public ownership.
Most of the assets of production are in the hands of the state and production quotas are set for each
organization.
In recent years market-driven economies have become increasingly popular. An example is Russia, which has
begun introducing aspects of free enterprise such as allowing people to start their own businesses and to
keep any profits that they make. Eastern European countries are another example.
Economic Systems-Mixed Economy
Mixed Economy
In examining economic systems, it is important to remember that, in a strict sense, most nations of the
world have mixed economies, characterized by a combination of driven planning. For example, the US, a
leading proponent of
a market-driven economic policies, provides health care and other social services to many citizens through
government-regulated agencies. So the US has some aspects of planning centrally driven planning.
Economic Systems
Other democratic countries with mixed economies include Great Britain, Sweden, and Germany, all of which
have even stronger social welfare systems than America. Another example of the role of government in the
economy is that of promoting business and ensuring that local firms gain or maintain dominance in certain
market areas. The US and EU governments continually pressure the Chinese to open their doors to foreign
MNEs and the Chinese government is very active in helping its local firms to do business with the West.
Planned Economy – Government Control of Assets:

Over the last decade an increasing number of countries have begun moving toward privatization, the
process of selling government assets to private buyers. To understand the reasons for, and the economic
impact of, this process, it is helpful to examine both the potential benefits of government ownership and the
advantages of moving to privatization
Economic Systems-Planned
Advantages of Planned Economy
Advantages of planned economies
Reduces inequalities in wealth – the government controls the distribution of incomes. This reduces
inequalities in wealth.
Lower unemployment – if individuals are free to pursue private profits, there will tend to be higher
unemployment since firms making losses will lay staff off. This should not be an issue in a planned economy.
Fairer treatment of consumers – in a planned economy there will be no private monopolies. Monopolies
can exploit the consumer, charging high prices for poor quality products and services. (Note: government
monopolies may still exist).
Affordable goods – government control of prices reduces the problem of inflation and can be used to
ensure affordable basic goods for poorer members of society.
Disadvantages of Planned Economy
Consumer sovereignty – consumers determine what is produced by producers, i.e.
suppliers will only produce goods and services that consumers will buy.
Greater competition – competition between firms should lead to improved efficiency and
quality and lower priced goods and services.
Incentive to work hard – individuals are free to make profit for themselves (and not the
government). This increases the incentive to work hard.
The former Soviet Union and China would be classed as transition economies.
Some of the primary reasons for privatization include
(1) it is more efficient to have the goods and services provided by private business than by government-run
companies;
(2) a change in the political culture brings about a desire to sell off these assets;
(3) the company has been making money and the government feels that there is more to be gained by
selling now than by holding on;
(4) the purchase price can be used to reduce the national debt;
(5) the company is losing money and the government has to assume the losses out of the national treasury;
(6) the commodity needs research and development funds in order to maintain a competitive stance, and it
is unwilling to make this investment; and.
(7) international funding agencies are making assistance to the country .conditional on a reduction in the
size of the government.
There are six common, and sometimes interdependent, reasons for countries to control business assets, a
process known as nationalization. These include
(1) promoting economic development, for example by coordinating the assets of many businesses into one
overall master plan;
(2) earning profits for the national treasury;
(3) preventing companies from going bankrupt and closing their doors;
(4) enhancing programs that are in the national interest;
(5) increasing the political or economic control of those in power; and
(6) ensuring goods and services to all citizens regardless of their economic status.
 Global Business and Risk
Analysis

Economics-Banking &
Finance, MBA
Marketing, MS
MS-IT)
Lecture#64
Global Business
Risk in Global Business
 Country Risk
 Political Risk

Country and Political Risk
Globalization can be a huge opportunity for a company to engage in business with
many countries around the world. However, investing abroad may be accompanied by
risk. This section will review two such risks:
Country risk
Political risk
Country risk
Country risk is the risk arising from operating or investing in a particular country, with risks
relating to matters such as:
political interference, e.g: currency controls
political stability,
the social and economic infrastructure,
the culture of the country,
and its attitude to foreign business.
Country risk is a much more general term than political risk and relates to all of the risks of
operating or investing in a particular country.
Political risk is the possibility of an unexpected politically motivated event in a country
affecting the outcome of an investment.
Political risk is greater in countries with developing economies
A change in government can sometimes result in dramatic changes for a business.
Political risk could have a direct effect on a business. For example:
– The risk of nationalization of foreign owned assets.

– The risk of a government decision to raise taxation.
– The risk of a government decision to restrict payments to foreign shareholders.
– The risk that politically motivated terrorists cause damage to property and/or
employees.
– The risk of changes in the law, such as employment law.
– The risk that contracts are cancelled or revised.
– The risk that lobby groups within a country put pressure on the government to support
home based business rather than foreign business.
Risk mapping
When an initia review is carried out to identify and assess risks, the assessment of both
probabilities and impact might be based on judgement and experience rather than on a
detailed statistical and numerical analysis.
Probability & Likelyhood: In an initial analysis, it might be sufficient to categorise the
probability of an adverse outcome as ‘high’, ‘medium’ or ‘low’, or even more simply as
‘high’ or ‘low’.
Impact: Similarly, it might be sufficient for the purpose of an initial analysis to assess the
consequences or impact of an adverse outcome as ‘severe’ or ‘not severe’. l

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Fundamentals of Management

Mubashir Wasim (MSc.

Lecture Outcome: Find way to study and qualify this

S# Degree Specialization A1M-

1- MSc. Economics Money, Banking & Finance

4- MCS Software Engineering

5- MS-IT Information System

O5- Business Mathematics & Statistical Inference Computer Based

O6- Commercial Laws

1. Management Definition and Functions

2. Basics of Management Process

3. Key concepts in Management

5. Leadership and Motivation

7. The financial function; conflict

10. Type of organization

11. Governance and Regulation

Q1- Rationale: Line authority can easily be shown on the

Course Course Exam.

“QUITTERS NEVER WIN, AND

Mubashir Wasim (MSc.

Management Specific Purpose

Management is getting people to work harmoniously together by making efficient

Q1: Management is about planning, controlling, putting appropriate organization

Option D: which is A &B

• It's also not clear if managers at Kodak did

• According to the basic understanding of

Power is the capacity to exert influence to

Sources or Types of Power

Mubashir Wasim (MSc.

 Review of the last lecture

Management Specific Purpose

Management is getting people to work harmoniously together by making efficient

Q1: Management is about planning, controlling, putting appropriate organization

Q1: Management is about planning, controlling, putting appropriate organization

Option D: which is A &B

If a manager justifies an instruction to a subordinate by saying

If a manager justifies an instruction to a subordinate by saying

A team which is a mix of HR experts and Senior Accountants is

A team which is a mix of HR experts and Senior Accountants is

'the right to give orders and power exact obedience’. Henry

C. the right to give orders and power to exact

A. It is responsibility without authority

If a responsibility is given without authority, it result for an official

If a responsibility is given without authority, it result for an official

d) All of the above

What is difference between

Reward Power: Complete

Coercive Power: Just started-

What is difference between

What is difference between management and organization?

Mubashir Wasim (MSc.

Lecture Contents Today

 Review of the last lecture (Authority)

'the right to give orders and power exact obedience’. Henry

D- the state or fact of having a duty to deal with something

C. Responsibility, authority and accountability

a) Low Confidence and Trust:

a) Low Confidence and Trust:

f) Organization culture and reward system: