CSEET · Business Laws and Management

Functions of Management: formula sheet

Full chapter guide

Key formulas

Definition in one line: Management = Planning + Organising + Staffing + Directing + Controlling, aimed at goals; Use this to answer any 'what is management' question. Some texts list coordination separately.
Levels of management: Top (policy) → Middle (implementation) → Lower (supervision); Top level makes policy. Middle level carries it out. Lower level deals directly with workers.
Objectives: Organisational + Social + Personal; Organisational objectives include survival, profit and growth.
Art test: Art = theoretical knowledge + personalised application + creativity + practice; Management meets these features, so it is called an art.
Science test: Science = systematic knowledge + experiments + universal validity; Management has principles, but they are flexible and not exact, so it is only a partial science.
Profession test: Profession = body of knowledge + formal education + professional body + code of conduct; Management lacks a single compulsory body and licence, so it is an emerging profession, not a full one.
Planning process (sequence): Set objectives → Develop premises → Identify alternatives → Evaluate alternatives → Select best alternative → Implement the plan → Follow up; Questions often ask which step comes before or after another. Premises are assumptions about the future and come right after objectives.
Policy vs Procedure vs Rule: Policy = guide to thinking | Procedure = sequence of steps | Rule = fixed do or don't; Policy allows discretion. Procedure fixes the order of actions. Rule allows no discretion and has no sequence.
Strategy vs Policy: Strategy = plan to meet competitors and reach objectives | Policy = guide for routine decisions; Strategy is made at top level and deals with the environment. Policy guides managers within the organisation.
Budget: Budget = plan expressed in numbers for a future period; It is both a plan and a control tool.
Organising process order: Identify work → Group into departments → Assign duties and authority → Set reporting relationships; Questions often ask which step comes first or next.
Line organisation: Direct authority from top to bottom; one boss per person; Also called scalar or military type. Its feature is unity of command.
Functional organisation: Work grouped by specialisation; a worker may report to several specialists; It breaks unity of command.
Line and staff organisation: Line = commands and decides; Staff = advises and supports; Staff has no authority over line operations.
Span of control: Span = number of subordinates directly reporting to one manager; Wide span gives a flat structure; narrow span gives a tall structure.
Bases of departmentation: Function, product, territory, customer, process; Functional is the most common base.
Formal vs informal: Formal = created by management, rule based; Informal = created by social interaction, no written rules; Informal organisation exists inside the formal one.
Three elements of delegation: Delegation = Assigning responsibility + Granting authority + Creating accountability; All three must be present. Accountability stays with the delegating manager, who cannot escape it.
Authority and responsibility balance: Authority ≈ Responsibility; A subordinate should get authority equal to the responsibility given. Too little authority makes the task impossible; too much invites misuse.
Direction of flow: Authority: downward | Responsibility and accountability: upward; Useful for statement-type MCQs.
Delegation vs decentralisation: Delegation = act between two persons | Decentralisation = organisation-wide policy; Delegation is needed in every organisation. Decentralisation is a choice, and top management can adopt it or not.
Staffing chain: HR planning → Recruitment → Selection → Training and development → Performance appraisal; Learn the stages in this order. It helps you place any question.
Recruitment vs selection: Recruitment = attracting applicants (positive); Selection = choosing and rejecting (negative); Recruitment comes first and builds the pool. Selection works on that pool.
Training vs development: Training = present job skills, short term; Development = future growth, long term; Training suits all employees. Development is mainly for managers.
Selection steps: Screening → Tests → Interview → Reference check → Medical exam → Selection decision → Placement; Order is what MCQs test. The medical exam usually comes after the reference check.
Sources of recruitment: Internal (promotion, transfer) and External (advertisement, campus, agencies, walk-ins); Internal sources motivate existing staff. External sources bring fresh ideas.
Elements of directing: Directing = Supervision + Motivation + Leadership + Communication; Remember these four. Questions often ask which one is not an element.
Maslow's hierarchy (bottom to top): Physiological → Safety → Social → Esteem → Self-actualisation; A lower need must be reasonably satisfied before the next one motivates.
Herzberg's two factors: Hygiene factors (prevent dissatisfaction) vs Motivators (create satisfaction); Salary and working conditions are hygiene factors. Recognition and growth are motivators.
Leadership styles: Autocratic (leader decides) | Democratic (group shares) | Laissez-faire (group decides); Match the style to who makes the decision in the question.
Barrier categories: Semantic | Psychological | Organisational | Personal | Physical; Classify each barrier by its source.
Coordination: definition: Coordination = synchronising the efforts of people and departments → common organisational goals; Use the keywords: synchronise, integrate, unity of action, common goal.
Cooperation vs coordination: Cooperation = voluntary and informal; Coordination = deliberate and managerial; Cooperation is a quality of people. Coordination is a task of management.
Key features: Integrates effort | Continuous | All-pervasive | Responsibility of every manager | Deliberate; Common MCQ base: pick which statement is NOT a feature.
Core principles: Direct contact | Early start | Continuity | Reciprocal relationships | Unity of direction; Often attributed to Mary Parker Follett as principles of coordination; check your study material for the exact list.
Steps in the control process: Set standards → Measure actual performance → Compare with standards → Analyse deviations → Take corrective action; Learn the order. Exam options often swap two steps.
Deviation: Deviation = Actual performance − Standard performance; A negative figure means performance is below the standard. Whether that is bad depends on the item: lower cost is good, lower sales is bad.
Planning and controlling link: Planning sets the standards; controlling checks results against them; Planning looks ahead. Controlling looks at results and feeds back into the next plan.
Return on investment (ROI): ROI = (Net income ÷ Investment) × 100; A modern technique that judges how well capital is used.

Quick revision

Management functions: planning, organising, staffing, directing, controlling; coordination runs through all of them.
Planning is deciding in advance what to do, how and when; it looks ahead.
Organising groups work and people into a structure with defined roles.
Departmentation groups activities into departments, for example by function, product or territory.
Authority is the right to give orders; responsibility is the duty to complete the task; accountability stays with the person who delegated.
Delegation passes authority to a subordinate; decentralisation spreads decision power across the whole organisation.
Staffing covers recruitment, selection, training and appraisal of people.
Directing includes motivation, leadership and communication.
Coordination aligns the efforts of different departments toward common goals.
Controlling compares actual performance with standards and takes corrective action.
Planning and controlling are linked: standards for control come from plans.
In Paper 4, attempt all questions; there is no negative marking.

Common mistakes

Calling management a full science or full profession. Fix: Say management is an art, has some features of science, and is an emerging profession.
Mixing up the middle and lower levels. Fix: Middle managers head departments and turn policy into plans. Lower managers supervise workers directly.
Treating policy and rule as the same thing. Fix: Ask if a manager can use judgement. If yes, it is a policy. If no, it is a rule.
Calling a rule a procedure because it has instructions. Fix: A procedure has an order of steps. A rule is a single instruction with no sequence.
Saying staff officers have authority to command line managers. Fix: Remember staff only advises and supports. Line commands.
Confusing functional organisation with functional departmentation. Fix: Functional organisation is a structure type with specialist bosses. Functional departmentation just groups work by function.
Saying accountability can be delegated. Fix: Remember that authority and responsibility can be assigned, but the manager stays answerable for the result.
Treating delegation and decentralisation as the same thing. Fix: Delegation is a process between two people. Decentralisation is a policy covering the whole organisation, and it is the extension of delegation.
Using recruitment and selection as if they mean the same thing. Fix: Recruitment finds and attracts applicants. Selection picks from them. Remember: recruit first, then select.
Calling recruitment negative and selection positive. Fix: Recruitment invites many people, so it is positive. Selection rejects many, so it is negative.

Exam tips

In MCQs, the nature question nearly always rests on the three-part verdict: art, partial science, emerging profession.
Learn one clue word per feature, such as pervasive, continuous, intangible and dynamic.
Match job titles to levels. Board or CEO is top, department head is middle, supervisor is lower.
For written answers, start with a definition and add one example from an Indian company.
Use the 15 minutes of reading time to mark easy Part B questions first, since there is no negative marking.
In the OMR paper, questions often give a scenario and ask you to name the type of plan. Practise the keyword method.
Learn the process steps as a chain and be ready for 'which step comes next' questions.
Differences between policy, procedure and rule are a favourite. Prepare one line for each pair.