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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
Q#1
Marks = 10

What are the most important factors to improve the managerial skills?

(Marks: 3)

Q#2
Explain the possible risks associated with Budgeting.

Risks
1. Interest Rates:The Council has no current long term debts but significant investments. Changes in interest rates
can have a significant effect on interest income. However much of the interest income is credited
to the HRA and there is usually an offsetting change to housing subsidy
2. Pension Fund:The Council contributes to the Essex County Local Government pension fund.
3. Changes in specific grant income:The Council receives large sums each year in specific grants, eg 25m for housing and council tax
benefit. The risk is that changes in Government rules or an inadvertent failure to comply with
grant conditions might result in a significant loss of income
4. Fraud:Major fraud might cause significant financial loss to the Council as well as weakening public
confidence
5. Insolvency of Counterparties:The Council might suffer losses in the event of the insolvency of major partners or commercial
suppliers. This is a particular risk in relation to investment transactions.
6. Changes to Housing Subsidy :The Housing Revenue Account (HRA) makes a net payment of subsidy to the Government.
However changes in subsidy rules could increase this payment and worsen the financial position
of the HRA (equally changes could benefit the HRA).
Q#3
Marks = 5
Identify the major elements of mega environment which effect an organization.
Elements of the Mega Environment
There are many external elements that can negatively affect a business, such as increased
competition, rapidly changing technology and economic fluctuations. Within these elements, you
will find, among other things, foreign competition, capital markets movements, legal contrasts and
non-responsive political solutions. A change in an external uncontrollable element will be felt by
all businesses in an industry, but the impact these changes have on a specific business depends on
the strength and stability of the management team.
A major problem with predicting the movement of uncontrollable elements is their interaction
with each other. External elements are closely interrelated, and consequently, anything affecting
one element can have a secondary effect on another element. For example, a cultural/social change
in our society can result in a legal/political change. These adjustments can affect our economic
environment, which can lead to changes in technological developments. The development of
technology, in turn, can affect the level of competition. These interactions prove circular when you
realize the status of competition then affects our economy, culture and society. (See Exhibit 3.)
Many managers do not realize that they can plan for changes in the external environment to

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
safeguard their businesses. Foresight is essential in order to adapt to changes in the external
environment. For example, consider a company that thrives on the sale of a single line of computer
software. If this company does not begin developing new products or improve its existing product,
it will quickly be shut out by the competition. Producing single or narrow-lined products with no
concentration on new product development severely limits a business's ability to compete. This is
true especially when external changes, such as technological discoveries, inspire competitors to
improve existing products or to create newer, more effective ones.
Managers can safeguard their businesses by planning for external changes. Consider the tobacco
companies as an example. They have known for many years about the external changes affecting
their industry. They have been affected by cultural/social and legal/political changes for the last
several decades. They developed new products, such as smokeless tobaccos, to offset their
declining product sales
Q#4
Marks = 5
Why organizational management favors group-decision making over decisions by
individuals?
Human performance in decision making terms has been the subject of active research from several
perspectives. From a psychological perspective, it is necessary to examine individual decisions in
the context of a set of needs, preferences an individual has and values they seek. From a cognitive
perspective, the decision making process must be regarded as a continuous process integrated in
the interaction with the environment. From a normative perspective, the analysis of individual
decisions is concerned with the logic of decision making and rationality and the invariant choice it
leads to.
Yet, at another level, it might be regarded as a problem solving activity which is terminated when
a satisfactory solution is found. Therefore, decision making is a reasoning or emotional process
which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.
Logical decision making is an important part of all science-based professions, where specialists
apply their knowledge in a given area to making informed decisions. For example, medical
decision making often involves making a diagnosis and selecting an appropriate treatment. Some
research using naturalistic methods shows, however, that in situations with higher time pressure,
higher stakes, or increased ambiguities, experts use intuitive decision making rather than
structured approaches, following recognition primed decision approach to fit a set of indicators
into the expert's experience and immediately arrive at a satisfactory course of action without
weighing alternatives. Recent robust decision efforts have formally integrated uncertainty into the
decision making process
Q#5
Marks = 3

How will you explain the concept of Perfect Rationality?

Ans:-

Rationality is nothing but assuming that every component of the decision making process is true
and complete. This decision making process is depending but not limited to following:
1) Proper and correct identification of the problem

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
2) Proper evaluation and measurement of the problem. The extent is to be known as
something which cannot be measured cannot be dealt with.
3) No discrepancies with the available problem and its background.
4) Managers interpretation is absolutely perfect
5) Managers own ideas, views and opinions are not jeopardizing the possible decisions
that can be taken. In other means, manager is perfect in his job to take the required decision.
Q#6
Marks = 5
An organization deals with various stakeholders doing their business. Define some of these
parties that affect, or can be affected by, the company's actions.
Ans:Stakeholders are individuals, groups or any existing entity that has interest in the existence and
functionality of the organization. Few stakeholders can be listed as follows:1) Environmental agencies:- The product might be environmental friendly or hazardous.

2) NGOs:- to ensure that HR practices are satisfactory.

3)
Government:- For ensuring implementation of the laws and regulations. Further,

success of an organization also supports strength of the government and subsequently the

nation.

4)
Owners:- The people who own the business. They are definitely interested to see the

profits & gains as well as the growth of the business. Efficient and learning owners have

now put their emphasis on TQM, effectiveness and customer satisfaction to stay competitive

and alive in market.

5)
Religious, Social, Cultural groups:- Have their interest to ensure that there is no

discrimination of any kind.

6)
Shareholders:- They are another major stakeholder after owners as they have invested

in the business and look forward for favorable returns.

7)
Employees:- The employees of the company are stakeholders as the reputation,

performance and growth of the business will have impact on their functionality,

development and satisfaction.

8)
Competitors:- They are also stake holders as they have to compete and accordingly

need to keep their eye on the business of their competitors.

9)
End users:- They look up on the organization to meet their needs in terms of products

or services with utmost satisfaction.

10) Suppliers:- Every organization is dependant on the input from their suppliers.

Therefore, suppliers have great interest in the business activity and see the business as a

potential market for his business.

Q#7
Marks = 5

Under what conditions group decision making is preferable to individual decision making?

Give logical reasons.

Ans:-

Group thinking is preferable to individual decisions for following reasons:

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
1) Group thinking is based on co-ordination and detailed discussion of several individuals.

Therefore, the decision may be called as elective and not selective and will have higher

support.

2) Large number of ideas are generated. Brainstorming is effective tool in group thinking

and decisions.

3) A decision by individual is limited to his understanding and approach. However, the

same solution if presented in group thinking will be polished and made more suitable to fit

the requirement.

4) Group decisions has the edge of taking difficult decisions with ease when compared to

individual decision.

5) Group decisions are not influenced if properly controlled by the managers. Individual

decisions are decisions influenced by one persons opinion only.

6) Group decisions have the advantage of foreseeing the other end of the picture. The

decisions after effects can be seen, reviewed and accordingly the decision can be mended.

7) Group decisions can reduce the chances of rational decisions.

8) Group decisions takes into consideration the bigger picture / broader vision of the whole

situation which is being dealt.

Q#8
Marks = 10
CEO of a company is paid too much for is work give reasons of his High Salary
Q#9
Marks = 3
A manager is working in a telecom company, what legal-political and economic factors he
needs to be aware of, in managing globally?
Q # 10
Marks = 3
How the E - commerce is different from E - business?
Q # 11
Marks = 3
In the study of management, what are the four major approaches that make an important
contribution to overall understanding of management?
Q # 12
Marks = 3
Ali works in a manufacturing industry. How TQM will affect his job
Q # 13
Marks = 3
List down the key skills needed by a manager to perform his duties and activities?
Q # 14
Marks = 10
Describe in detail the Hawthorne studies and their contribution to management practices?
Q # 15
Marks = 10
To be successful in 21st century companies must take advantage of the new information
technology, globalization and entrepreneurship. How advances in these concepts positively
effect a business?
ANSWER:
In 21st century the trends are changing rapidly in the fields of Information technology,
globalization and entrepreneurship. The best manager is one who takes these changes as
opportunity and makes good use of it for their organization. We see great advances in the above
mentioned fields which positively affect a business.

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
Information Technology: Technology is changing day by day but the best thing is to change as
the society changes just take technology changes as an opportunity, adopt the changes and rule the
world.
Globalization: There are no constraints by national borders the whole world is your market now
what managers need to do is just search for the opportunities and accept the challenges and
capitalize them to create value and for the betterment of your organization.
Entrepreneurship: It is the process where individuals or groups use organized efforts to take
opportunities and create value from it. They are not contented to remain small rather want to grow
through innovation. There are great risks to be taken by entrepreneur but entrepreneur are not
afraid of risks and accept challenges and take threats as an opportunity and gain success.
Q # 15
Marks = 10
How a manager can make his forecasting technique more effective? Discuss in detail.
Now days, management techniques are more demanding, as soon as global boundaries are finished
due to IT, and approach to each and every part of the world become easy, challenges are also
increased in managing organization.
He will not stick to the old fashioned technique in decision making but he will use the up to date
technique to resolve problem and forecasting.
He will use rational model for forecasting, so he will go through all steps and having complete
knowledge and command of the problem so he might have alternatives.
1. First he will identify the problem.

2. Second he will categorize the problem, either is it crisis, non crisis or opportunity problem?

3. Third, he/ she weigh the problem according to importance.

4. Develop the alternative, in case of plan change he will use alternative.

5. He/ she will critically analyze the alternative.

6. He/ she with his/her team will select the best alternative among all alternatives.

7. he/she will plan for the implementation of alternative.

8. Then he/she will monitor the effectiveness of plan.

By these steps manager can forecast effectively, with almost negligible chances of failure.

Q # 15
Marks = 10
Describe Porters Model and explain how a manager would use it to develop a strategy to
achieve competitive advantage.
Q # 16
Marks = 10
Ali is working as the head of tea unit of a multinational organization. Expenses of tea unit
are increasing day by day. He is much worried. He decided to call a meeting and ask for
some suggestions to reduce expenses from his subordinates. Different subordinates ssuggest
for the downsizing of research department as it was not working efficiently. Ali still wants to
think over this suggestion. What steps he should take to make a rational decision?
Q # 17
Marks = 3
Considering all the unique characteristics of programmed decision making, what sort of
benefits can be achieved through this style of decision making?
Q # 18
Marks = 5

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
Managers at all levels and in all areas of organizations make decisions. What kinds of
decisions the different members of an organization have to make at different levels within
the organization?
Q # 19
Marks = 5
Managers at all levels and in all areas of organizations make decisions. What kinds of
decisions the different members of an organization have to make at different levels within
the organization?

Q # 20
Marks = 5
Who are responsible for setting goals? Do you think different Managers set goals, or one
manager is responsible for it?
ANS: GOAL SETTING: Goals are the desired outcomes for the individuals, groups or
organizations. The success of an organization depends on its goals and how they are achieved.
Goal setting is the responsibility of a manager. There are three managers at three different levels:
Top manager
Middle manager
First Line manager
Each manager is responsible for setting goals at different level.

1. Top manager sets the strategic goals which are organization wide.
2. Middle managers set Tactical goals
3. First line managers set operational goals which are related to the operations of the organization.
But it is important that all the goals set by managers should be in accordance to organization's
mission.
Q # 21
Marks = 10
Describe the significant workplace issues that affect motivation in today's workforce.
ANS: MOTIVATION: It is the willingness to exert high levels of efforts to reach organizational
goals.
Motivation is an important aspect in today's world where competition is increasing day by day, so
there is a strong need for motivating employees in order to get best performance from them. In
spite the importance of motivation there are various issues which affect the motivation in today's
workforce. Some of the factors are given below:
Inappropriate Goals: the goal itself acts as a motivator but if not set well it creates lack of
understanding in employees which results in poor performance.
Recognition: In today's world recognition acts as a strong motivator. If a worker's
performance is good he needs to be recognized so that his performance is reinforced but if there is
lack of recognition it will de- motivate the worker.
Salary/Pay: The basic physiological needs are satisfied by money so salary /pay play an
important role in motivating an employee. If it is not up to the limit where it satisfies workers
basic needs it is obvious that low salary will cause de-motivation in employee.

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
Opportunities: Everyone desires to develop their capabilities and reaching their full
potential, it can somehow be achieved by career opportunities offered by the organization. If an
organization does not allow an employee to excel in his/her career this may lose his interest in
work.
Work Itself: The job and the working conditions if not liked by worker he will not do his
job with interest and will yield low performance.
Q # 22
Marks = 10
How can a manager make the delegation process more effective? Give logical reasons to
support your answer.
ANS: DELEGATION: Delegation is the assignment of part of manager's work to others along
with responsibility and authority.
Effective Delegation: Delegation can be made effective in many ways:

Trust: It is very important while delegating to have full trust in the subordinates. If manger
lacks trust in subordinates he will always have a threat of their failure.

Training the subordinates: Delegation can be effectively done if subordinates know what
and how they have to do their work. For this they must be trained well.

Manager's knowledge about delegation: While delegating manager should know how to
delegate i.e. how to take work from subordinates and which tasks should be assigned to
subordinates.
Q # 23
Marks = 10
Discuss the Boston Consulting Group (BCG) matrix and explain its usefulness in
segmenting businesses. Discuss the characteristics for each of the four categories based on
the BCG matrix.
ANS: BOSTON CONSULTING GROUP (BCG) MATRIX: The BCG matrix was developed
by Boston Consulting Group. Its main purpose was to compare different businesses in an
organization's portfolio on the basis of market share and market growth. It helps the organization
in allocating resources to its various businesses.
Categories of BCG matrix:
The matrix defines four business groups. The SBUs plotted on BCG matrix can be classified as
follows:
Star: Star has a high market share in a growing market.
Cash Cow: Cash Cow is an SBU which has high market share in a slowly growing market.
Question Mark: Have low market share in a growing market. They are the problem creators.

Dog: Has low market share in a low growing market.

Q # 24
Marks = 5
Is organizing important for all levels of managers? Give your opinion?
Q # 25
Marks = 10
ABC Ltd is a small marketing services company. You have been put in charge of a new project
team. It is the second week the team has been together, and progress on the task is frustratingly
slow. There are lots of creative ideas being put forward, but team members criticize everything
and try to put their own ideas over others. Your manager is getting concerned and asks you to
report on how the team is working.

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
Propose different measures for encouraging cohesion in your team.
Q # 26
Marks = 10
Suppose that an organization has some distinctive competencies, how long it will retain those
competencies?
Q # 27
Marks = 5
Can individual be so much motivated that his/ her performance declines as a
result of excessive efforts? Discuss.
Yes, in certain case its true. If a person set goals too high for himself, he may end up Demotivating himself because of the failure to achieve the goals. When rewards are used by
organizations as payoffs for better performance, the intrinsic rewards, which are derived
from person doing what they like, are reduced.
Due to excessive efforts, people loss control over their behavior so that pervious
motivation diminishes. The elimination of extrinsic rewards can produce a shifting from an
external to an internal explanation in an individuals perception of thinking that why he
works on a task. Too much motivation make person to think differentiate themselves from
others by their desire to do things better.
Q # 28
Marks = 10
How can we implement Maslows Hierarchy of need theory in our life? Discuss in detail.
Maslow's Hierarchy of Needs is based on the assumption that people are motivated by a series of
five universal needs. These needs are ranked, according to the order in which they influence
human behavior, in hierarchical fashion.
Physiological needs are deemed to be the lowest- level needs. These needs but be fulfilled
Safety needs -- the needs for shelter and security
Social needs include the need for belongingness and love
Esteem needs after social needs have been satisfied, ego and esteem needs
Self-actualization is the need for self-realization, continuous self-development, and the process of
becoming all that a person is capable of becoming.
In daily life if we translate this theory its discuss food is basic need of human being we should
look into this basic need to motivate our workers
Stability is equal to safety in Maslows theory. Friendship is equal to esteem in theory.
Status and achievements esteem and achievement respectively.
Above theory is used to motivate our works. We also get guideline during our daily life. It
provides us the path to look into needs of others.
Q # 29
Marks = 10

Do you think motivation comes from within a person or it is a result of the situation?

Explain in your own words.

What is motivation?

Motivation is the internal condition that activates behavior and gives it direction; and energizes
and directs goal-oriented behavior Motivation comes from within. Very few people are highly
motivated at work. Most people work at only a small fraction of their actual capabilities. Your
Employer can create only motivational environment. It is up to you to motivate yourself.
The highest levels of motivation come when we are in tune with our mind and thinking.

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
Self-improvement is one of the best motivators because it comes from you inner feelings. Money
Does Not Motivate. People adapt to the amount of money they are making that motivation is
short- lived. Managers often try to motivate employees via promises of financial rewards and
promotion but people like are motivators such as feeling valued and appreciated. People are
motivated when they feel understood.
True motivation only comes from within an individual but it can only be started from external
factors.
Q # 30
Marks = 10
XYZ Ltd is a firm which undertakes reconstruction and maintenance. The work is carried out by
teams which operate independently of each other. As a team co-coordinator, you have investigated
a number of recent customer complaints about delays. It appears that instructions given to head
office are not reaching the teams quickly or clearly enough. The teams come away feeling that
head office lacks understanding of their work and respect for their inputs. You have identified the
problem as poor communication on many levels.
With the above stated issue explain the particular problems of upward communication in an
organization. Suggest how upward communication can be improved?
Answer:
Upward communication flows from employees to managers.
Upward communication can be used in order to keep managers aware of how employees feel
about
Their jobs, their coworkers then we must provide them proper facility to communicate with
management.
A climate of trust, respect should be created between worker and managers.
We should share decision making power with them.
Listen Problems and exceptions of the team.
Take Suggestions for improvement from team.
Try to establish Performance reports to motivate them
Q # 31
Marks = 10

Compare and contrast the advantages and disadvantages of Gantt chart and PERT analysis.

Answer:

A PERT network flowchart kind of system which represents the sequence of activities needed to

complete project.

It also keep track of costs linked with that activity

A Gantt chart is special bar type charts which show the present progress of the project. It shows

major activity compare to target completion date.

Project activities shown on the left side of the

Chart. Time shown on bottom or top of the chart
Advantages of Gantt chart
1. It shows how much of the plan has been completed
2. Many people prefer this plan

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
Disadvantages
1. Estimated values must be given before the chart can be drawn.
2. It can not show critical path
3. Different type of scheduling cannot be shown
4. several scheduling possibilities cannot be shown
Advantages of PERT
Use can determine critical path
You can update project performance
You can expect project completion time
Activity start and end dates
Disadvantages
So many activities
Network charts might become long and hard to understand for someone
Q # 32
Marks = 5

Identify the major elements of mega environment which effect an organization?

Answer:

There are many external elements that can negatively affect a business, such as increased
competition, rapidly changing technology and economic fluctuations. Within these elements, you
will find, among other things, foreign competition; capital markets movements, legal contrasts and
non-responsive political solutions. A change in an external uncontrollable element will be felt by
all businesses in an industry, but the impact these changes have on a specific business depends on
the strength and stability of the management team.
A major problem with predicting the movement of uncontrollable elements is their interaction
with each other. External elements are closely interrelated, and consequently, anything affecting
one element can have a secondary effect on another element. For example, a cultural/social change
in our society can result in a legal/political change. These adjustments can affect our economic
environment, which can lead to changes in technological developments. The development of
technology, in turn, can affect the level of competition. These interactions prove circular when you
realize the status of competition then affects our economy, culture and society. (See Exhibit 3.)
Many managers do not realize that they can plan for changes in the external environment to
safeguard their businesses. Foresight is essential in order to adapt to changes in the external
environment. For example, consider a company that thrives on the sale of a single line of computer
software. If this company does not begin developing new products or improve its existing product,
it will quickly be shut out by the competition. Producing single or narrow-lined products with no
concentration on new product development severely limits a business's ability to compete. This is
true especially when external changes, such as technological discoveries, inspire competitors to
improve existing products or to create newer, more effective ones.
Managers can safeguard their businesses by planning for external changes. Consider the tobacco
companies as an example. They have known for many years about the external changes affecting
their industry. They have been affected by cultural/social and legal/political changes for the last

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
several decades. They developed new products, such as smokeless tobaccos, to offset their
declining product sales
Q # 33
Marks = 5
Why organizational management favors group-decision making over decisions by
individuals?
Answer:
Human performance in decision making terms has been the subject of active research from several
perspectives. From a psychological perspective, it is necessary to examine individual decisions in
the context of a set of needs, preferences an individual has and values they seek. From a cognitive
perspective, the decision making process must be regarded as a continuous process integrated in
the interaction with the environment. From a normative perspective, the analysis of individual
decisions is concerned with the logic of decision making and rationality and the invariant choice it
leads to.
Yet, at another level, it might be regarded as a problem solving activity which is terminated when
a satisfactory solution is found. Therefore, decision making is a reasoning or emotional process
which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.
Logical decision making is an important part of all science-based professions, where specialists
apply their knowledge in a given area to making informed decisions. For example, medical
decision making often involves making a diagnosis and selecting an appropriate treatment. Some
research using naturalistic methods shows, however, that in situations with higher time pressure,
higher stakes, or increased ambiguities, experts use intuitive decision making rather than
structured approaches, following recognition primed decision approach to fit a set of indicators
into the expert's experience and immediately arrive at a satisfactory course of action without
weighing alternatives. Recent robust decision efforts have formally integrated uncertainty into the
decision making process.
Q # 34
Marks = 3
Who is Devils advocate? Explain in your own words.
Q # 35
Marks = 5
How rational decision making model helps an organization in making effective decisions?
Q # 36
Marks = 5
For what reasons rational decision making model get lemmatized?
Q # 37
Marks = 5
What are the unique characteristics that emphasize the significance of rational decision
making?
ANSWRE

According to the rational model of decision making, managers engage in completely rational
decision processes, ultimately make optimal decisions, and possess and understand all
information relevant to their decisions at the time they make them. including all possible
alternatives
and
all
potential
outcomes
and
ramifications

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MGT 503 Principles of Management

Mid Term Paper Subjective Questions
Steps:identifying
a
problem.
identifying
the
decision
criteria.
allocating
weights
to
the
criteria
involves
developing
alternatives
analyzing
alternatives.
involves
selecting
an
alternative
choosing
a
course
of
action
and
implementing
the
alternative
involves
evaluating
the
decision
effectiveness
Managerial decision making is assumed to be rational; that is, choices that is consistent and value
maximizing within specified constraints. The assumptions of rationality are summarized below.
a These assumptions are problem clarity (the problem is clear and unambiguous); goal orientation
(a single, well-defined goal is to be achieved); known options (all alternatives and consequences
are known); clear preferences; constant preferences (preferences are constant and stable); no time
or
cost
constraints;
and
maximum
pay
off.
b The assumption of rationality is that decisions are made in the best economic interests of the
organization,
not
in
the
managers
interests.
The assumptions of rationality can be met if: the manager is faced with a simple problem in which
goals
are
clear and alternatives limited, in which time pressures are minimal and the cost of finding and
evaluating
alternatives is low, for which the organizational culture supports innovation and risk taking, and in
which
outcomes
are
concrete
and
measurable.
The rational model is flawed in that it does not apply to actual decision aiming for two reasons.
a.
Perfect
information
is
not
available.
b.
Managers
values
and
personality
factors
enter
into
their
decisions.
The rational model presents an ideal against which actual decision-making patterns can be
measured

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