Business Administration Class XII Study Material: Curriculum and Topics, Exercises of Business Administration

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BUSINESS ADMINISTRATION

CLASS XII

Study Material

Curriculum - Business Administration

Topics Topics to be covered Marks allocated

Concept of Business Meaning of terms “Business” and Administration “Administration” Legal Framework/obligations of Forms of Business organizations Introducing Business Interest Lobby organizations – e.g. Chambers of Commerce and how to use them Practice Session: In Groups , To understand the concepts and integration of Business and Administration, concept of People Management – Leadership/ Motivation needs to be brought in Place. A brief overview needs to be shared to set the base for the next module. This module should include- Concept of Human Resources (Meaning. Management, Relevance) that ultimately run the business.

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Concept of People Management

Role of Leadership Motivation Conflict Management Interpersonal Relations (Johari Window Concepts) In continuation with the last module, this module should focus on theory as well as practical implications of these principles. The pedagogy should be such that it focuses on cases, activities, simulations & role plays to understand the behavior of people at work.

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Concept of Business Plan

Innovation in form of Entrepreneurship needs to be taught Various ingredients of Business Plan Concept of performance and Profit Budget and their monitoring Tools of Budget Analysis/Corrective Action

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Overview of Supply Chain Management

Overview of IT Management

Overview of Human Resources Management

Overview of Marketing Management

All these topics have been discussed in some point or the other in the curriculum

Only a quick recap and understanding needs to be reiterated in the system so as to set the base for the next level of specialization for the students.

This would also add value to the students in terms of understanding the technical nature of businesses.

1.1 BUSINESS ADMINISTRATION - CONCEPT, OBJECTIVES, IMPORTANCE

CONCEPT OF BUSINESS

Literally, the word “business” means the state of being busy. Generally, the term business includes all human activities concerned with earning money. In other words, business is an activity in which various persons regularly produce or exchange goods and services for mutual gain or profit. The goods and services produced or purchased for personal use are not included in “business”.

DEFINITION

1.According to L. H. Haney

“Business may be defined as human activities directed toward providing or acquiring wealth through buying and selling of goods.”

2.James Stephenson says that:

“Every human activity which is engaged in for the sake of earning profit may be called business.”

3.In the words of B. W. Wheeler

“An institution organized and operated to provide goods and services to the society, under the incentive of private gain” is business.

Business administration in simple terms, is everything that encompasses a business. The administration of a business includes managing and monitoring absolutely everything to do with a business, from marketing, advertising, to the hiring and the management of

decisions, too, which is of course again, exceptionally important. In short, a business would very likely fail without a good business administration team.

 THE PROCESS OF BUSINESS ADMINISTRATION:

The process of business administration is the overseeing and controlling of a business. This includes keeping a lot of records, monitoring and overseeing every department and staffing and managing teams of employees.

1.2 Business Administration functions - planning, organizing, staffing, directing and controlling

Business Administration Management has been described as a social process involving responsibility for economical and effective planning & regulation of operation of an

enterprise in the fulfillment of given purposes. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.

Different experts have classified functions of Business Administration. According to George & Jerry , “There are four fundamental functions of Business Administration i.e. planning, organizing, actuating and controlling”. According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”. Whereas Luther Gullick has given a keyword ’ POSDCORB ’ where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting.

i.e. PLANNING , ORGANIZING , STAFFING , DIRECTING AND CONTROLLING.

For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable

Each function blends into the other & each affects the performance of others.

1. Planning

holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”. Staffing involves:

 Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).  Recruitment, Selection & Placement.  Training & Development.  Remuneration.  Performance Appraisal.  Promotions & Transfer.

4. Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:

 Supervision  Motivation  Leadership  Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann , “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:

a. Establishment of standard performance. b. Measurement of actual performance. c. Comparison of actual performance with the standards and finding out deviation if any. d. Corrective action.

 The nature of coordination is of creating unity in action. It means during coordinating process an effort is made to create unity among the various activities of an organisation. For example, the purchase and sales departments have to coordinate their efforts so that supply of goods takes place according to purchase orders.

(3) Coordination is a Continuous Process:

 It is not a job which can be performed once and for all, but its need is felt at every step. Many activities are performed in a business. Sometimes or the other, if any one of the activities goes on fluctuating either for more or less than required, the whole organisational balance is disrupted. Thus, a close watch has to be kept on all the activities to maintain the balance.

(4) Coordination is an All-pervasive Function:

 Pervasiveness refers to that truth which is applicable to all spheres (business and non-business organisations) and places uniformly. The nature of coordination is pervasive. Like making of timetable in an educational institution is an apt example of establishing coordination.  In the game of cricket, the placement of players at pre-determined positions is nothing but coordination. In the same manner, to synchronise the activities of different departments, like purchase, sales, production, finance, etc. in a business organisation is coordination.

(5) Coordination is the Responsibility of All Managers:

 Coordination is needed at all the three, i.e., top, middle and lower managerial levels. Different activities performed at all the levels are equally important. Thus

it is the responsibility of all the managers that they make efforts to establish coordination. That is why, it could not be said that coordination is of more importance to any one particular managerial level or a manager.

(6) Coordination is a Deliberate Function:

 Coordination is never established by itself but it is a deliberate effort. Only cooperation does not suffice but coordination is also needed. For example, a teacher aspires to teach effectively (this is cooperation) but the timetable is not prepared in the school (this is lack of coordination).  In this situation, classes cannot be arranged for. Here, the effort made by the teacher is meniangless, in the absence of coordination. On the other hand, in the absence of cooperation, coordination dissatisfies the employees. Thus, both are required at a given point of time.

IMPORTANCE OF COORDINATION

The need and importance of coordination can be judged from points below :-

1. Coordination encourages team spirit

There exist many conflicts and rivalries between individuals, departments, between a line and staff, etc. Similarly, conflicts are also between individual objectives and organisational objectives. Coordination arranges the work and the objectives in such a way that there are minimum conflicts and rivalries. It

Therefore, with the help of coordination an organisation can achieve its objectives easily and quickly.

6. Coordination improves relations in the organisation

The Top Level Managers co-ordinates the activities of the Middle Level Managers and develops good relations with them. Similarly, the Middle Level Managers co- ordinates the activities of the Lower Level Managers and develops good relations with them. Also, the Lower Level Managers co-ordinates the activities of the workers and develops good relations with them. Thus, coordination overall improves the relations in the organisation.

7. Coordination leads to higher efficiency

Efficiency is the relationship between Returns and Cost. There will be higher efficiency when the returns are more and the cost is less. Since coordination leads to optimum utilisation of resources it results in more returns and low cost. Thus, coordination leads to higher efficiency.

8. Coordination improves goodwill of the organisation

Coordination helps an organisation to sell high quality goods and services at lower prices. This improves the goodwill of the organisation and helps it earn a good name and image in the market and corporate world.

Every industry is different, and every company has its own strategy for which a variety of indi- cators are possible. Nonetheless, it's vital that each organization choose wisely; the old adage, "You get what you measure," seems true for all organizations.

Clearly, profit and market share will be important performance indicators for automobile com- panies; customer satisfaction and retention for services firms; share price and staff loyalty for dot-coms. Government will have different drivers than the private sector, and monopolies will have different drivers than free-market firms. All, however, must know their aim in life and set a scorecard to evaluate how they're doing.

PART I

Traditionally, competitive organizations have used physical asset-based measures or investor- based measures, which I have likened to hearing last night's final score without seeing the football game. Although we know that all teams go out to win and, in the long term, a team must win or its management and coaches will be fired, just having the final score after the fact does little to help our understanding of the whole game. We don' t know if it was a good game for our team or not. We don' t know if it was exciting and if our fans were happy, or perhaps not because we should have done better. We don' t know if our strategy worked, or if it was abandoned part way through. We don' t know what the team should probably do differently in the next game. We only know the result.

Similarly, in business, most of us need other feedback to know what's working. A high stock price or good return on assets is nice, but how can we contribute to it with what we do every day? Earlier, I talked about evaluating human resources and intellectual capital as measured by return on management. However, this too can disconnect us from what we must do as far as many of our staff are concerned. As in sports, we need predictive measures, not just after-the- fact reports, to see the total picture. Constructing a connected measurement system is critical for us to break down overall targets into what people do every day.

A popular response to this has been the "balanced scorecard" approach, which tries to put in place a set of measures that aren't oriented just to the financial bottom line. Measures of all major components of success are required, including customer satisfaction and loyalty, innova- tion, knowledge and people, customers, suppliers, processes, as well as the financial side of the organization. From this perspective, the measurement-oriented approach doesn't have to be just financial numbers but can also include outsider perceptions. This means that all organizations, regardless of business mission, can find their own set of performance metrics from which all decisions regarding processes can be derived and linked to each other.

This concept is normally referred to as traceability. Traceability simply means that everything we do, and every decision we make under ideal circumstances, relates through a set of linked performance measures to the organization's scorecard.

After performance measurement factors are determined, the organization sets some perfor- mance targets. There may be inherent conflict among the targets. Meeting targeted measures associated with customer acquisition, such as achieving rapid market share growth, could be in direct opposition to the requirement to delight our customers. Attaining good satisfaction levels and delivering higher profits by reducing costs may be fundamentally at odds, especially if we also are striving for no headcount growth at the same time. Likewise, improving speed may fly in the face of our quality improvement initiative. Cost reduction can also be a killer of customer satisfaction, depending how it's done. Management must send clear messages on strategy and priority and not rely just on wishes and targets. Remember, hope is not a strategy. Both hope and business strategies are needed.

The bottom line for any business improvement is that well-thought-out, targeted measurements will inspire and track progress and ensure that we