COMPLETE MBA

COMPLETE MBA

 

BY

RITTIK CHANDRA

 

 

Published by:

RITTIK CHANDRA

RITTIK PUBLICATION

93, Mahatma Gandhi Road, 1st Floor

Kolkata- 700007, India

Mobile No.: +91-9883787991

E-mail: rittikpublication@gmail.com

Website: www.rittikpublication.in

Cover designed by: RITTIK CHANDRA

© All rights reserved by RITTIK CHANDRA

 

 

Dedicated to the youth of the world

INTRODUCTION

The Masters in Business Administration (MBA) is a master’s level qualification targeted at students from diverse undergraduate programs of study. The MBA would provide students with knowledge of the underlying theoretical background and knowledge of management practice.

This book comprises most important subjects in several areas of specialism, industry internships and workplace based learning, and a dissertation component. The dissertation component aims to integrate theory with practice and explore issues from a cross-disciplinary perspective.

The major objectives of this book , i.e. “COMPLETE MBA” are as follows:

Foster knowledge of different business, administration and management disciplines.

Appreciate the practice of management

Develop critical thinking and analytical skills

Develop problem solving and decision making skills

Understand team dynamics and team work in the workplace

Develop skills to write succinct reports and present reports to stakeholders

Make students career ready for positions in business and management.

 

“COMPLETE MBA” comprises the following subjects:

BUSINESS ETHICS

BUSINESS LAWS

BUSINESS COMMUNICATION

ORGANIZATIONAL BEHAVIOUR

FINANCIAL MANAGEMENT

BANKING

PRODUCTION MANAGEMENT

MARKETING MANAGEMENT

PROJECT MANAGEMENT

HUMAN RESOURCE MANAGEMENT

INTERNATIONAL BUSINESS

RESEARCH METHODS IN MANAGEMENT

ENTREPRENEURSHIP

SUBJECT 1: BUSINESS ETHICS

Ethics:

The term ethics is from the Greek word ethos (Character), refers to the philosophical science that deals with the rightness and wrongness of human actions.

 

Definition of Ethics:

Ethics is a set of moral principles or values which is concerned with the righteousness or wrongness of human behaviour and which guides your conduct in relation to others.

Ethics is the activity of examining the moral standards of a society, and asking how these standards apply to our lives and whether these standards are reasonable or unreasonable, that is whether they are supported by good reasons or poor ones.

 

Business Ethics:

Business Ethics is a specialized study of moral right and wrong. It concentrates on moral standards as they apply particularly to business policies, institutions, and behaviour.

 

Morals:

Morals are the standards, norms of principles of right and wrong. They are basically principles which help to guide our behaviour and accept behaviour of others. They issues relate to. Are these standards based on science? In other words how scientific are these standards? Who develops these standards? How do they develop?

 

Values:

Value comes from the Latin word ‘valere’ which means to be of worth, to be strong. As per dictionary, value gives the following meaning: relative worth, utility or importance, degree of excellence, quality, intrinsically valuable. Value literally means something that has a price, something precious, dear and worthwhile, hence something one is ready to suffer and sacrifice for, it necessary one is ready even to die for it.

Values are a set of principles or standards of behavior that are regarded as desirable, important and held in high esteem by society. They’re based on the moral norms or standards.

 

Human values:

Human values are the values of the human beings for the human beings and by the human beings. Morals and values are the foundation of human values. Just as a building has a foundation of concrete, the building of human values rests on morals and values. Human values can also be defined as values of life.

 

Relevance of Values in Management:

Knowledge of business ethics will help managers in resolving ethical issues/dilemmas as they arise.

Knowledge of values will help managers in setting highly responsible tone for the organization – in individual judgments and decisions whether ethical or not.

The study of business ethics provides conscientious managers with morally responsible approach to business.

It helps manager to realize their social responsibility. Many organizations find it wise to go beyond their primary mission and take into the needs of the community. Business ethics make managers more accountable for social responsibility.

 

CSR:

CSR is an evolving concept that currently does not have a universally accepted definition. Generally, CSR is understood to be the way firms integrate social, environmental and economic concerns into their values, culture, decision making, strategy and operations in a transparent and accountable manner and thereby establish better practices within the firm, create wealth and improve society.

The World Business Council for sustainable development has described CSR as the business contribution to sustainable economic development. Building on a base of compliance with legislation and regulations. CSR typically includes “Corporate governance and ethics.

 

Potential benefits of implementing a CSR approach.

Key potential benefits for firms implementing CSR include:

Better anticipation; and management of an ever-expanding spectrum of risk.

Improved reputation management

Enhanced ability to recruit, develop and retain staff.

Improved competitiveness and market positioning.

Enhanced operational efficiencies and cost savings.

Improved ability to attract and build effective and efficient supply chain relationships.

Enhanced ability to address change.

More robust “social license” to operate in the community.

Access to capital

Improved relations with regulators

 

Corporate governance:

Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation; such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this it also provides the structure through which the company objectives are set and the means of attaining those objectives and monitoring performance.

 

Difference between Corporate Governance and Corporate Management:

Governance is concerned with the intrinsic nature, purpose integrity and identity of the institution, with a primary focus on the entity’s relevance continuity and fiduciary aspects. Governances involves the monitoring and overseeing of strategic direction, socio-economic and cultural context, externalities, and constituencies of the institution. On the other hand, Management is more of hands of activity. It is characterized as conducting or supervising action with the judicious use of means to accomplish certain ends. Management primarily focuses on specific goal attainment over a definite time frame and is prescribed organization.

 

 Issues, Principles and key constituents in Corporation Governance:

Corporate governance addresses three basic issues:

Ethical issues - Efficiency issues, and - Accountability issues.

Ethical issues are concerned with the problem of fraud, which is becoming wide spread in capitalist economies.

Efficiency issues are concerned with the performance of management.

“Accountability issues” emerge out of the stakeholders need for transparency of management in the conduct of business.

 

Unethical practices in Advertising:

False promises

Incomplete description

Misleading Comparisons

Bait-and-Switch Offers

Visual Distortions

False Testimonials

False Comparisons

Partial Disclosures

Small-Print Qualifications

 

When Advertising is considered unethical?

When it gives false information.

When it degrades the rival’s product or substitute product.

When it makes exaggerated or tall claims.

When it is against the national and public interest.

When it gives misguiding information.

When it conceals information that vitally affects human life.

 

Code for Commercial Advertising on Doordarshan:

The code for commercial advertising was presented to parliament in 1987. It contains 33 does and don’t for advertisers

Ads that exploit national emblem, any part of the constitution/personality of national leaders or state dignitaries.

Ads that have any relation to relation, political or industrial dispute.

Ads that decried any race, cast, co lour, creed, and nationality or are against the directive principle or the constitution.

Ads that tend to invite people to crime or cause order or aversely affect friendly relations with foreign states.

No advertisement shall be presented as news.

Ads that promote chit funds, moneylenders, jewellery, fortune letters, and foreign goods would not be accepted.

No derogatory remarks for other products or comparison with them should be made.

Ads which are likely to startle viewers-such as gunfire, sirens, bombardments, screams and raucous laughter.

Guaranteed goods will have to make available to Director General of Doordarshan for inspection, if necessary.

Advertisement that portray women as passive or submissive

 

Gandhian Trusteeship System:

The system of Trusteeship is viewed by the Gandhian theorists as of prime relevance for resolving conflicts and achieving cooperation in organizational settings. Here an attempt has been made to analyze the Gandhian system of trusteeship. It is an attempt to search managerial applications embedded in Gandhian Theory of Trusteeship.

Trusteeship provides a means of transforming the present capitalist order of society into an egalitarian one. It gives no quarter to capitalism, but gives the present owning class a chance of reforming itself.

The Gandhian concept of trusteeship in its capsule form means enjoying the wealth by renouncing it. If magnified, it means ‘Earn your crore by all means. But understand that your wealth is not yours; it belongs to the people. Take what you require for your legitimate needs and use the remainder for the benefit of the society”

 

Sins of Gandhi:

Mahatma Gandhi said that seven things will destroy us.

Wealth without work

Pleasure without Conscience

Knowledge without Character

Commerce (Business) Without Morality (Ethics)

Science without Humanity

Religion without sacrifice

Politics without Principle.

 

Characteristics of Indian Psyche:

It gives more importance to personalized relationship that contractual relationship.

It prefers natural leader rather than official leader.

It does not like many middle officers.

It can accommodate apparently contradictory view. Main character of Indian culture is synthesis.

It considers the leader as the role-model.

It recognizes that majority of Indian maybe illiterate, but they are not uneducated.

It realizes that religion plays the most important role in Indian life. Culture and tradition mean a lot to them.

It recognizes that the Indians are very much attached to their family.

It recognizes that Indians are hard working and not necessarily smart working.

 

Subjectivity & Objectivity:

Creator is subjective. Creation is objective. Insight i.e. creator is more important than Outsight i.e. creation. Our body, senses intellect, mind etc. Are objective, seen, tangible. But our soul atman is unseen, intangible, subtlest and subjective. Hence, wisdom manager is much more important than knowledge manager.

Manager must develop this third eye, ‘Jnana Chakshu.’ The eye of Vision, intuition, insight foresight and such other divine qualities or values. Lord Shiva possesses Third Eye. This is the essence of Indian ethos for management.

 

Karma Yoga (Selfless work):

It is yoga of moral Endeavour, self-less service to others. It brings about union of human being with the Divine. Work is done as workshop to the Divine in human beings who is also all pervading in the universe. 

Gita evolves the moral and ethical theory of human conduct and expounds the art of right living – the doctrine of duty with discipline and devotion without attachment to work and agency.

 

Swadharma:

Gita emphasizes that Swadharma should be understood as a pious work to be done, and should be done with the spirit of doing public good. If done real religiously, it becomes a great offering to the Divine himself.

This is the true Yajna spirit, wherein one works for self satisfaction which in fact he derives from the public good.

 

Role of Karma yoga in our lives:

Karma Yoga is a good pathway for :

Self-purification and self-development.

Individual growth and welfare

Collective growth and welfare

Minimum play of passion, jealousy, hated, greed, anger and arrogance.

Team spirit, team work.

Autonomous management, minimum control and supervision.

Manager acts as mentor and facilitator

Self-motivation or Inspirational motivation.

Perfection or excellence in products and services.

Skills and values united.

All round happiness and prosperity

Conflicts resolved by integration

 

Yogah Karmasu Kaushalam:

Yoga means excellence at work. Seek to perform your assigned duty of work in an excellent manner. Koushalam denotes doing work with devotion and without attachment. Such detached attitude enhances its value and improves the concentration and skill of the worker. You work with smartness, determination and ability. Your head, heart and soul cooperate with your hands. In Total quality Management (TQM), Karma Yoga and Yogah Karmasu Kaushalam provide valuable contributions. Under this slogan we have hundred percent motivation coming from within.

 

Holistic Approach:

Holistic approach in Management is based on spiritual principle of unity. Oneness, non-dual or Advaita concept. Under this principle of unity, the universe is an undivided whole where every particle is connected with every other particle. The Divine interpenetrates this Jagat like pearls on a string. Hence, Entire Humanity is ONE.

 

Basic principles of Indian ethos for management :

Immense potential energy and talents for perfection as human being has the spirit within his heart.

Holistic approach indicating unity between the Divine individual self and the universe.

Subtle, intangible subject and gross, tangible objects are equally important. One must develop one’s Third Eye, Jnana Chakshu, or the Eye of Wisdom.

Karma Yoga offers double benefit, private benefit, self-purification and public benefit.

Excellence at work through self-motivation and self development is the best means of Total Quality Management.

Co operation is a powerful instrument for team work and success in any enterprise involving collective work.

 

Need of Indian Ethos in modern corporate management:

To develop proper management pattern.

To assure all round growth in productivity, marketing, profitability.

To gain worldly achievement and lead enriched quality of life together.

To synchronies private and public benefits.

 

Insights into Indian ethos:

Indian ethos provides that ‘Business’ need not be regarded evil, tainted and unethical. Business is sacred. It is a matter of attitude, approach and level of management consciousness. One can do business, make money, earn profit, build up property and even then it can be managed with due recognition to human and ethical values and respecting all persons in the enterprise and in the society as human beings. Indian ethos demands subjective management system, giving due importance to virtues like compassion, honesty, co-operation etc.

 

Self-Management:

The manager is first a man and then a manager. The manager should first learn to manage and control himself. Without self-management and control, how can he manage and control others? The first need is understand and know himself. This is a course in the subjective system of management. Indian insights want first system of subjective management and then only management in objective terms can be perceived and practiced.

 

Nishkama Karmayoga:

The theory of Karma is the central theme of Bhagvad Gita which when translated into modern day management may provide fresh approach into ‘doing’ the ‘right’ things at the ‘right’ time. Everybody looks for peace and happiness and nobody likes to face adversity. That is why the soul is bounded with Karma (deeds or actions) Bhagwat Gita tells us that future is always based in our present deeds whether they are good or bad. We can change our future happening by virtue of our present pious deeds and workshop and by adopting true path.

Nishkam Karma or selfless or desire-less action is an action performed without any expectation of fruits or results, which has now found place not just in business management, management studies but also in promoting better business ethics as well. In Indian philosophy, action or Karma has been divided into three categories, according to their intrinsic qualities or gunas. Here Nishkam Karma belongs to the first category, the Satvik (pure) or actions which add to calmness; the Sakam Karma (self-centred action) comes in the second rajasika (aggression) and Akarma (in-action) under the third, tamasika which co-relates to darkness or inertia.

Nishkam Karma has been variously explained as ‘Duty for duty’s sake’ and as ‘Detached involvement’.

 

The Guna dynamics model (SRT principle):

First model viz. the guna model analyses the dynamic of the three gunas viz. tamas, rajas and sattava. This dynamics is presented in sloka 14-10 ‘Sattava asserts itself by predominating over rajas and tamas, rajas’. When the intensity of tamas is higher than sattava and rajas, there is lot of negative energy. When intensity of sattava is higher than rajas and tamas there is lot of synergy. Hence, Gita suggests a transformation from tamas to sattava through increase in the intensity of sataava and reduction in the intensity of tamas. If tamas dominates in a society and its institutions, it would lead to lot of negative energy thereby leading to disorders in society. Hence, the social processes should be designed, organized and transformed in such a waythat there is increase in rajas and sattava in the society. This would lead to establishment of a ‘good society’.

Guna theory is an analytical framework for analyzing the man’s nature. As per Guna theory management styles could be tamas driven rajas driven or sattava driven, because the tamas driven management style ultimately leads to disaster, the emphasis is on a shift towards rajas or sattava driven management styles. The sattava driven management style emphasizes the ethical dimension of management.

Guna theory not only provides us a theory of personality but is also useful in psychological analysis through analysis of the three ego states viz. the tamasik, rajasik and sattavik. When these three ego states in an individual interact with each other and interact with ego-states of another individual, we get interesting insights into human behaviour.

 

Guide to Action and Decision Making in Management:

Gita suggests that unnecessary details could lead to getting out of focus and thereby it could lead us to wrong decisions. Hence, it is necessary to concentrate on the proper choices and alternatives.

The mental state of the decision-maker is critical to decision making. Anger is considered as the root cause for delusion and confusion in decision making hence it is suggested that critical decisions should be made in anger free mental state.

In Geeta, five factors have been identified as influencing factors in decision making viz. the ‘seat (body) or the right place, the doer (ego) or the competency, organs of perceptions or the instruments, functions of various organs of action or the effort an the ‘presiding deity’ or the chance factor. In Bhagwat Gita too it is said that “one’s own self is one’s friend, and one’s own self is one’s enemy”. We an relate this to the management decision making as if a person take a correct decision he can set him on the top and if the decision is incorrect then it will make him fall down. So Bhagwat Gita has also shown the path to modern management in relation to Decision making.

 

Gita & Self-Management:

Have a Clear Goal : Have a clear goal, which tickles your heart, attaining which you visualize yourself to be a fully contended man. Think Big. Never be a blind follower of the world, look within to discern your goal. What YOU want is more important, because that alone will guarantee your full involvement, integration &love.

 

Entertain a quiet Mind – All decisions are taken by our minds. A quiet mind alone can be conscious of various aspects of any situation and it alone is free to act. An unquiet mind is a conditioned mind, it knows just to react only to regret later. It is never free.

 

Get the best knowledge – Always remember right knowledge is the greatest of all powers. Cultivate an inquisitive mind. Remain in touch with the latest. Always take out your time to study various good literature.

 

Have the best motivation - Right motivation opens the floodgates of our potentials & perception. A person who is bogged down with his selfish considerations, insecurities and the choking sense of insufficiency.

 

Have Holistic vision – A fragmented vision dissipates our time & energy and also mars our perception. It brings baseless tears and insecurities, and is the main cause of the sense of limitation and the subsequent egocentricity. Base your life on facts and be blessed with the perception of truth, a sense of fullness and love. With a mind which can see all the aspects of a situation simultaneously every decision cannot but be spontaneously right.

SUBJECT 2: BUSINESS LAWS

CHAPTER-1: Basic Concepts

 

Contract:

“An agreement enforceable by Law is a Contract.”

 

Implied contract:

An agreement which is not made by written or spoken words of parties but it is evidenced from the acts or conduct of the parties or according to prevailing conditions.

 

Quasi contract:

The contract which is not created by proposal and acceptance but imposed by law based on the principle of equity.

 

Difference between void and voidable contract:

A void contract is ab-initio void hence, cannot be enforced by law on the other hand enforceability of a voidable contract, depends upon the will of the aggrieved party.

 

Difference between void Agreement and Void contract:

Void agreement is void from beginning (ab-initio) whereas void contract becomes void when aggrieved party chooses to rescind it.

 

General and standing offer:

The offer made to the public in general and any one can receive, it is general offer, whereas standing offer is an offer made as tender to supply goods as and when required amounts to a standing offer.

 

Cross offer and counter offer:

When two parties exchange identical offers in ignorance at the time of each other’s offer, it is called cross offer, on the other hand when offered offers variations in the original offer, it is called as counter offer.

 

Executed and executory contract:

A contract in which all the parties to the contract have performed their respective obligation is known as executed contract, whereas Executory contracts is one in which all or something still remain to be fulfilled or performed by the parties.

 

Bilateral and Unilateral contract:

Bilateral contract is one in which both the parties exchange a promise to each other, which is to be performed in future, but still outstanding hence, it is called bilateral contract and similar to executory contract on the other hand, Unilateral contract is one in it a promisor promises to do something. In such a contract, promisor binds himself to perform his promise but the offerer does not do so. Therefore, it is called Unilateral Contract.

 

Capacity to contract: The term capacity to contract means competence to legally enter into a contract that is legally binding to the parties.

 

Minor:

A minor is a person who has not completed eighteen years of age. Who has not completed the age of 21 years in case the court has appointed guardian or superintendence of court of wards of minor’s property.

 

Consent:

According to Section 13 “Two or more persons are said to consent when they agree upon the same thing in the same sense.” It is Unison or meeting of mind or consensus ad idem.

 

Coercion:

According to Section 15 of Indian Contract Act, 1872, “Committing any act forbidden by Indian Penal Code or detaining or threatening to detain property of another for getting consent is coercion.”

 

Undue influence:

Ans.: When a dominating party misuses his influence to dominate the will of the weaker party to get undue or unfair advantage in a contract, then it is called undue influence (Section 16).

 

Fraud:

According to Section17, “The term fraud is the intentional misrepresentation or concealment of material facts of an agreement by a party to or by his agent with an intention to deceive and induce the other party to enter into an agreement.

 

Misrepresentation:

It is defined under section 18. It means any innocent or without intentional false statement or positive assertion of fact made by one party to the other during the course of negotiation of a contract is known as misrepresentation.

 

Mistake:

It is defined under Section20 to 22, “It is an erroneous belief about something. When the consent of one or both the parties to a contract is caused by misconception or erroneous belief, the contract is said to be induced by mistake. It is mistake of law and mistake of fact. The mistake of Indian Law is enforceable not void but mistake of foreign law is void. When mistake made by a person it unilateral mistake and mistake is made by both the parties. It is bilateral mistake.

 

Consideration:

It is quid-pro-quo means something in return. Hence, consideration is the price paid by promisee for the obligation of the promise.

 

Doctrine of privity of contract:

A person who is not a party to the contract cannot sue upon it. Only the party to the contract can enforce the same.

 

Ex-Nudo-Pacto Nor-Oritur actio mean:

It means from bare promise, no right of action can arise.

 

Maintenance:

It is simply meaning the promotion of litigation in which one had no interest.

 

Champerty:

It is a bargain where by one party agrees to assist the other in recovering property.

 

Wagering Agreement:

It is an agreement involving payment of a sum of money upon the determination of an uncertain event.

 

Agreement against public policy:

It simply mean whenever an agreement is harmful or injurious to public interest and welfare it is said to be against public policy. It is harmful to the social, political, economic and other interest and welfare of the public is called agreement opposed to public policy.

 

Contingent contract:

It is a contract in which the promisor undertakes to perform the contract upon the happening or non happening of a specified future uncertain event, which is collateral to the contract (Section 32).

 

Appropriation of payments:

In case of a debtor owes several distinct debts to the same creditor, he makes payment which is insufficient to satisfy all the debts. In such a situation a question arises as to which particular debt the payment is to be appropriated.

 

Novation:

Novation means substitution of a new contract in place of an existing one with the consent of all the parties to the contract.

 

Rescission:

It is cancellation of a contract by the consent of all the parties to it or by the aggrieved party to it.

 

Remission:

According to Section63, “Remission meant acceptance of a lesser performance in discharge of a whole obligation under a contract.

 

Waiver:

When a party entitled to claim performance releases the other party from his obligation it is known as waiver.

 

Supervening impossibility:

If after making agreement it becomes impossible to fulfill the promise under contract, it is supervening impossibility. The contract becomes void.

 

Liquidated damages:

When the sum payable in the event of breach is decided by parties in advance, it is called liquidated damages.

 

Exemplary damages:

The damages which are awarded with a view to punish the defendant. These are awards in two cases.

1) On breach of contract of marriage and 2) wrongful dishonour of customer’s cheque by the bank.

 

Contract of Indemnity:

A contract of indemnity means a contract by which one person promises to save the other from the loss caused to him by conduct or incident.

 

Contract of guarantee:

According to Section126 of contract Act “A contract of guarantee as a contract to perform the promisor discharge the liability of a third person in case of his default.

 

Bailment:

According to section 148 “bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them.

 

Lien:

Lien is a right to retain that which is in possession of a person and belongs to another until his demands are satisfied. There are two types of lien 1) The general lien which means to retain any property belonging to the other for any lawful payment and 2) It is relating to retain those goods, which are the subject matter of contract of particular lien.

 

Agency:

The relationship between agent and principal created by an agreement whereby agent is authorized by his principal to represent him and establish contractual relations with third party.

 

Agency by estoppel:

If a person either by his conduct or words leads to another person to believe that a certain person is his agent, is called agency by estoppel.

 

Agency by ratification:

If the principal ratifies the act of a person done without authority, it is known as ‘agency by ratification’.

 

Sub-agent and substituted Agent:

A sub agent is a person employed by and acting under the control of the original agent in the business of the agency (Section191) on the other hand, a substituted agent is named by agent but appointed by the principal. He is liable to principal.

 

Contract of Sale:

A contract where seller transfers or agrees to transfer property, in goods to the buyer for a price on the other hand, a contract where seller agrees to transfer property in goods in future on fulfillment of certain conditions is called as agreement to sell.

 

Condition and warranty:

According to Section12 (2), a condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated, whereas warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives right to claim for damages but not to a right to reject the goods and treat the contract as repudiated (Section 12(3)].

 

Doctrine of Caveat Emptor:

The buyer must take care when buying goods; it is not seller’s duty to point out the defects in goods.

 

Res Prit Domine:

It simply means risks follows ownership. It is general rule that risk prima facie passes with ownership.

 

Nemo dot quod non habit:

It means nobody can give what he himself has not or no seller can transfer a better title than he himself has.

 

Unpaid seller:

According to Section45 (1) the seller of goods deemed to be unpaid seller when whole price has not been paid or negotiable instrument received as payment dishonoured.

 

Rights of unpaid seller:

(1) Right against the goods i.e. right of lien, right of stoppage of goods in transit and right of resale.

(2) Rights against buyer personally i.e. a) suit for price, b) damages for non acceptance, repudiation of the contract before the due date and suit for interest.

 

Retracting the bid:

The term retracting means withdraw or revoke. A bidder may retract his bid at any time before the compilation of sale. Any condition in an auction sale which forbids the bidder to retract his bid is void.

 

Damping:

Damping is an overt act of dissuade the prospective buyer from raising the price by pointing out defects in the goods, creating confusion in the mind of intending bidder and taking away him from the place of auction.

 

Company:

In terms of Section 3(2)(i) of the Companies Act, 1956, a company means “A company formed and registered under company Act 1956 or an existing company. An existing company means a company formed and registered under any of the former companies Act.”

 

Body Corporate:

According to Section 2(7), Body Corporate or Corporation includes a company incorporated outside of India but does not include as follows :

(i) A corporate sole.

(ii) A cooperative society registered under any law relating to cooperative societies.

(iii) Any other body corporate declared by Central Govt. in its gazette.

 

Holding company:

According to section 4(4) a company shall be deemed to be holding company of another if but only if that other is its subsidiary. Hence, a company has control over another company, the controlling company is known as holding company and the company is known as holding company and the other company is known subsidiary company.

 

Government Company:

According to Section617 “a Govt. company means any company in which not less than 51% of the paid up share capital is held by the following :

(i) By the Central Govt;

(ii) By any State Govt. or Governments; or

(iii) Partly by Central Govt. And partly by one or more State Governments.

A subsidiary of a Government Company is an also Government Company.

 

Foreign companies:

According to Section 591(1) “A foreign company is the company which is or has been incorporated outside India but establish or has established a place of business within India.”

 

One man company:

It is also known as family company. The one man holds entire share capital of the company. Other person holds only the minimum or negligible number of shares in the company.

 

Promoter:

A promoter is a person or group of persons who conceives an idea regarding the formation of a company for the first time. He also takes necessary steps for formation of a company and takes other essential steps for its incorporation, raising of capital and making it a going concern.

 

Commencement of business certificate:

A public company cannot start business without it. Hence, a public company before start of business must get a certificate that is called Commencement of Business Certificate. At the same time a public as well as private company must also commence its business within one year of its incorporation.

 

Ultra Vires:

It is composed of two Latin words i.e. Ultra and Vires. Ultra means beyond and vires means power. Hence ultra vires means beyond one’s power. In the context of company law, ultra vires means the acts beyond the legal powers or objects of the company. If a company acts/contracts beyond the memorandum either expressly or impliedly, it is null and void.

 

Abridged prospectus:

Abridged means which is in brief and it is a memorandum containing such salient features of a prospectus prescribed.

 

Statement in lieu of prospectus:

If a company requires to get shares or debentures amount from the public. The private company is restricted but the public company is required to issue prospectus. But some time the company privately managed the funds in such a case statement in lieu of prospectus ;must be filed at least three days before the allotment of shares or debentures; so it is substitute to prospectus.

 

Director:

The Supreme Court of India defines “A person who guides policy and superintends the working of a company, is a director”. The name by which he is called is immaterial. The term includes a Managing Director

 

Company Secretary:

According to Section2(45) of the Company Secretaries Act 1980 includes any individual possessing the prescribed qualifications and appointed to perform the duties which may be performed as Secretary under the act and any other ministerial or administrative duties.

According to Section 2(1)(C) of the Company Secretaries Act “Company Secretary means a person who is a member of the Institute of Company Secretaries of India.”

 

Holder in Due Course:

According to Section9 of the act, a holder in due course means i) who is to be the holder of N.I. ii) who possessed for consideration iii) he got it before the date of maturity, iv) he must have obtained the instrument in good faith and v) it is complete in all respects.

 

Acceptor for honour:

According to Section108 of the act, “A person desiring to accept for honour must by writing on the bill under his hand, declares that he accepts ;under protest the protested bill for the honour of the drawer or of a particular endorser whom he names or generally for honour.

 

Oblitering a Crossing:

According to Section89 provides protection to a collecting banker of a cheque whose crossing is obliterated or erased by a dishonest person under the following condition of such cheque the paying bank shall be discharged from its liability if

A) The cheque is not crossed or obliteration of crossing is not apparent at the time of presentation for payment, and

B) The payment has been made in due course as required under section 10.

 

Noting:

According to Section99, “Noting consists of recording and authenticating the fact and reasons of dishonour of a N.I. by the notary public at the request of the holder upon the same instrument or upon a paper attached thereto or party upon each. It contains date of dishonour, reasons for the dishonour, fees of Notary Public, his signature and reference to the notary public.”

 

Protesting:

According to Section100 “Protest is a formal certificate of dishonour issued by the notary public to the holder of a bill or note on his demand. It contains signature of Notary Public, about the fact time and place of the dishonour. The name of person for and against whom the instrument is protested.”

 

 

CHAPTER-2: Meaning and Essentials of Contact

 

Essentials of a valid contract:

Generally contract means a promise or agreement made by two or more persons enforceable by law. According to Indian Contract Act 1872 Section 2(h) defined.

“An agreement enforceable by law is a contract.” Hence, agreement and legal enforceability creates an agreement as contract. Section 10 defines “All Agreements are contracts if they are made by the free consent of parties, competent to contract for a lawful consideration and with a lawful object and are not hereby expressly declared void. The contract to be made in writing by law of land or in the presence of witnesses or be registered, if required”

On the basis of the above definitions and judgment given by judges, help us to mention the following essentials of a valid contract :

(1) Atleast two parties are required to enter into a contract that is promisor and promisee.

(2) Agreement : Proposal and acceptance must be absolute and unconditional. The two identical Cross-offers and successive counter offer are only offer and not agreement.

(3) The intention should be to create legal relations not the social, domestic, political relations.

(4) Contractual capacity among persons who is not minor, insane and disqualified by law of the land.

(5) Consent or Consensus ad idem. The parties are said to consent when they agree upon the same thing in the same sense. (Section13).

(6) Free Consent : According to Section14, the consent is said to be free when it is not caused by i) coercion, or ii) undue influence, or iii) fraud, or iv) misrepresentation or v) mistake.

(7) Consideration : Except some exceptions, an agreement without consideration is void. It means quid pro-quo. It must be lawful and real and not illusory.

(8) The lawful object and its consideration must be legal.

(9) The agreement must have certain meaning.

(10) An agreement to be valid must be possible to be performed.

(11) The agreements must not be declared void by the law of the land.

(12) Compliance of legal formalities is required.

Hence, every agreement to be enforceable by law must possess all these essential elements for a contract. If any of the element is missing in an agreement, such agreement is not enforceable by law.

 

 

CHAPTER-3: Proposal and Acceptance

 

Offer:

The term offer is also called proposal. It is defined under Indian Contract Act, 1872 Section 2(a), “when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.”

 

Acceptance:

Acceptance is defined under section 2(b) of Contract Act, 1872 i.e. when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a promise.

 

Rules regarding Valid Acceptance:

A few important rules of acceptance are as follows in brief :

(1) Acceptance must be absolute and unqualified {Section 7(1)}.

(2) It must be in prescribed manner/reasonable manner {Section 7(2)}.

(3) Acceptance may be given by performance of condition or act required by an offer or {(Section8)}.

(4) It may be given by acceptance of consideration (Section 8).

(5) Acceptance may be express or implied.

(6) It must be given within specified or reasonable period of time.

(7) Acceptance must be given while the offer is in force.

(8) It must be given only after the communication of offer is complete.

(9) Acceptance must be given by the person to whom offer is made.

(10) Acceptance must be communicated, only mental determination or intention to give acceptance is not sufficient.

(11) It must be from competent person/authorized person otherwise it will not be binding. Powell V. Lee (1908)

(12) It should be communicated to the offeror himself, other than him will not create legal obligation.

(13) Acceptance subject to contract is no acceptance. It will not create legal binding.

Note :

(i) A rejected offer cannot be accepted.

(ii) Counter offer does not constitute acceptance.

(iii) Cross offer cannot be assumed as acceptance.

(iv) Silence does not generally amount to acceptance.

(v) Acceptance to offer means acceptance of all terms of offer.

(vi) Sometimes grumbling acceptance is a valid acceptance.

(vii) Enquiring/seeking clarification of offer is not to be assumed as acceptance.

(viii) Circumstances of the acceptance must show the ability and willingness to fulfill the terms of offer.

 

 

CHAPTER-4: Capacity to Contract

 

Valid contract: According to Section 11, “Every person is competent to contract who is of the age of majority according to law to which he is subject and who is of sound mind and is not disqualified from contracting by any law to which he is subject. Hence, the following persons can make valid contract :

(i) Who is major

(ii) Who is of sound mind or sane

(iii) Who is not disqualified from contracting by any to which he is subject

 

Validity of Agreement made by a Minor:

(i) Agreements with or by a minor is absolutely void. Ruling was given in Mohri Bibee vs. Dharmodas Ghose.

(ii) No ratification of minor’s contract.

(iii) A minor can be a promisee or beneficiary.

(iv) Restitution/compensation is possible in case of minor under (section 33, specific Relief Act, 1963).

(v) The rule of estoppel does not apply for minor, he can plead his minority.

(vi) No specific performance is possible in case of minor because contract made by him is void {(Mirsarawarjan vs. Fakhruddin 1912) 3 Col. 232)}

(vii) Contract by parents/guardian/manager may be made on behalf of the minor, provided they had authority and benefit to minor

(viii) Minor may be given share in existing partnership business by the consensus of the partners.

(ix) Minor may be appointed as Agent but principal will be personally liable for his acts.

(x) Acts done by minor parents will not be liable.

(xi) Guarantee for and by the minor is valid.

(xii) Insolvency Act does not apply on minor; hence, minor cannot be adjudicated insolvent.

(xiii) Minor may be joint promisor under Law of contract.

(xiv) Minor cannot apply for allotment of shares in company, but he can apply for fully paid up share on behalf of his guardian.

(xv) Minor is allowed to make, draw and endorse negotiable instrument but he is not liable for dishonour.

(xvi) Minor cannot enter into service agreement but he can be beneficiary if he has performed his promise.

(xvii) Minor can enter into the contract of Apprenticeship at the age of 14 years if he is physically fit.

(xviii) Minor can become trade union member if he has attained the age of 15 years.

(xix) Marriage contract of minor on behalf of parents is allowed on the ground of the customs of the community.

(xx) Minor is held responsible for torts or civil wrong committed by him

(xxi) Liability of necessaries of life supplied to him or his legal dependents. His property is liable; he is personally not liable.

 

 

CHAPTER-5: Free Consent

 

Free consent:

According to section 10 of the Indian Contract Act, 1872, “All agreements are contract if they are made by the free consent of the parties competent to contract for a lawful consideration and lawful object and are not hereby expressly declared to be void”. Therefore, free consent is the one of the essentials of valid contract. But free consent is composed of two words free + consent. The term free meant without any pressure. Consent means defined under Section 13. “Two or more persons are said to consent when they agree upon the same thing in the same sense.”

Free consent is defined under section 14 i.e. consent is said to be free when issues not caused by :

(1) Coercion, as defined in section 15, or

(2) Undue influence, as defined in section 16, or

(3) Fraud, as defined in section 17, or

(4) Misrepresentation, as defined in section 18, or

(5) Mistake subject to the provision of section 20, 21 and 22.

Therefore, consent is not free when it has been caused by coercion or undue influence or fraud or misrepresentation and mistake. But if the consent is caused by any one of the first four factors such as coercion, undue influence, fraud and misrepresentation. The agreement is a voidable at the option of the party whose consent was so caused. (Section 19 and 19A). Under such position, the aggrieved party has option to assume the agreement either valid or void. If the contract is caused by mistake of foreign law, the agreement is void under section 20 and 21.

Hence, there are two situations i.e. no free consent that is earlier and no consent is as error in consensus.

 

Rules regarding free consent:

The rules regarding free consent are as follows one by one.

Coercion: Coercion means and includes the use or threatening to use the physical force against a person or property to compel him to enter him into a contract. According to section 15 of the Indian contract Act, 1872.

“Coercion is the committing or threatening to commit any act forbidden by the Indian Penal Code or the lawful detaining or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. “It is immaterial whether IPC is or not enforced in the place where the coercion is employed (Section 15).

Legal Rules relating to Coercion :

(1) Committing any act forbidden by the IPC i.e. killing or beating another person and interfering in the personal freedom of another person etc.

(2) Threatening to commit any act forbidden by the IPC.

(3) Threats to suicide amounts to coercion.

(4) Unlawful detaining of any property.

(5) Unlawful threatening to detain any property

(6) The act of coercion must have been performed with the intention of causing any person to enter into an agreement.

(7) Coercion may proceed either from the party or from a stranger.

(8) Coercion may be directed against the party or any person.

(9) It is not necessary that IPC should be in force at the place where the coercion is applied.

The effect of coercion is voidable at the desire of the aggrieved party.

Undue Influence : Instead of physical force ;when mental force is used for getting the consent of the another party, when a dominant party misuses his influence to dominate the will of the weaker party, to get unfair advantage, in a contract is said to be influenced by undue influence. It is defined under Section 16.

The legal rules relating to undue influence :

(1) The relations subsisting between the parties to a contract are such that one of them is in a position to dominate the will of the other due to

(i) Real or apparent authority.

(ii) In case of fiduciary relation.

(iii) In case of persons under mental or bodily stress.

(2) The dominating party uses his position to obtain an unfair or undue advantage over the other party.

Legal effect : Due to undue influence, the agreement becomes voidable at the option of the party whose consent was so caused. The court may set aside any such act under undue influence. A pardanashin woman is also given protection from undue influence.

Fraud : Fraud is intentional misrepresentation or concealment of material facts of an agreement by any party to or by his agent with an intention to deceive and induce the other party to enter into an agreement.

According to Section 17, “fraud means and includes any of the following acts committed to a contract or with his connivance, or by his agent, with an intention to deceive another party thereto or his agent, or to induce him to enter into contract.”

(i) The suggestion as a fact of that which is not true by one who does not believe it to be true.

(ii) The active concealment of a fact by one having knowledge or belief of the fact.

(iii) A promise made without any intention of performing it,

(iv) Any other act fitted to deceive, and

(v) Any such act or omission as the law specially declares to be fraudulent.

 

Essential Elements of Fraud :

(1) There must be a false representation either by words or by spoken words, induce the other party to enter into contract by active concealment of material fact.

(2) It must be done by the party or his agent.

(3) The representation must relate to a fact, the other party has been attracted to act upon the representation leading to fraud.

(4) The representation intentionally done to commit a fraud must have been done before the conclusion of the contract.

(5) The other party must have been deceived by fraud.

 

Legal Effects :

(1) Contract becomes voidable at the option of the party defrauded,

(2) The defrauded party can sue for damages suffered or ask for

restitution, and

(3) The party can insist for the performance of the contract.

 

Misrepresentation : It is innocent and unintentional false statement of fact told by one party to the other during the course of negotiation is called misrepresentation. According to section 18 misrepresentation means and includes :

(i) The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it is not true.

(ii) Any breach of duty which, without an intention to deceive, gains an advantage to the person committing it or any one claiming under him, by misleading another to his prejudice or to the prejudice any one claiming under him.

(iii) Causing, however, innocently, a party to an agreement to make a mistake as to the substance of the thing which is subject of the agreement.

 

Essential Elements of Misrepresentation :

(i) It must be a misrepresentation of some material fact;

(ii) It must be made before the concerned party enters into a contract.

(iii) It must be innocent or unintentional statement.

(iv) Misrepresentation may be committed by any of the following ways:

(a) By positive statement.

(b) By breach of duty.

(c) By causing a mistake by innocent misrepresentation.

 

Legal Effect of Misrepresentation : An aggrieved party suffering any loss as a result of misrepresentation can either rescind or avoid the contract altogether or can accept the contract but insist that he will be placed in such position in which he should have been, if the misrepresentation made had been true (section 19).

 

Mistake : Mistake is one of the causes because of which the consent is said not to be free. It is a misconception or misimpression or misunderstanding or erroneous belief about something. According to Section 20, “Where both the parties to an agreement are under a mistake as to a matter of fact essential to an agreement, the agreement is void.”

Mistake may be of two types viz –

(i) Mistake of Law, and

(ii) Mistake of Fact

Mistake of law may be two types :

(i) Mistake of law of the land will be enforceable but mistake of foreign law is void.

(ii) Mistake of fact: is as to material fact of the contract.

Mistake of fact may be of two types :

(1) Bilateral Mistake, and

(2) Unilateral Mistake

(1) Bilateral Mistake : Bilateral mistake is mutual mistake by both the parties to agreement and relating to

(i) Mistake as to subject matter, and

(ii) Mistake as to possibility of performance of the contract.

(i) Mistake as the subject matter may be as to identity of subject matter, as to existence of subject matter, quality of the subject matter, quantity of product, as to price, mistake as to title, mistake as to existence of State of affairs and (ii) mistake is to possibility of performance. It may be of two types viz Physical and Legal impossibility.

(2) Unilateral Mistake : The unilateral mistake means where one of the parties to a contract is under a mistake. As to the matter of fact, it is unilateral mistake. Such contract is not voidable. But under such following conditions, contract of unilateral mistake also becomes void :

(i) Mistake as to the identity of the party contracted with, (ii) Mistake as to identity of attributes of contracting party, and (iii) Mistake as to the nature of the contract.

 

SUBJECT 3: BUSINESS COMMUNICATION

 Section-I

 

Communication:

Communication is the process by which information is transmitted between individuals and organizations so that an understanding response results.

 

Objectives of Communication:

Various objectives of Communication are :—

Information: One of the most important objectives of communication is passing or receiving information about a particular fact or circumstance.

Advice: Advice is an important objective of communication as it involves personal opinions and is likely to be subjective. Advice is given to influence his/her opinion or behaviour.

Order: Order is an authoritative communication. The downward flow of information is dominated by orders. Orders may be written or oral, general or specific, procedural or operational, mandatory or discretionary.

Suggestion: Suggestion enjoys great advantage over other means of communication like advice or order. Suggestion is supposed to be very mild and subtle form of communication.

Persuasion: It is an important objective of communication. In the office or the factory, the lazy, the incompetent and the disgruntled workers have o be persuaded to do their work.

Education: Education is a very conscious process of communication. The main purpose of education is to widen knowledge as well as to improve skills.

Warning: Warning is a forceful means of communication as it demands immediate action. If employees do not abide by the norms of the organization, or violate the rules and regulations, it may become necessary to warn them.

Raising Morale: Morale boosting is only possible through communication. High morale results in better performance.

Motivation: Motivation energizes and activates a person and channelises his behaviour towards the attainment of desired goals.

Thus, motivation as a form of communication is very crucial in handling human behaviour.

 

Types of communication:

Informal Communication:—

(a) Downward Communication: Downward communication flows from a superior to the subordinate staff.

Its objectives are:—

To give directions about some job.

To explain policies and procedures.

To convey assessment of performance.

To explain the rationale of the job.

Its limitations are:—

Under communication or over communication.

Delay.

Loss of information.

Distortion.

Resentment by subordinate staff.

To make it effective:—

Managers should be adequately informed.

Managers should be clear how much to communicate.

Information should be passed on to the correct person.

(b)Upward Communication: Upward communication moves from the subordinate staff to the superiors.

Its importance is:—

Provides feedback to the superiors.

Releases the pent up emotions of the subordinate staff.

Provides the superiors with useful suggestions.

Promote harmony.

Its limitations are:—

Employees are reluctant to express themselves.

Employees fear that their criticism may be interpreted as a sign of their personal weakness.

Great possibility of distortion.

Bypassed superiors feel insulted.

Resentment by subordinate staff.

To make it effective:—

Superiors should take initiative to get close to the subordinate staff.

Keep the lie of communication short.

(c) Horizontal Communication:—

It flows between people at the same level.

It is important for promoting understanding and coordination among various people or departments.

It is carried on through face to face discussion, telephonic talk, periodical meetings & memos.

(d) Consensus:—

Consensus is the process of arriving at agreement through consultation.

Informal Communication:—

Grapevine:—

It is an informal channel of communication.

Primarily a channel of communication of horizontal communication, it can flow even vertically and diagonally.

It is of 4 types:—

Single strand: Flows like a chain.

Gossip: One person tells everyone else.

Probability: Information may move from anybody to anybody.

Cluster: Moves through selected group.

Importance:—

Emotional relief.

Harmony and cohesiveness in the organization.

Fast channel.

Provides feedback.

Demerits:—

Distortion of information.

May transmit incomplete information.

Travels with destructive swiftness.

Keep an eye on rumour-managers.

Use it primarily for feedback.

Contradict rumours promptly.

 

Section-II

 

Media of communication:

Written Communication: It includes letters, circulars, memos, telegrams, reports, minutes, forms and questionnaires, manuals etc.

Therefore, everything in written form falls in the area of written communication.

Merits:—

Accurate

Precise

Permanent Record

Legal Document

Can reach a large number of people simultaneously.

Helps to fix responsibility.

Limitations:—

Time Consuming

Expensive not in terms of postage but of the time of so many people.

Quick clarification is not possible.

 

Oral Communication: Includes face to face conversation, conversation over the telephone, interview, and group discussion.

Merits:—

Saves time

Saves money

Immediate feedback

Can be informal

Immediate clarification

Limitations:—

Not possible for distant people in the absence of mechanical devices.

Unsuitable for lengthy messages.

Message cannot be retained for long

No legal validity

Greater chances of misunderstanding

Not easy to fix responsibility

 

Face to Face Communication:—

Merits:—

Expression and gestures makes communication very effective.

Very suitable for discussions.

Limitations

Unsuitable for large organizations.

Unsuitable for large gatherings.

Ineffective if the listener is not attentive.

 

Visual Communication: It encompasses gestures and facial expressions, tables, charts, graphs, diagrams, posters, slides, film strips etc. It is suitable only to communicate elementary and simple ideas, can be effective if used in combination with other media.

 

Audio-Visual Communication: It encompasses television and cinema films that combine the visual impact with narration.

 

Computer based Communication: It includes e-mails, voice mails, cellular phones, fax etc.

Advantage:—

The quickest means of communication.

The barrier of space is conquered.

Video-conferencing can replace personal meetings.

Storage and retrieval of permanent record had become easier.

Limitations:—

Uncertain legal validity.

The virus malady.

Fear of undesirable leakage.

 

Non-verbal Communication:

Non-verbal Communication is communication transmitted without the use of words.

Characteristics of non-verbal communication:—

Verbal and non-verbal clues co-exist.

Body postures, gestures and dress suggestive of social status and education level.

Non-verbal clues are more reliable than verbal clues.

Non-verbal clues carry cultural biases.

It is necessary to interpret non-verbal clues in relation to their context.

 

KIVESICS: Body Language

KIVESICS-The study of body language is the most important aspect of non-verbal communication.

Body language includes facial expression, gestures, body movements, posture, eye contact and touch.

Facial Expression: Face is the index of the mind. A glance at someone’s face is enough to give them clues about the subject’s mental state.

Gestures: A gesture is a movement of the head, hands or legs to express an idea, feeling or emotions.

Body Movements: Body movements refer to the positioning or movement of the body.

Posture: Posture means the way in which someone usually stands or sits or holds his shoulders, neck and back.

Eye Contact: Eye contact is a very subtle aspect of body language. It regulates interaction.

Touch: Like gestures, touching is also one of the earliest methods of communication among human beings.

 

 

Section-III

 

Barriers to communication:

Each communication must be transmitted through an appropriate medium. An unsuitable medium is one of the biggest barriers to communication.

Physical Barriers:—

Noise: Noise in a factory, external disturbance in telecom facilities, poor writing, bad photocopies etc.

Time and Distance: It can also act as a barrier to communication.

Semantic Barriers:—

Interpretation of Words: It is quite possible that the receiver of a message does not assign the same meaning to a word as the transmitter had intended. This may lead to miscommunication.

Words carry different meanings, shades or flavours to the transmitter and receiver.

To minimize semantic barriers, we should—

o Use familiar words.

o Clarify the shades.

o As far as possible, use words with positive connotations.

 

Barriers caused by different comprehensions of reality are:—

Abstracting means picking up few details and leaving out others.

Slanting means giving a particular bias or slant to the reality.

Inferring means drawing inferences from observation.

 

Socio-Psychological barriers:—

Attitude and Opinions: We react favourable or are hostile according to our personal benefit.

Emotions: We cannot transmit nor receive anything correctly if our mind is agitated.

Closed Mind: We hold our opinion so rigidly that we just refuse to listen.

The Source of Communication: We react according to the trust we have in the source of communication.

Inattentiveness: We unconsciously become inattentive if communication contains new idea or if we don’t like an idea.

Faulty transmission: Part of the message is last in transmission and can also act as a barrier.

Poor Retention: Oral messages in particular are lost due to poor human retention.

Status Consciousness: We are over-conscious of our lower or higher rank and do not express ourselves candidly.

 

 

Writing Skills

 

Essentials of an effective business letter:

A business letter is an important form of written communication. Therefore, business letter should include the following:

Promptness: As a rule, respond to the letter the day it is received.

Knowledge of the Subject: Knowledge of the past correspondence, if any, the requirements of the sender of the letter as well as knowledge of the firm’s policies.

Appropriateness: Vary the tone and language of your letter according to the need of the occasion.

Accuracy, Completeness and clarity: All facts, figures, statements, quotations etc. must be accurately mentioned.

Tact: Proper handling of complaints and adjustments and letters seeking credit.

Courtesy: Courtesy implies that we seek favours politely and express our gratitude for the favours done to us.

Persuasion: It means winning people to your point of view not by coercing them but by making positive suggestions.

Conciseness: Don’t load you letters with irrelevant details and unnecessary ifs and buts.

The Positive and Pleasant Approach: Avoid no’s and sorry’s. They are unwelcome words.

 

Layout of a Business Letter:—

Heading

7, Main Market

Lodhi Road

New Delhi

 

Date

March 8, 2008

 

Inside Address

Gupta General Store

23, Daryaganj

New Delhi

 

Salutation

Sir/Madam,

 

Body

(a) Subject and Reference

(b) Opening Paragraph

(c) Main Paragraph

(d) Closing Paragraph

 

Complimentary Close

Yours sincerely

 

Signature

Sushil, Sharma & Co.

Managing Proprietor

 

Reference Initials

YPB: nj

 

Enclosure

Encl.: Catalogue

 

Enquiries:

When a buyer wishes to get some information about the quantity, price, availability etc., of the goods to be purchased, or about the terms of sales etc., a letter of enquiry to the seller is written.

Types of Enquiries:—

Solicited Enquiries: An enquiries made in response to the seller’s advertisement and publicity.

Unsolicited Enquiries: An enquiry made at the buyer’s own initiative.

Enquiry for Some Favour: An enquiry not about goods but about some other information, may be about some special price or some favourable terms.

Routine Enquiry: An enquiry made by an old buyer in the usual course of business.

 

Report Writing 

Thousands of reports, long or short, formal or informal, crucial or ordinary, special or routine are written everyday. Therefore, report is a way of communication an information from someone to someone who wants to use the information.

Types of Business Report:

Types of Business Report:—

On the basis of legal formalities reports are:—

(1) Formal (2) Informal

Formal Reports: A formal report is one which is prepared in a prescribed form and is presented according to an established procedure to a prescribed authority.

Informal Reports: An informal report is usually in the form of a person-to-person communication. It may range from a short, almost fragmentary statement of facts on a single page, to a more developed presentation taking several pages.

Formal reports can be statutory or non-statutory:—

A report prepared and presented according to the form and procedure laid down by law is called a statutory report

Formal reports which are not required under any law but which are prepared to help the management in framing the policies is called non-statutory report.

Periodic or Routine Reports are prepared and presented at regular, prescribed intervals.

They may be submitted annually, semi-annually, quarterly, monthly, fortnightly, weekly or even daily.

Special Reports: They are related to a single occasion or situation.

On the basis of function, a report can be:—

Informative

Interpretative

Informative Report: If a report merely presents facts pertinent to an issue or a situation.

Interpretative Report: It analyzes the facts, draws conclusions and makes recommendations.

On the basis of the number of persons entrusted with the drafting of reports:—

Reports by Individuals

Reports by committees or sub-committees.

 

Characteristics of a good report:

Precise and brief

Accurate (factually and grammatically)

Relevant

Reader-oriented

Objective

Clear and Unambiguous

 

Steps involved in preparing a report:

Five steps are suggested to write a report:—

Investigating the source of information: It is done right in the beginning. Major sources of information are—Company files, personal observation, interviews, letters, questionnaires, library research.

Taking notes: During the investigation phase, the writer keeps on taking notes of anything that appears to be related to the subject.

Analysing the data: After taking notes it is then the data is analysed.

Making an outline: In this stage, the problem is stated, the facts are recorded, they are briefly analysed and the logical conclusion is arrived at.

Writing the report: The last stage is that of writing the report. It will need constant shuttling between the outline and the notes.

 

Presentation Skills

Steps are involved in making a good presentation:

All successful presentations pass through the following six stages:—

Specifying the objective: Objectives are classified in the following seven ways:—

To demonstrate – a service, product, system.

To create – an image, strategy.

To entertain – colleagues, outside people.

To sell – a concept, product, idea.

To represent – a group, company, department.

To promote – an attitude, a way of working.

To suggest – a solution, a new concept.

Planning: It is necessary to plan your presentation before you actually sit down to prepare it. Planning consists of:— Knowledge about the audience.

Considering physical factors relevant to the presentation.

Deciding the structure of the presentation.

Preparation:—

To collect all relevant information in the light of your objective.

Average the selected information in a logical and sequential manner.

The opening and closing sections of the presentation are extremely important.

Prepare your visual carefully.

Check the weightage given to each section.

Time the presentation. Keep some margin for the fact that actual presentation takes longer than we expect.

Practice and Rehearsal: Practice and rehearsal under a watchful eye and accompanied with self-analysis and improvement efforts is absolutely necessary.

Insist on a ‘full-dress’ rehearsal to get its maximum benefits.

Getting Ready: Wear a formal but simple and dignified dress.

Making the Presentation:—

Great the audience pleasantly and warmly.

Introduce yourself briefly.

Make a clear statement of the objectives of your presentation and tell the audience how it has been structured.

All this while one must sound clear, courteous & considerate.

 

 

Interviews

 

Interview:

Interview is a two way communication. The employer’s aim is to know whether the applicant can be of service to his company, and the applicant’s aim is to find out whether the job being offered by the company can be suitable to him.

 

Techniques of interviews:

Screening: Screen the application of the candidates.

Random Appearance: In order to judge a man by his personal and physical appearance rather than on the basis of his application. So they call every applicant for interview.

Tests: Psychological testing has come into vogue which are adopted by many organizations.

Experience: Some companies emphasize more on experience than paper qualification. Under stress interview: This is to see how an individual will react when put under a stressful situation.

 

Preparation made by interviewer for conducting a interview:

1) Be clear about company profile and job requirements.

Send interview letters well in advance.

Make candidate comfortable.

Interview in a congenial and interruption – free atmosphere.

Candidate’s bio-data with each member of the committee.

Questions according to a set procedure.

 

Types of interview:

The various kinds of interviews are:—

Appraisal Interview: It is held once a year to discuss the performance of the employees.

Exit Interview: Such interviews takes place when the employee is leaving the organization either voluntarily or through dismissal.

Reprimand Interview: In such kind of interview manager summons the employee to his room and talks to him in his official capacity.

 

 

Effective Listening

 

Effective listening:

It means not only understanding the content of message but also understanding the feeling of the speaker.

 

Advantages of listening:

1) It promotes awareness.

Makes better organizational policies.

Solves the problems of employees.

Leads to the success of two way communication.

 

Ways to improve listening skills:

1) Stop talking.

Put the speaker at ease.

Show a desire to listen.

Write down the main points and get them checked for correctness.

Do not create or tolerate distractions.

Be patient.

Keep your temper no matter how angrily the speaker speaks.

Listen ‘between the lines’.

Keep an open mind.

SUBJECT 4: ORGANIZATIONAL BEHAVIOUR

Chapter 1: Introduction

 

Organizational behaviour:

A field of study that investigates the impact that individuals, groups & structure have on behaviour within organisations, for the purpose of applying such knowledge towards improving an organisation’s effectiveness.

 

Major contributing disciplines to OB:

OB basically draws concepts and principles from behavioural sciences and the core disciplines of behavioural sciences are psychology, sociology, anthropology and social psychology. OB draws knowledge from all these disciplines but it does not draw the whole knowledge of these disciplines but only the relevant knowledge which helps in predicting and directing human behaviour in the organisation. The contribution of core disciplines of behavioural science to OB are as follows:-

Psychology: Psychology is the science that seeks to measure, explain and sometime change the behaviour of human beings. Psychologists concern themselves with studing and attempting to understand individual behaviour those who have contributed and continue to add to the knowledge of OB are learning theorists, personality theorists, counceling psychologists, and most important industrial and organisational psychologists.

Recently industrial/organizational psychologists concerned themselves with learning, perception, personality, emotions, training, leadership, effectiveness, needs and motivational forces, job satisfaction decision making processes, performance appraisals, attitudes measurement, employee-selection techniques, work design and job stress.

Sociology: While psychology focuses on the individual. Sociology studies people in relation to their social environment or culture. Sociologists have contributed to OB through their study of group behaviour in organisations, particularly formal and complex organizations. Perhaps most importantly, sociology has contributed to research on organisational culture, formal organization theory and structure organization technology, communications, power and conflict.

Anthropology: Anthropology is the study of societies to learn about human beings and their activities. For instance, anthropologists work on cultures and environments has helped us understand differences in fundamental values, attitudes, and behaviour between people in different countries and within different organisations. Much of our current understanding of organisational culture, organisational environments and differences between national cultures is a result of the work of anthropologists or those using their methods.

Social psychology : Social psychology blends concepts from both psychology

 

Roles of OB in today’s business organisations:

OB offers several ideas to management as to how human factor should be properly emphasized to achieve organisational objectives. Human factor is not merely an instrument in the organisation but the very core of organisational existence. Since organisation is the interaction of persons, they should be given adequate importance in managing the organization. This becomes more important because of the changing dimensions of human behaviour, changing from money motivated behaviour to multimotivated behaviour. Organisational behaviour helps the managers in the following areas:-

(1) Understanding Human Behaviour -

For shaping human behaviour in definite direction for achieving certain predetermined objectives, managers must know how the people in the organisation behave. OB provides way for understanding human behaviour in all the directions in which human beings interact. Thus, behaviour can be understood at the individual level, interpersonal level, group level, and intergroup level.

Individual Level – The behaviour of human beings as a social man is the first issue in behavioural science. It provides for analysing why and how an individual behaves in a particular way. Human behaviour is a complex phenomenon and is affected by a large number of factors- psychological, social, cultural and others. OB integrates these factors to provide simplicity in understanding human behaviour.

Interpersonal Level – Human behaviour can be understood at the level of interpersonal interaction. Such interpersonal interaction is normally in paired relationship which represents man’s most natural attempt at socialization. When one focuses on the influence of one’s peer and its affect in working relationship, or examines the superior – subordinate relationships, it is obvious that the two- person is inevitable in the organisation. OB provides means for understanding the interpersonal relationship in the organisation. Analysis of reciprocal relationship, role analysis, and transactional analysis are some of the common methods which provide such understanding.

Group Level – Though people interpret anything at their individual level, they are often modified by group pressure which, thus, becomes a force in shaping human behaviour. Thus individuals should be studied in group also. Research in group dynamics has contributed vitally to OB and shows how a group behaves in terms of its norms, cohesion, goals, procedures, communication pattern, leadership and membership. These research results are furthering managerial knowledge ofunderstanding group behaviour which is very important for organisational morale and productivity.

Intergroup Level – The organisation is made up of many groups that develop a complex of relationship to build its process and substance. Understanding of the effect of group relationships is important for managers in today’s organisation. Intergroup relationships may be in the form of cooperation or competition the cooperative relationships help the organisation in achieving its objectives. The cooperative relationships help the organisation in achieving its objectives. OB provides means to understand and achieve cooperative group relationships through interaction, rotation of members among groups, avoidance of win-lose situation, and focus on total group objectives.

Controlling and Directing Human Behaviour –

After understanding the mechanism of human behaviour, managers are required to control and direct the behaviour so that it confirms to standards required for achieving organisational objectives. For this purpose, OB helps managers in many areas: use of power and sanction, leadership, communication and building organisational climate conducive for better interactions.

Use of Power and Sanction- Organisational behaviour can be controlled and directed by the use of power and sanction which are formally prescribed by the organisation. Power is referred to as capacity of an individual to take certain action and may be utilized in many ways. Mere use of power and sanction in the organisation is not enough for directing human behaviour. OB explains how various means of power and sanction can be utilized so that both organisational and individual objectives are achieved simultaneously.

Leadership- OB brings new insights and understanding to a manager and analyses which style is more appropriate in a given situation. Thus managers can adopt styles keeping in view the various dimensions of organisations, individuals, and situations.

Communication – Communication is the building block of an organisation. It is communication through which people come in contact with others people in the organisation, particularly at higher level spend considerable time in communicating to achieve organisational effectiveness, the communication must be effective. The communication process and how it works in interpersonal dynamics has been evaluated by OB. The factors that affect communication have been analysed so as to make it more effective.

Organisational Climate – It refers to the total organizational situations affecting human behaviour. Organisational climate time a systems perspective and affects human behaviour. OB suggests the approach to create organisational climate in totality rather than merely improving the physiological conditions or increasing employee satisfaction by changing isolated work processes satisfactory working conditions, adequate compensation, and the necessary equipments for the job are viewed as only small part of the requirements for sound motivational climate. It greater importance are the creation of an atmosphere of effective supervision, the opportunity for the realisation of personal goals, congenial relations with others at the work place, and a sense of accomplishment. Thus OB has discovered a new approach of managing people in the organisation.

 

 

Chapter 2: Understanding Self (Perception & Personality)

 

Understanding Self Perception:

Social Perception:

The process of interpreting information about another person virtually all management activities rely on perception. It appraising performance, managers use their perceptions of an employee’s behavior as a basis for the evaluation.

 

Categories of factors influence our perception of another person:

Three major categories of factors influence our perception of another person:

Characteristic of the perceiver – Several characteristics of the perceiver can affect social perception. One such characteristic is familiarity with the target. When we are familiar with person, we have multiple observations on which to base our impression of him or her. If the information we have gathered during these observation is accurate. We may have an accurate perception of the other person. Familiarity does not always mean accuracy, however sometimes we know a person well, we tend to screen out information that is inconsistent with what we believe the person is like. This is particular danger in performance appraisals where the rater is familiar with the person being rated.

The perceiver’s attitudes also affect social perception. Suppose you are interviewing candidates for a very important position in your organisation– a position that requires negotiating contracts with suppliers, most of whom are male. You may feel that women are not capable of holding their own in tough negotiations. This attitude will doubtless affect your perceptions of the female candidates you interview.

Characteristics of the Target –

Characteristics of the target, who is the person being perceived, influence social perception. Physical appearance plays a big role in our perception of other the perceiver will notice the targets physical features like height, weight, estimated age, race and gender. Clothing says a great deal about a person. A loud person, one who dresses out landishly, a very tall person, or a hyperactive child will be noticed because she provides a contrast to what is commonly encounter. Interviewers rate attractive candidates more favorably, and attractive candidates are awarded higher starting salaries. People who are perceived as physically attractive face stereotypes as well.

Verbal Communication from targets also affects out perception of them. we listen to the topics they speak about, their voice tone and their accent and make judgements based on this input.

Non Verbal Communication conveys a great deal of information about the target. Eye contact, facial expressions, body movements, posture all are deriphered by the perceiver in a attempt to form an impression of the target. It is interesting that some non verbal signals mean very different things in different cultures. Facial expressions, however, seem to have universal meanings. Individuals from different cultures are able to recognize and decipher expressions the same way.

The intentions of the target are inferred by the perceiver, who observed the target’s behavior. We may see our boss appear in our office doorway and think, “Oh no! she’s going to give me more work to do.” In this case, the perceiver’s interpretation of the target’s intentions affects the way the perceiver views the target.

Characteristics of the Situation –

The situation in which the interaction between the perceiver and the target takes place has an influence on the perceivers impression of the target the social context of the interaction is a major influence. Meeting a professor in his or her office affects your impression in a certain way that may contrast with the impression you would form had you met the professor in a local restaurant. In Japan, social context is very important business conversations after working hours or at lunch are taboo.

The strength of situational cues also affects social perception, some situations provide strong cues as to appropriate behaviour. In these situations, we assume that the individual’s behaviour can be accounted for by the situations, and that it may not reflect the individual’s disposition. This is the discounting principle.

With this we can see that characteristics of the perceiver, the target and the situation all affect social perception. It would be wonderful if all of he had accurate social perception skill.

 

Perceptual selectivity:

Perception is a selective process and as the people can seen of only limited amount of information in the environment, they are characteristically selective. By selection, certain aspects of stimuli are screened out and others are admitted, those which are admitted remain in the awareness of the people and those which are screened out fall below the threshold. For example, When people read a newspaper, they do not read the entire newspaper but only those news which interest them. similar things happen in other cases too this is known as perceptual selectivity.

This is caused by a variety of factors which may be grouped into two categories:

(1) External factors in perceptual selectivity:-

The external factors consists of environmental influences and are in the form of the characteristics of perceptual inputs or stimuli. These characteristics may distinguish a particular stimuli from other stimulus of the same group. Such characteristics may be in the form of size, intensity, repetition, novelty and familiarity, contrast and motion their impact on the perceptual selectivity is as follows:

Size – Size is a characteristics which may affect the perceptual selectivity by affecting the attraction of the perceiver. Generally, bigger is the size of perceived stimulus, higher is the probability that it attracts the attention of the perceiver and he may select it for perception.

Intensity – The intensity principle of attention states that the more intense the external stimulus is, the more likely it is to be perceived. A loud sound, strong odour or bright light.

Repetition – The repetition principle states that a repeated external stimulus is more attention getting than a single one. Repetition increases people’s sensitivity or alertness to the stimulus. Advertisers use this principle by repeated advertisement of the same product to attract people’s attention. In the organisational context, repeated instruction, even for the routines work, is based on this principle.

Novelty and Familiarity – This principle states that either a novel or a familiar external situation can serve as attention getter. New object or events in familiar setting or familiar object or events in new sitting draw better attention.

Contrast – This principle states that external stimuli which stand against the background, or which are not what people are expecting, receive more attention. Letters of bold types, persons dressed differently than others, buildings of different colour in the same locality, etc get more attention. Contrast is a kind of uniqueness which can be used for attention getting.

Motion – Motion principle states that a moving object draws more attention as compared to a stationary object. Workers may pay more attention to the materials being moved by them on a conveyor belt as compared to the maintenance needs of a machine lying next to them.

All these factors are related to stimuli. While the factors affect perceptual selectivity, their uses should be made properly, otherwise, negative consequences may emerge.

(2) Internal Factors in Perceptual Selectivity –

While external factors are related to environmental stimuli, internal factors are related to the individual’s complex psychological make up. People generally select those stimuli and situations from the environment that appeal to or are compatible to, their personality, motivation, and other personal factors. There are a number of such factors-self concept, beliefs, expectations, inner needs, response disposition, response salience and perceptual defence which filter the stimuli which do not suit the people.

Self Concept – They way a person views the world depends a greater deal on the concept or image he has about himself. This concept plays an internal role in perceptual selectivity. It can be thought of as an internal form of attention getting and is largely based on the individual’s complex psychological make-up knowing one self makes it easier to see other accurately. People’s own characteristics affect the characteristics which they are likely to see in others. They select only that aspects which they find match with their characteristics.

Beliefs – A person’s beliefs have profound influence on his perception. Thus, a fact is conceived not on what it is but what a person believes it to be. The individual normally censors stimulus inputs to avoid disturbance of his existing beliefs. This is referred to as maintainence of cognitive consistency. Katz argues that (i) an individual self censors his intake of communications so as to shield his beliefs and practices from attack. (ii) an individual seeks out communications which support his beliefs and practices; and (iii) the latter is particularly true when the beliefs and practices in question have undergone attack or the individual has otherwise been made of them.

Expectations – Expectations are related with the state of anticipation of a particular behaviour from a person, even in the organisational setting, expectations affect people’s perception. Though such expectations may change because of direct contact, and expectations may fall near actual but a mental set about beliefs, expectations and values filters perception and may be lasting and difficult to change.

Inner Needs – The need is a feeling of tension or discomfort when one thinks he is missing something or when he feels he has not quite closed a gap in his knowledge. People with different needs usually experience different stimuli. Similarly, people with different needs select different items to remember or respond to, when people are not able to satisfy their needs, they are engaged in wishful thinking which is a way to satisfy the needs not in real world but in imaginary world, the day dreaming. According to Freud, wishful thinking is the means by which the Id, a part of personality, attempts to achieve tension reduction.

Response Disposition – Response disposition refers to a person’s tendency to perceive familiar stimuli rather than unfamiliar ones. Thus, a person will perceive the things with which he is familiar.

Response Salience – Response salience is the set of dispositions which are determined not by the familiarity of the stimulus situations, but by the person’s own cognitive predispositions. Thus, a particular problems in an organization may be viewed as a marketing problem by marketing personnel, a control problem by accounting people and human relations problem by personnel people. It indicates that type of response salience which people have affects their perception the reason for this phenomenon lies in the background of the people for which they are trained. They are trained to look at the situation from one point of view only, not from other point of view.

Perceptual Defence – Perception defence refers to the screening of those elements which create conflict and threatening situation in people. They may even perceive other factors to be present that are not a part of the stimulus situations. Perceptual defence is performed by –

denying the existence or importance of conflicting information.

distorting the new information to match the old one, or

acknowledging the new information but treating it as a non-representative exception.

 

The Nature and Importance of Perception:

The key to understanding perception is to recognize that it is a unique interpretation of the situation, not an exact recording of it. In short, perception is a very complex cognitive process that yields a unique picture of the world, a picture that may be quite different from reality. Applied to organizational behavior, an employee’s perception can be thought of as a filter. Becauseperception is largely learned, and no one has the same learning and experience, then every employee has a unique filter, and the same situations/stimuli may produce very different reactions and behaviors.

Recognition of the difference between this filtered, perceptual world and the real world is vital to the understanding of organizational behavior. A specific example would be the universal assumption made by managers that associates always want promotions, when, in fact, many really feel psychologically forced to accept a promotion. Managers seldom attempt to find out, and sometimes associates themselves do not know, whether the promotion should be offered. In other words, the perceptual world of the manager is quite different from the perceptual world of the associate, and both may be very different from reality. One of the biggest problems that new organizational leaders must overcome are the sometimes faulty or negative perceptions of them. If this is the case, what can be done about it? The best answer seems to be that a better understanding of the concepts involved should be developed. Direct applications and techniques should logically follow complete understanding. The place to start is to clearly understand the difference between sensation and perception and have a working knowledge of the major cognitive subprocesses of perception.

Understanding Self Personality:

Personality theories:

The most logical grouping of theories of personality seems to be into psychoanalytic, socio-psychological, trait and self theories.

(1) Psychoanalytic theory – This is based on the motion that man is motivated more by unseen forces than he is controlled by conscious and rational thought. Clinical techniques were used primarily to develop psychoanalytic theory freud noted that his patients’ behaviour could not always be consciously explained this clinical finding led him to conclude that major motivating force in man was unconscious framework. This framework contains three aspects, though interrelated but often conflicting. These are id, ego and superego. They are so interrelated that they can only be artificially separated for individual strictly and analysis.

The Id – The id is the source of psycho energy and seeks immediate gratification biological or insticntual needs. Freud believed that instinct could be classified under life instincts and death instincts. Life instinsts are hunger, thirst and sex; the energy involved in their activity is libido. The id operates on what is called the pleasure principle, i.e., it arts to avoid tensions and seeks immediate pleasure. Many of its impulses are not acceptable to the values of organised society. For example, when an individual is thirsty his id would urge him to grab something to drink. It doesn’t matter how the drink was acquired.

Ego – The ego comes into being because of the limitations of the id in dealing with the real world through learning and experiences. The ego is the conscious and logical part of human personality and is associated with the reality principle, which is capable of postponing the release of tension until that time when it will be effectively directed at coping with the external environments the ego is said to be the executive of the personality.

The Super Ego – The super ego represents social and personal norms and serves as an ethical constraint on behaviour. It can best be described as the conscience. The super ego provides norms to ego to determine what is wrong or right. However, a person is not aware of the working of the superego, and conscience is developed by absorption of cultural values and norms of society.

The psychoanalytic theory of freud is based on theoretical conception, rather than a measurable item for scientific verification. The theory does not give a total picture of behavior emerging from the personality. However this theory gives an important insight into personality structure and the idea of unconscious motivation which can be used by behavioral scientists.

(2) Socio-psychological theory – Socio – psychological theory recognises the interdependence of individual and society. The individual strives to meet the needs of the society, while society helps the individual to attain his goal. Out of this interaction, the personality of an individual is determined. Thus the theory is not exclusively sociological but rather a combination of two.

Socio-psychological theory differs from psycho-analytic in two respects. First, social variables, and not the biological instincts, are the important determinants in shaping personality. Second, behavioural motivation is conscious, man knows his needs and wants, and his behaviour is directed to meet these needs.

The theorists accepts that socio-psychological factors determine personality, however, there is no general agreement as to the relative importance of social variables. For example, from an emphasised the importance of social context, while Sullivan & Horney stressed interpersonal behaviour, and Adeer employed different variables. Horney’s model suggests that human behaviour results from three predominant interpersonal orientations-complaints, aggressive, and detached. Complaint people are dependent on other people and move toward others. Aggressive people are motivated by the need for power & move against others. Detached people are self-sufficient and move away from others. Sociopsychological theory offers, to a very great extent, the answer to the problems of emergence of personality, particularly in terms of the influence of social factors in shaping personality. The managers in the organisations can take clue from this theory in shaping the behaviour of their employees. However, they cannot get a total picture of human behaviour as determined by personality.

Trait Theory – Trait factor theory presents a quantitative approach to the study of personality. This theory postulates that an individual’s personality is composed of definite predispositional attributes called traits. A trait may be defined as any distinguishable, relatively enduring way in which one individual differs from another. Thus traits can be considered as individual variables there are basically three assumptions of this theory –

Traits are common to many individuals and vary in absolute amounts between individuals.

Traits are relatively stable and exert fairly universal effects on behaviour regardless of the environmental situation. Thus a consistent functioning of personality variables is predictive of a wide variety of behaviours.

Traits can be inferred from the measurement of behavioural indicators.

Two most widely trait theories come from the work of Allport and Cattell. Allport bases his theory on the distinction between common traits and personal dispositions. Common traits are used to compare people. He has identified six categories of values: religious, social, economic, political, aesthetic, and theoretical for comparative purpose. Besides the common traits, there are personal dispositions which are completely unique. These are cardinal (most pervasive), central (unique and limited in number) or secondary (peripheral). This uniqueness emphasises the psychology of the individual that Allport has developed.

Cattel has developed a similar set of traits through the construction of tests and the determination of factors or traits families which may emerge from these psychological measures. However, he has taken a different approach from Allport. He has identified two categories of traits- surface traits and source traits. He determined thirty-five surfacetraits by finding cluster of traits that are correlated. For example, wise-foolish, affectionate-cold, honest dishonest and so on. Such traits lie on the surface of the personality and are largely determined by the underlying source traits. He identified twelve sourcetraits. Examples of such traits are affectothymia (good nature & trustfulness) versus sizothymia (critical and suspicious); ego strength (maturity & realism) versus emotionality & neuroticism (immaturity and evasiveness); dominance versus & submissiveness, sergcancy (cheerfulness & energy) versus (depressed & subdued feelings).

Trait theory gives recognition to the continuity of personality. This theory is based on personality research. In this research, typical study attempts to find a relationship between set of personality variables and assorted behaviour. This contributes personality tests to the behavioural science. However, this theory is very descriptive rather than analytical and is a long way from being comprehensive theory of personality.

Self Theory – Self theory, termed as organismic or field theory, emphasises the totality and interrelatedness of all behaviours. Carl Rogers self theory of personality is very relevant in organisational behaviour. He defines the self concept as organised consistent, conceptual, gestalt composed of perceptions of the ‘I’ or ‘me’ & the perceptions of the relationships of the ‘I’ or ‘me’ to others and to various aspects of life, together with the values attached to these perceptions. These are four factors in self concept.

Self image – The self image is the way one sees oneself. Every person has certain beliefs about who or what he is; taken together, these beliefs are a person’s self-image or identity. Erikson has defined identity as “a life- long development largely unconscious to the individual & his society.” Its roots go back all the way to the first self recognition in the baby’s earliest exchange of smiles, there is something of a self-realisation coupled with a mutual recognition.

Ideal-self – The ideal-self denotes the way one would like to be the ideal-self differs from self-image in the fact that the self-image indicates the reality of a person as perceived by him, while ideal-self indicates the ideal position as perceived by him. Thus, there may be a gap between these two characteristics. The ideal self is important in stimulus selectivity because a person will select those stimuli for processing which fit in with the characteristics of his ideal-self.

Looking glass-self – This is the perception of a person about how others are perceiving his qualities & characteristics. This is the perception of others perception, that is, the way one thinks people perceive about him and not the way people actually see him. The looking glass-self is predominantly a social product which emerges from face to face interaction with others from the very beginning of the life. This interaction is directed towards cues about how others see him as an individual. Thus, beliefs about self are in large measures a reflection of other’s perception about the person.

Real-Self – This is what one really is. The first three aspects of self-concept are the functions of individual perception and they may be same as real-self or different from it. An individual’s self-image is confirmed when other person’s responses to him indicate their beliefs about who and what he corresponds with. In the face of feedback from the environment, the person re-evaluates himself and readjusts his self-image to be more consistent with the cues he was receiving. Thus, there is a mutual recognition of his real-self, and the validity of his self image is confirmed.

A person’s self-concept gives him a sense of meaningfulness & consistency. Gellerman observes that “the average individual is not particularly well acquainted with himself, so to speak, but he remains quite faithful to his not-soaccurate image of himself & thereby acquires some consistency.” In analysing organisation behaviour, the self-concept plays a very significant role. A person perceives a situation depending upon his self-concept which has a direct influence on his behaviour. This implies that person with a different self-concept needs different types of managerial practices.

 

Determinants Factors of personality:

Personality represents a process of change & it relates to the psychological growth & development of individuals while it may be possible to detect underlying personality characteristics, these characteristic may be useful only at that point of time and only for a limited number of situations. Therefore, it becomes important to know the factors that cause a given personality to change or develops. These factors can be classified into four broad categories.

(1) Biological factors – The general characteristics of human biological system influence the way in which human being tends to sense external event data, interpret & respond to them.

Heredity – Heredity is the transmission of the qualities from ancestors through a mechanism lying primarily in the chromosomes of the germcells. Heredity predisposes to certain physical, mental & emotional states. It has been established through research on animals that physical and psychological characteristics can be transmitted through heredity. However, such a conclusive proof is not available for human beings though psychologists and geneticists have drawn the conclusion that heredity plays an important role in personality.

Brain – Physiologists & psychologists have studied the structure of human brains have divided it into two parts – left hemisphere which lies in the right side of the body and right hemisphere which lies in the left side of the body. Depending on the structure of the brain, an individuals personality develops.

Physical features - An individual’s external appearance which is biologically determined, is an important ingredient of personality. In a narrow sense, personality is referred to physical features of a person. A person’s physical features have some influence on his personality because he will influence others and in turn will affects his self concept Mussen observes that “a child’s physical characteristics may be related to his approach to the social environment, to the expectancies of others, & to their reaction to him these in turn, may have impact on personality development.” Similarly, the rate of physical maturation also affects personality because persons of varying maturity are exposed to different physical & social situations & activities differently.

Biological Factors

Family & Group Individual Situational

Factors personality factors

Cultural Factors

 

Determinants of personality

Family & social factors – The development of the individual proceeds under the influence of many socialising forces & agencies, from nuclear family to more distant or global groupings. Family and social groups have their impact through socialization & identification processes.

Socialisation – is a process by which an individual infant acquires, from the enormously wide range of behavioural potential, ties that are open to him at birth, those behaviour patterns that are customary & acceptable according to the standards of his family & social groups. Socialisation process starts with initial contact between mother & her new infant.

Identification process – occurs when a person tries to identify himself with some person whom he feels ideal in the family. Generally, a child in the family tries to behave like his father or mother. The identification process can be examined from three different perspectives.

identification can be viewed as the similarity of behaviour between child & model.

identification can be looked as the child’s motives or desires to be like the model.

it can be viewed as the process through which the child actually takes on the attributes of the model.

Socialization & identification process are influenced by –

Home environment – Total home environment is a critical factor in personality development. For example, children with markedly institutional upbringing or children in a cold, unstimulating home have a much greater potential to be emotionally maladjusted than children raised by parents in warm loving & stimulating environment. The key variable is the type of environment that is generated for the child.

Family members – Parents & other family members have strong influence on the personality development of the child. Parents have more effect on the personality development as compared to other members of the family. The study by Newcomb showed the high correlation between attitudes of parents and children was higher than that between the children and their teachers. Besides parents, siblings (brothers & sisters) also contribute to personality.

Social groups – Besides a person’s home environment & family members, there are other influences arising from the social placement of the family as the person is exposed to agencies outside the home, particularly the school, friendship, & other work groups. Similarly, socio-economic factors also affect personality development.

Cultural Factors –

Culture is the underlying determinant of human decision making. It generally determines attitudes towards independence, aggression, competition & cooperation. Each culture expects & trains its members to behave in the ways that are acceptable to the group. To a marked degree, the child’s cultural group defines the range of experience & situations he is likely to encounter & the values & personality characteristics that will be reinforced & hence learned. Despite the importance of cultural contribution to the personality, a linear relationship cannot be established between personality & a given culture. One problem stems from the existence of numerous sub cultures within a given cultures. Thus, workers are not influenced by the same culture as managers are.

Situational Factors –

The S-O-B-C model of human behaviours considers the situations under which the behaviour is occurring. Milgrains research study suggests that very powerful role the situation may play in human personality. On the basis of his research study, he states that a situation exerts an important pressure on the individual. It exercises constraints or provide push. In certain circumstances, it is not so much the kind of person a man is, as the kind of situation in which he is placed, that determines his actions. For example, a worker whose personality history suggests that he had need for power and achievement, may become frustrated and react apathetically & aggressively if he is put in a bureaucratised work situation. Thus, he may appear lazy & trouble maker though his personality history may suggests that he is very hard working & striving to get ahead. Thus, because of changed situation, his personality composition changes this aspect is very important for organisational behaviour because a manager has control over the organisational situation.

 

Major factors for shaping the personality of an individual:

Managers should learn as much as possible about personality in order to understand their employers. Hundreds of personality characteristics have been identified. We have selected five characteristics because of their particular influences on individual behaviour in organizations. Locus of control, selfesteem, self-monitoring, & positive/negative affects and big five personality traits because these.

(1) Locus of Control – An individual’s generalized belief about internal (self) versus external (situation or others) control is called locus of control.

Internal locus of control – People who believe they control what happens to them are said to have an internal locus of control.

External Locus of control – People who believe that circumstances or other people control their face have an external locus of control.

Research on locus of control has strong implications for organizations.

Internal have been found to have higher job-satisfaction, to be more like to assume managerial positions and to prefer participative management styles. Internals have been shown to display higher work motivation, hold stronger beliefs that effort leads to performance, receive higher salaries & display less anxiety than externals.

Knowing about locus of control can prove valuable to managers. Because internals believe they control what happens to them, they want to exercise control in their work environment. Allowing internals considerable voice in how work is performed is important. Internals will not react well to being closely supervised. Externals, in contrast, may prefer a more structured work setting, & they may be more reluctant to participate in decision making.

Self esteem – Self-esteem is an individuals general feeling of self worth.

Individuals with higher self-esteem have positive feelings about themselves, perceive themselves to have strengths as well as weaknesses & believe their strength are more important than their weaknesses. People with high self-esteem perform better & are more satisfied with their jobs. When they are involved in a job search, they seek out higher status jobs. A work team made up of individuals with high self-esteem is more likely to be successful than a team with low selfesteem.

Individual with low self esteem view themselves negatively they are more strongly affected by what other people think of them.

Self-esteem may be strongly affected by situations. Success tends to raise self esteem, whereas, failure tends to lower it. Given that high self esteem is generally a positive characteristic, managers should encourage employees to raise their self-esteem by giving them appropriate challenges & opportunities for success.

Self monitoring – A characteristics with great potential for affecting behaviour in organizations is self monitoring. The extent to which people base their behaviour on cues from people & situations.

High self monitors pay attention to what is appropriate in particular situations and to the behaviour of other people and they behave accordingly. They are highly sensitive to external cues and can behave differently in different situations. High self monitors are capable of presenting striking contradictions between their public persona & their private self. Low self monitors, can’t disguise themselves in that way they tend to display their true dispositions & attitudes in every situations, hence, there is high behavioural consistency between who they are & what they do.

The evidence indicates that high self-monitors tend to pay closer attention to the behaviour of others & are more capable of conforming than are low self monitors they also receive better performance ratings, are more likely to emerge as leaders, and show less commitment to their organizations. In addition, high self monitoring managers tend to be more mobile in their careers, receive more promotions and are more likely to occupy central positions in an organizations.

Positive /Negative Affect – Individuals who focus on the positive aspects of themselves, other people, & the world in general are said to have positive affect. Interviewers who exhibit positive affect evaluate job candidates more favourably than do interviewers whose effect is neutral. Employees with positive affect are absent from work less often.

Those who accentuate the negative in themselves, others & the world are said to possess negative affect. Individuals with negative affect report more work stress. Individual affect also influences the work group. Negative individuals, affect produces negative group affect, and this leads to less cooperative behaviour in the work group.

Positive affect is a definite asset in work settings. Managers can do several things to promote positive affect, including allowing participative decision making & providing pleasant working conditions. We need to know more about inducing positive affect in the work place.

Big Five personality Traits –

In recent times, researchers have identified five fundamentals traits that are specially relevant to organizations. Because these five traits are so important & they are currently receiving so much attention, they are now called the big five personality traits. Each of these five personality traits has two external points – high & low. These five traits are as follows–

Agreeableness

Conscientiousness

Emotional stability

Extroversion

Openness

In general, experts agree that personality traits closer to the left end of each dimension are more positive in organizational setting, whereas traits closer to the right are less positive. A brief description of these traits is presented below:

Agreeableness – Agreeableness refers to a person’s ability to get along with others. Agreeableness causes some people to be gentle, cooperative, forgiving, understanding & good matured in dealing with others. It seems likely that highly agreeable people are better in developing good working relationships with coworkers, subordinates, superiors, whereas less agreeable persons are not likely to have good working relationships.

Conscientiousness – Conscientiousness refers to a number of goals on which a person focuses his attention. Persons who focus on relatively few goals at a time are likely to be organised, systematic, careful thorough and disciplined, they tend to focus on small number of goals at one time. Persons with less conscientiousness tend to pursue a wider array of goals and as a result, to be more disorganised, careless & even irresponsible as well as less thorough and self disciplined. More conscientious persons tend to be higher performers than less conscientiousness persons in a variety of jobs.

Extroversion – Degree of extroversion reflects a person’s comfort level with relationships. There may be persons with either introversion or extroversion features compared to introverts, extroverts tend to be happier in their jobs and in their lives as a whole. They experience more positive emotions than do introverts and they more freely express these feelings. They also tend to perform better in jobs that require significant interpersonal interaction. Extroversion is a relatively strong predictor of leadership emergence in groups. One downside of extroversion is that they are more impulsive than introverts; they are more likely to be absent from work and engage in risky behaviour.

Openness – Openness refers to a person’s rigidity of beliefs and range of interests. Individuals who score high on openness to experience are more creative in science and in art than those who score low. because creativity is important to leadership, open people are more comfortable with ambiguity and change than are those who score lower on this traits and are more likely to be effective leader. As a result open people cope better with organizational change and are more adaptable in changing contexts.

The big five personality traits still continue to attract both researchers and managers. The framework of big five traits has its potential value as it encompasses an integrated set of traits that appear to be valid predicators of certain behaviours in certain situations. According to Mount et al. “managers who can both understand the framework and assess these traits in their employees are in a good position to understand how and why they behave as they do.” However, applying this framework in their organisations, Indian managers should take adequate precaution to ensure that possession of higher degree of these traits is really in tune with their organisational requirements.

 

 

Chapter 3: Motivation

 

Motivation process:

The term motivation can be traced to the Latin word movere, which means “to move”. This meaning is evident in the following comprehensive definition: motivation is a process that starts with a physiological or psychological deficiency or need that activates a behavior or a drive that is aimed at a goal or incentive. Thus, the key to understanding the process of motivation lies in the meaning of, and relationships among, needs, drives, and incentives.

Needs set up drives aimed at incentives; this is what the basic process of motivation is all about. In a systems sense, motivation consists of these three interacting and interdependent elements:

Needs – Drives – Incentives

Needs – Needs are created whenever there is a physiological or psychological imbalance. For example, a need exists when cells in the body are deprived of food and water or when the personality is deprived of other people who serve as friends or companions. Although psychological needs may be based on a deficiency, sometimes they are not. For example, an individual with a strong need to get ahead may have a history of consistent success.

Drives – With a few exceptions, drives or motives (the two terms are often used inter-changeably), are set up to alleviate needs. A physiological drive can be simply defined as a deficiency with direction. Physiological and psychological drives are action oriented and provide an energizing thrust toward reaching an incentive. They are at the very heart of the motivational process. The examples of the needs for food and water are translated into the hunger and thirst drives, and the need for friends becomes a drive for affiliation.

Incentives – At the end of the motivation cycle is the incentive, defined as anything that will alleviate a need and reduce a drive. Thus, attaining an incentive will tend to restore physiological or psychological balance and will reduce or cut off the drive. Eating food, drinking water, and obtaining friends will tend to restore the balance and reduce the corresponding drives. Food, water, and friends are the incentives in these examples.

These dimensions of the basic motivation process serve as a point of departure for the content and process theories of work motivation. After discussion of primary, general, and secondary motives, those work-motivation theories that are more directly related to the study and application of organizational behavior and human resource management are examined.

 

Primary and Secondary Motives:

Primary Motives–Psychologists do not totally agree on how to classify the various human motives. It they would acknowledge that some motives are unlearned and physiologically based. Such motives are variously called physiological, biological, unlearned or primary. The last term is used here because it is more comprehensive than the others. However, the use of the term primary does not imply that these motives always take precedence over general and secondary motives. Although the precedence of primary motives is implied in some motivation theories, there are many situations in which general and secondary motives predominate over primary motives. Common examples are celibacy among priests and fasting for a religious, social or political cause. In both cases, learned secondary motives are stronger than unlearned primary motives.

Two criteria must be met in order for a motive to be included in the primary classification: It must be unlearned, and it must be physiologically based. Thus defined, the most commonly recognized primary motives include hunger, thirst, sleep, avoidance of pain, sex, and maternal concern. Although these very basic physiological requirements have been equated with primary needs over the years, just like personality traits discussed in the last chapter, there is recent recognition given to the role that the brain may play in people’s motives. The “hard-wiring” of emotional needs would meet the primary criteria of being unlearned and physiologically based. Neuropsychologists are just beginning to do research on the role the brain plays in motivation, but potential applications to the workplace are already being recognized. For example, Coffman and Gonzalez-Molina note: “What many organizations don’t see- and what many don’t want to understand – is that employee performance and its subsequent impact on customer engagement revolve around a motivating force that is determined in the brain and defines the specific talents and the emotional mechanisms everyone brings to their work. However, even though the brain pathways will be developed in different ways and people develop different appetites for the various physiological motives because people have the same basic physiological makeup, they will all have essentially the same primary needs. This is not true of the learned secondary needs.

General Motives: A separate classification for general motives is not always given. Yet such a category seems necessary because there are a number of motives that lie in the gray area between the primary and secondary classifications. To be included in the general category, a motive must be unlearned but not physiologically based. Whereas the primary needs seek to reduce the tension or stimulation, these general needs induce the person to increase the amount of stimulation. Thus, these needs are sometimes called “stimulus motives.” Although not all psychologists would agree, the motives of curiosity, manipulation, activity, and possibly affection seem best to meet the criteria for this classification. An understanding of these general motives is important to the study of human behavior-especially in organizations. General motives are more relevant to organizational behavior than are primary motives.

The Curiosity, Manipulation, and Activity Motives: Early psychologists noted that the animals used in their experiments seemed to have an unlearned drive to explore, to manipulate objects, or just to be active. This was especially true of monkey that were placed in an unfamiliar or novel situation. These observations and speculation about the existence of curiosity, manipulation, and activity motives in monkeys were later substantiated through experimentation. In this case, psychologists feel completely confident in generalizing the results of animal experiments to humans. It is generally recognized that human curiosity, manipulation, and activity drives are quite intense; anyone who has reared or been around small children will quickly support this generalization.

Although these drives often get the small child into trouble, curiosity, manipulation, and activity, when carried forward to adulthood, can be very beneficial. If these motives are stifled or inhibited, the total society might become very stagnant. The same is true on an organizational level. If employees are not allowed to express their curiosity, manipulation, and activity motives, they may not be motivated. For example, sticking an employee behind a machine or a desk for eight hours a day may stifle these general motives. There is even recent research indicating that not allowing these types of motives to be expressed and fulfilled may have more serious consequences. A university of Texas study found that people who spent most of their lives in a job they had little control over had a 43 percent higher risk of dying prematurely, and those who did boring, passive work had a 35 percent greater chance of earlier death.

The Affection Motive: Love or affection is a very complex form of general drive. Part of the complexity stems from the fact that in many ways love resembles the primary drives and in other ways it is similar to the secondary drives. In particular, the affection motive is closely associated with the primary sex motive on the one hand and with the secondary affiliation motive on the other. For this reason, affection is sometimes placed in all three categories of motives and some psychologists do not even recognize it as a separate motive.

Affection merits specific attention because of its growing importance to the modern world. There seems to be a great deal of truth to the adages, “Love makes the world go round” and “Love conquers all.” In a world where we suffer from interpersonal, intraindividual, and national conflict, and where quality of life, family values, and human rights are becoming increasingly important to modern society, the affection motive takes on added importance in the study of human behavior in general and organizational behavior in particular.

Secondary Motives: Whereas the general drives seem relatively more important than the primary ones to the study of human behavior in organizations, the secondary drives are unquestionably the most important. As a human society develops economically and becomes more complex, the primary drives, and to a lesser degree the general drives, give way to the learned secondary drives in motivating behavior. With some glaring exceptions that have yet to be eradicated, the motives of hunger and thirst are not dominant among people living in the economically developed world. This situation is obviously subject

Impressum

Verlag: BookRix GmbH & Co. KG

Texte: RITTIK CHANDRA
Bildmaterialien: RITTIK CHANDRA
Lektorat: RITTIK CHANDRA
Tag der Veröffentlichung: 07.07.2013
ISBN: 978-3-7309-3579-8

Alle Rechte vorbehalten

Widmung:
TO THE YOUTH OF THE WORLD