Tag: Principles

  • What are the Principles of the Contract of Insurance? Define

    What are the Principles of the Contract of Insurance? Define

    The cost for the risk made by the insurer and the insurer is paid by the insured, it is called “premium” and the document in which the contract of insurance is called is “Policy”. An insurance contract is a contract by which a person attempts to compensate another person against the loss of occurrence of an event or to pay the amount upon the occurrence of any event. The person who ensures that he is called “insurer”. The person who affects insurance is called “insured” or “assured”. In insurance, the insurance policy is an agreement between the insurer and the insured (usually a standard form of contract), which is known as the policyholder, which determines the claims required to pay the insurers legally. Do you study to learn: If Yes? Then read the lot. Let’s Study: What are the Principles of the Contract of Insurance? Define. Read this in the Hindi language: बीमा अनुबंध के सिद्धांत क्या हैं? परिभाषित…।

    The concept of Insurance Discussing the topic: What are the Principles of the Contract of Insurance? Define.

    In exchange for initial payment, known as premium, the insurer promises to pay for the loss due to the dangers covered under the policy language. An insurance contract is an insurance company that represents the agreement between the insurance company and the insured. There is a central insurance agreement for any insurance contract, which specifies the risks covered, the limits of the policy, and the duration of the policy. You also need to know about: Types of Insurance.

    Insurance Contract: “Almost all of us have insurance. When your insurer gives you the policy document, generally, all you do is glance over the decorated words in the policy and pile it up with the other bunch of financial papers on your desk, right? If you spend thousands of dollars each year on insurance, don’t you think that you should know all about it? Your insurance advisor is always there for you to help you understand the tricky terms in the insurance forms, but you should also know for yourself what your contract says. In this article, we’ll make reading your insurance contract easy, so you understand their basic principles and how they are put to use in daily life.” The definition reference by Investopedia.

    The Principles of the Contract of Insurance:

    Following are the general principles of the contract of insurance:

    Subrogation:

    According to the rule of subrogation, when the loss is caused to the insured by the conduct of a third party, the insurer shall have to make good such loss and then have a right to step into the shoes of the insured and bring an action against such third party who caused the loss to the insured. This right of subrogation is enforceable only when there is an assignment of cause of action by the insured in favor of the insurer. The doctrine of subrogation does not apply to life insurance.

    Contribution:

    Where there are two or more insurances on one risk, the principle of contribution applies as between different insurers. The aim of contribution is to distribute the actual amount of loss among the different insurers who are liable for the same risk under different policies in respect of the same subject-matter. In case of loss, anyone insurer may pay to the assured the full amount of the loss covered by the policy. Having paid this amount, he is entitled to contribution from his coinsurers in proportion to the amount which each has undertaken to pay in case of loss of the same subject-matter.

    Period of Insurance:

    Except in the case of life insurance, every contract of insurance comes to an end of the expiry of every year, unless the insured continues the same and pays the premium before the expiry of the year.

    Indemnity:

    Every contract of insurance such as life insurance and personal accident and sickness insurance is a contract of indemnity. So, the insurer pays the actual loss suffered by the insured. He does not pay the specified amount unless this amount is the actual loss to the insured.

    Mitigation of Loss:

    The insured must take reasonable precautions to save the property, in the event of some mishap to the insured property. He must act as a prudent uninsured person would act in his own case under similar circumstances to mitigate or minimize losses.

    Insurable Interest:

    The assured must have, what is called “insurable interest” in the subject matter of the contract of insurance. “He must be so situated with regard to the thing ensured that he would have benefit from its existence, loss from its destruction”.

    Risk must Attach:

    The insurer must run the risk of indemnifying the insured. If he does not run the risk, the consideration for which the premium is paid fails and consequently, he must return the premium paid by the insured.

    Causa Proxima:

    The insurer is liable for loss which is proximately caused by the risk insured against. The rule is “Causa Proxima non-remote spectator”, i.e. the proximate but not the remote cause is to be looked to. So, the loss must be proximately caused in order that the insurer is to become liable.

    Uberrimae Fidei:

    A contract of insurance is a contract Uberrimae Fidei, i.e. a contract requiring utmost good faith of the parties. So, all material facts which are likely to influence the insurer in deciding the amount of premium payable by the insured must be disclosed by the insured. Failure to disclose material facts renders the contract voidable at the option of the insurer. Read this in the Hindi language: बीमा अनुबंध के सिद्धांत क्या हैं? परिभाषित…।

    What are the Principles of the Contract of Insurance Define
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  • Meaning, Definition, Principles, and Functions of Insurance

    Meaning, Definition, Principles, and Functions of Insurance

    Meaning: Life is a roller coaster ride and is full of twist and turn. The insurance policy is a protection against the uncertainties of life. Insurance is defined as a cooperative tool which is meant to spread the damage caused by a particular risk, which comes in contact with it and who agrees to insure themselves against that risk. As in all insurance, the insured person pays the premium in risk, transfer, and exchange to the insurer. Do you study to learn: If Yes? Then read the lot. Let’s Study: Meaning, Definition, Principles, and Functions of Insurance. Read this in the Hindi language: अर्थ, परिभाषा, सिद्धांत, और बीमा के कार्य।

    The concept of Insurance Discussing the topic: Meaning, Definition, Principles, and Functions of Insurance.

    These risks are such that they can not be known in advance when they win and provision for them against any person is physically impossible. In the case of risk life insurance assumed by the insurer, there is the risk of death of the insured. Insurance policies cover the risk of life as well as other assets and valuables such as home, automobile, ornaments etc.

    Depending on the risk, they cover, insurance policies can be classified into life insurance and general insurance. Life insurance products include the risk against incidents such as death or disability for the insurer. General insurance products include risks against natural disasters, theft, etc. Before this study, once read this article: Features, Types, and Importance of Insurance.

    How do you understand insurance? Meaning.

    Insurance is a system through which some people are harmed, who are aware of many risks. With the help of insurance, a large number of people aware of similar risks contribute to a common fund, in which it is good to face losses by some unfortunate people due to unfortunate incidents.

    Insurance is a protection against financial loss arising out of an unexpected event. The insurance policy not only helps in reducing risk but also provides financial cushions against unfavorable financial burdens. Insurance is defined as a cooperative tool which is meant to spread the damage caused by a particular risk, which comes in contact with it and who agrees to insure themselves against that risk.

    The risk is the uncertainty of financial loss. Insurance is also defined as a social tool to deposit the money in order to meet the risk of uncertain loss through a certain risk for the injured person against the risk. Insurance provides financial protection against the loss arising from an indefinite event.

    One person can take advantage of this protection by paying the premium to the insurance company. Generally, a pool is created through contributions made by those wishing to save from common risk. In the case of indeterminate incidence from this pool, any damage to the insured is paid. 

    Life insurance has come a long way from earlier days when it was originally considered as a risk-cover medium from time to time, which included temporary risk situations like ocean voyages. Since life insurance became more established, it was felt that this was a useful tool for many situations, including temporary needs, hazards, savings, investment, retirement etc.

    Insurance is a contract between two parties, so that a party agrees to take risk in exchange for ideas that go in the form of premium and to any other party in the event of an indefinite event (death) or termination of a certain term in the case of life insurance After compensating for the latter or the other party, any other party is promised to pay a certain amount. In the case of general insurance, there is an uncertain event. The risk side is known as ‘insurer’ or ‘assurance’ and the party whose risk is covered is known as ‘insured’ or ‘assured’.

    Definition of Insurance:

    The definition of insurance can be seen from two viewpoints:

    Functional Definition:

    Insurance is a co-operative device of distributing losses, falling on an individual or his family over a large number of persons each bearing a nominal expenditure and feeling secure against heavy loss. Insurance is a co-operative device to spread the loss caused by a particular risk over a number of persons, who are exposed to it and who agree to insure themselves against the risk.

    Thus, the insurance is;

    • A co-operative device to spread the risk.
    • The system to spread the risk over a number of persons who are insured against the risk.
    • The principle to share the loss of each member of the society on the basis of the probability of loss to their risk, and.
    • The method to provide security against losses to the insured.

    Similarly, another definition can be given. Insurance is a co-operative device of distributing losses, falling on an individual or his family over a large number of persons, each bearing a nominal expenditure and feeling secure against heavy loss.

    Contractual Definition:

    Insurance may be defined as a contract consisting of one party (the insurer) who agrees to pay to other parties (the insured) or his beneficiary, a certain sum upon a given contingency against which insurance is sought. Insurance has been defined to be that in which a sum of money as a premium is paid in consideration of the insurance incurring the risk of paying a large sum upon a given contingency.

    The insurance, thus, is a contract whereby:

    • Certain sum, called premium, is charged in consideration.
    • Against the said consideration, a large sum is guaranteed to be paid by the insurer who received the premium.
    • The payment will be made in a certain definite sum, i.e., the loss or the policy amount whichever may be, and.
    • The payment is made only upon a contingency.

    The more specific definition can be given as follows,

    “Insurance may be defined as a consisting one party (the insurer) agrees to pay to the other party (the insurer) or his beneficiary, a certain sum upon a given contingency (the risk) against which insurance is sought.”

    So it is clear that every risk involves the loss of one or the other kind. The function of insurance is to spread this loss over a large number of persons through the mechanism of co-operation.

    The important Principles of Insurance:

    The main motive of insurance is cooperation. Insurance is defined as the equitable transfer of risk of loss from one entity to another, in exchange for a premium.

    Insurance is based upon two basic principles:

    Cooperation:

    Insurance is a co-operative device. If one person is providing for his own losses, it cannot be strictly insurance because in insurance the loss is shared by a group of persons who are willing to co-operate.

    Probability:

    The loss in the form of premium can be distributed only on the basis of the theory of probability. The chances of loss are estimated in advance to affix the amount of premium. Since the degree of loss depends upon various factors, the affecting factors are analyzed before determining the amount of loss.

    With the help of this principle, the uncertainty of loss is converted into certainty. The insurer will not have to suffer loss as well as the gain windfall. Therefore, the insurer has to charge only so much of amount which is adequate to meet the losses.

    The insurance, on the basis of past experience, present conditions and future prospects, fixes the amount of premium. Without premium, no co-operation is possible and the premium cannot be calculated without the help of the theory of probability, and consequently, no insurance is possible.

    The important principle of insurance are as follows:

    Nature of contract:

    Nature of contract is a fundamental principle of the insurance contract. An insurance contract comes into existence when one party makes an offer or proposal of a contract and the other party accepts the proposal. A contract should be simple to be a valid contract. The person entering into a contract should enter with his free consent.

    Utmost good faith:

    Under this insurance contract, both the parties should have faith over each other. As a client, it is the duty of the insured to disclose all the facts to the insurance company. Any fraud or misrepresentation of facts can result into the cancellation of the contract.

    Insurable interest:

    Under this principle of insurance, the insured must have an interest in the subject matter of the insurance. The absence of insurance makes the contract null and void. If there is no insurable interest, an insurance company will not issue a policy. Insurable interest must exist at the time of the purchase of the insurance. For example, a creditor has an insurable interest in the life of a debtor, A person is considered to have an unlimited interest in the life of their spouse etc.

    Indemnity:

    Indemnity means security or compensation against loss or damage. The principle of indemnity is such a principle of insurance stating that an insured may not be compensated by the insurance company in an amount exceeding the insured’s economic loss. In the type of insurance, the insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss.

    This is a regulatory principle. This principle is observed more strictly in property insurance than in life insurance. The purpose of this principle is to set back the insured to the same financial position that existed before the loss or damage occurred.

    Subrogation:

    The principle of subrogation enables the insured to claim the amount from the third party responsible for the loss. It allows the insurer to pursue legal methods to recover the amount of loss, For example, if you get injured in a road accident, due to reckless driving of a third party, the insurance company will compensate your loss and will also sue the third party to recover the money paid as the claim.

    Double insurance:

    Double insurance denotes insurance of same subject matter with two different companies or with the same company under two different policies. Insurance is possible in case of indemnity contracts like fire, marine and property insurance. The double insurance policy is adopted where the financial position of the insurer is doubtful. The insured cannot recover more than the actual loss and cannot claim the whole amount from both the insurers.

    Proximate cause:

    Proximate cause literally means the ‘nearest cause’ or ‘direct cause’. This principle is applicable when the loss is the result of two or more causes. The proximate cause means; the most dominant and most effective cause of loss is considered. This principle is applicable when there are series of causes of damage or loss.

    Functions of Insurance:

    The functions of Insurance can be bifurcated into Primary functions and Secondary functions.

    Primary Functions of Insurance:

    The primary functions of insurance include the following:

    • Provide Protection: The primary function of insurance is to provide protection against future risk, accidents, and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.
    • Assessment of risk: Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. The risk is the basis for determining the premium rate also.
    • The collective bearing of risk: Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among the larger number of people. All the insured contribute premiums towards a fund, out of which the persons exposed to a particular risk are paid.
    • Savings and investment: Insurance serve as a tool for savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured. For the purpose of availing income-tax exemptions, people invest in insurance also.

    Secondary Functions of Insurance:

    The secondary functions of insurance include the following:

    • Prevention of Losses: Insurance cautions individuals and businessmen to adopt a suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of the automatic sparkler or alarm systems, etc. Reduced rate of premiums stimulates more business and better protection to the insured.
    • Small capital to cover large risks: Insurance relieves the businessmen from security investments, by paying the small amount of premium against larger risks and uncertainty.
    • Contributes to the development of large industries: Insurance provides a development opportunity for large industries having more risks. Even the financial institutions may be prepared to give credit to sick industrial units which have ensured their assets including plant and machinery.
    • Source of Earning Foreign Exchange: Insurance is an international business. The country can earn foreign exchange by way of issue of insurance policies.
      Risk Free Trade: Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.

    In past years, tariff associations or mutual fire insurance associations were found to share the loss at a cheaper rate. In order to function successfully, the insurance should be joined by a large number of persons. Insurance is a form of risk management primarily used to hedge against the risk of potential financial loss. Again insurance is defined as the equitable transfers of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care. Read this in the Hindi language: अर्थ, परिभाषा, सिद्धांत, और बीमा के कार्य।

    Meaning Definition Principles and Functions of Insurance

  • Accounting Principles points in Meaning Definition and Features

    Accounting Principles points in Meaning Definition and Features

    Explore the importance of accounting principles. Learn about their meaning, definition, and features, and understand how they guide the efforts of accountants and auditors. To search for the goals of the accounting profession and for expanding knowledge in this field, A logical and useful set of principles and procedures are to develop. Explained each one point, Accounting Principles points in Meaning Definition and Features. We know that while driving our vehicles, follow standard traffic rules.

    Accounting Principles Understand in these points Meaning, Definition, and Features.

    Without adhering traffic rules, there would be much chaos on the road. Similarly, some principles apply to the account. Thus, the accounting profession cannot reach its goals in the absence of a set of rule to guide the efforts of accountants and auditors. The rules and principles of accounting are commonly referring to as the conceptual framework of accounting.

    Meaning of Accounting Principles:

    They are a man make. Unlike the principles of Physics, Chemistry and other natural sciences; accounting principles were not deduced from basic axioms, nor their validity is verifiable through observations or experiments. These principles are drawn from the practical practice of accounting.

    Definition of Accounting Principles:

    They have been defining by the Canadian Institute of Chartered Accountants as,

    “The body of doctrines commonly associated with the theory and procedure of accounting serving as an explanation of current practices and as a guide for the selection of conventions or procedures where alternatives exist. Rules governing the formation of accounting axioms and the principles derived from them have arisen from common experience, historical precedent statements by individuals and professional bodies and regulations of Governmental agencies.”

    According to Hendriksen (1997), Accounting theory may define as logical reasoning in the form of a set of broad principles that;

    • Provide a general frame of reference by which accounting practice can evaluate, and.
    • Guide the development of new practices and procedures.

    The theory may also use to explain existing practices to obtain a better understanding of them. But the most important goal of accounting theory should be to provide a coherent set of logical principles that form the general frame of reference for the evaluation and development of sound accounting practices.

    No list of universally accepted principles can prepare but still, certain principles are drawn which are acceptable by most of the accountants.

    According to the Terminology Committee of AICPA,

    “The word principles are used to mean a general law or rule adopted or preferred as a guide to action; a settled ground or basis of conduct or practice.”

    A.W. Johnson describes as,

    “Broadly speaking, these principles are the assumptions and rules of accounting, the methods, and procedures of accounting and the application of these rules, methods, and procedures to the actual practice of accounting.”

    Definition and Explanation:

    Accounting is the language of business through which economic information is communicating to all the parties concerned. In order to make this language easily understandable all over the world, it is necessary to frame or make certain uniform standards which are accepting universally. These standards are termed “Accounting Principles”.

    They may define as those rules of action or conduct which are adopting by the accountants universally while recording accounting transactions. It is a body of doctrines commonly associated with the theory and procedures of accounting. They are serving as an explanation of current practices and as a guide for the selection of conventions or procedures where alternatives exist.

    The American Institute of Certified Public Accountants (AICPA) has advocated the use of the word” Principle” in the sense in which it means “rule of action”. It discusses the generally accepted accounting principles as follows: Financial statements are the product of a process in which a large volume of data about aspects of the economic activities of an enterprise are accumulating, analyze and report.

    This process should carry out in conformity with generally accepted accounting principles. These principles represent the most current consensus about how accounting information should record, what information should disclose, how it should disclose, and which financial statement should prepare. Thus, generally accepted principles and standards provide a common financial language to enable informed users to read and interpret financial statements. Thus, we may define Accounting Principles as those rules of action or conduct which are adopting by the accountants universally while recording accounting transactions.

    Features of Accounting Principles:

    They are synthetic. It is acceptable because they are believing to be useful. The general acceptance of an accounting principle usually depends on how well it meets the following three basic norms:

    • Usefulness.
    • Objectiveness and.
    • Feasibility.

    A principle is useful to the extent that it results in meaningful or relevant information to those who need to know about a certain business. In other words, an accounting rule, which does not increase the utility of the records to its readers, is not acceptable as an accounting principle. A principle is objective to the extent. That the information is not influencing by the personal bias or Judgement of those who furnished it. Accounting principle says to be objective when it solidly supports by facts. Objectivity means reliability which also means that the accuracy of the information reported can verify.

    Accounting principles should be such as are practicable. A principle is feasible when it can implement without undue difficulty or cost. Although these three features are generally finding in accounting principles. An optimum balance of three is struck in some cases for adopting a particular rule as an accounting principle. For example, the principle of making the provision for doubtful debts find on feasibility and usefulness though it is less objective. This is because of the fact that such provisions are not supporting by any outside evidence.

    Essential Features of Accounting Principles:

    They are acceptable if they satisfy the following norms:

    Relevance or Usefulness:

    A principle will be relevant only if it satisfies the needs of those who use it. The accounting principle should be able to provide useful information to its users otherwise it will not serve the purpose. Also, know this What do you think of Data Warehousing?

    Objectivity:

    A principle will say to be objective if it bases on facts and figures. There should not be a scope for personal bias. If a principle can influence the personal bias and whims of users. It will not be an objective principle and its usefulness will limit. The cost principle will be more useful than the value principle. Because the value will base on market prices and personal judgment will differ in finding out value.

    Feasibility:

    The accounting principles should be practicable. The principles should be easy to use otherwise their utility will limit. While showing fixed assets in the balance sheet, it will be more feasible to take cost less depreciation. If the assets are shown on market value or replacement cost basis. Then, it will involve difficulties and different persons will take different values because market prices go on changing every time.

    The features mentioned above should be present in accounting principles. But in some cases, the optimum balance of these features is struck for adopting. A particular rule as the accounting principle. Sometimes one feature may have to sacrifice for the other so that it may adopt as the principle. Explains and define Entrepreneurial Marketing and SME.

    We may show fixed assets at replacement cost. Because it is practicable and actual cost principle may not be able to give correct results. As the rise in price index will make it less useful. Similarly, the principle of making provision for doubtful debts founds on the feasibility and usefulness basis though it is less objective. Such provisions are not supporting by any outside evidence and there is always a fear of personal bias.

  • What are the key principles of Training and Development?

    What are the key principles of Training and Development?

    Principles of Training and Development: Competitive advantage is referred to that ability of an organization which is not possessed by the other organizations and it is a competitive advantage which leads the organization to the top positions. The content is the study of explains – the key Principles of Training and Development, Training Principles and Techniques, and Training Procedure. There are many organizations in the world who are leading the markets by gaining competitive advantage in different fields of their business activities. Also, learn the Main Principles of Training and Development.

    Understanding and Learn, What are the key principles of Training and Development?

    One of the ways in which a firm can attain a competitive advantage over the competitors is by building a force of superior human resource. Now the question arises that how this force of superior human resource can build. The answer lies in a very important function of human resource management i.e. training and development. It has been observing that the employees or labor working in a competitive environment of the market always welcome the training and development programs which can enhance their skills and knowledge.

    Nowadays every job holder understands that to sustain and grow in the career it is very important to polish their skills. It is not that time where one degree or diploma is sufficient for the whole life. Employees actively participate in several programs which are organizing by their organization and it has been observing that in some organization employee’s demand from their human resource department to arrange such training and development programs.

    Successful organization of today has built its human resource workforce over the passage of time. There is no doubt that this workforce is a highly valuable asset for any organization and the only possible way to build this workforce is training and development. There are several theories which emphasize the importance of training and development in the organization and provides different alternative methods for training and development. A discussion of four major theories of training and development gives below.

    What is the theory of Reinforcement?

    This theory emphasizes on the learning behavior of a person and suggests that the learner will repeat that behavior which is attached with a positive outcome or result. Skinner an economist of the behaviorist school of thought proposed the theory of reinforcement and suggested that the training and development programs should align with the organizational objectives and a positive outcome should expect with such training and development programs. Further elaborating this concept suggested in reinforcement theory, it can argue that there are several techniques available in human resource practices which can associate with the training and development programs and the required suggestion by this theory can fulfill.

    Different types of rewards in the form of bonuses, salary raises, promotion and awarding of certificate after the training program can associate with the training and development activities and these rewards will definitely generate a positive outcome. If this is done by an organization then according to the Skinner’s theory of reinforcement the trainer i.e. the employee will show more interest in the training and development programs held by the organization.

    Learning Types:

    The theory presented by Gagne emphasized on learning of intellectual skills. These are such skills which are found rare among the persons. He suggested by different learning types in his theory and each learning type contains some external and internal conditions. The five categories of learning which Gagne defined in his theory include intellectual skills, verbal information, attitudes, cognitive strategies, and motor skills.

    Experiential Learning:

    Experiential and cognitive types of learning are differentiated by the experiential theory of learning presented by C. Rogers. According to Rogers, the wants and needs of the learner are addressed by this type of learning. Experience gives the personal maturity and increases the learning power along with the knowledge. Due to personal involvement, the learner is able to conduct a self-evaluation test. Which allows him to understand the effect of learning on his/her attitude.

    Social Learning:

    The social theory presents a new view of learning i.e. social. According to the presenter of this theory, Albert Bandura, direct reinforcement cannot address all types of learning. Hereby direct enforcement means the training and development programs that are organizing to enhance the skills. According to this theory, such programs do not address all learning types. As there are some social elements which cannot teach. Those elements are learning by the learner from his/her surroundings.

    Such type of learning calls observational learning and this learning associate with the understanding of different human behaviors. The first type of learning defined in this theory is through observation. In an organization, the environment and the surroundings play a very important role. The environment should be very professional and the surroundings should be in such a way that the people (employees) learn from them.

    Extra knowledge:

    This theory also suggests that it is not necessary that the behavior change after learning something.

    It expects that a person’s behavior changes after learning something, but it is not in all cases. Furthermore, the theory also explains the mental states which play a vital role in the learning process. If the mental status of the person is negative regarding any learning activity then. He will not take part in that learning process and even. If he forces to do so, he will not gain any positivity from that process.

    In organizational training programs, the mental state can make positive regarding the training and development programs by associating the rewards and benefits with such programs. Which will motivate the employees and help to build a positive mental state? The case company also follow this theory. As it allows the employees to learn from the surrounding and provides an environment where they can learn from their supervisors/managers and coworkers.

    Training Principles and Techniques:

    According to Pigors and Myres, training principles and techniques include:

    • The trainee must want to learn. His motivation to improve his job performance or to learn a new skill must be high.
    • There should be some reward at the conclusion of training viz., promotion or a better job.
    • The trainer should ask the trainee as to whether he is learning the job correctly. This knows as feedback.
    • Training is best to accomplish through learning by doing rather than by listening.
    • The material to learn should develop in stages.
    • When the trainee gives the correct response, he learns the job.
    Training Procedure:
    • First of all the instructor must prepare. He should know both his job and how to teach it. On the basis of job analysis and job description, various operations should plan. In order to avoid delays, everything must be ready before training starts.
    • The next step is the preparation of the trainee. The fact that the employee is learning the job for the first time should keep in mind. The importance of the job, its relationship with the other jobs and the importance of rapid and effective learning should explain.
    • The operations should then present carefully and patiently. The sequence of the entire job explains by taking one point at a time.
    • The performance of the trainee should then try by asking him to explain each step and do the practical.
    • The employee is then put on the job. In the follow-up action, his performance should frequently check and questions should encourage.

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  • Market-Based Management: Meaning, Principles, and Dimensions!

    Market-Based Management: Meaning, Principles, and Dimensions!

    Market-Based Management is found on the principles that cause societies to become wealthy instead of mired in poverty. The Concept of the study Explains – Market-Based Management: Meaning of Market-Based Management, Principles of Market-Based Management, Ten-Points, and Dimensions of Market-Based Management. It seems the business as a small society with exceptional features requiring variation of the education drawn from society at large. Through this variation, an organization could build an MBM structure and ever-evolving mental models. Also learned, Market-Based Management: Meaning, Principles, and Dimensions!

    Explain and Learn, Market-Based Management: Meaning, Principles, and Dimensions!

    Market-Based Management is a holistic approach to an organization that incorporates theory and practice and organizes businesses to deal effectively with the challenges of change and growth. It also draws on the training learned from the failures and successes of individuals to attain prosperity, peace and organizational progress. Thus, it involves the study of the history of economics, politics, societies, cultures, governments, businesses, conflicts, science, non-profits and technology.

    Market-Based Management is the exceptional management tactic developed and executed by Koch Industries, Inc. It is a company philosophy that is embedded in the science of human action and functional through five dimensions: Vision, Knowledge Processes, Virtues and Talents, Decision Rights and Incentives. Koch Industries’ MBM Guiding Principles articulate the rules of just conduct and describe the main values which direct the day by day business activities.

    Meaning of Market-Based Management:

    MBM is an approach of philosophy which centers on using the tacit knowledge of workers to the benefit of the business. It stands on creating a situation where workers can feel secure to speak their opinions and questionable decision making because of the values and the culture permits it. Market-Based Management was based on the fact that capital, ideas, and talent are permissible to flow freely and is situated where it is most likely to produce wealth and innovation. This is unusual from the traditional company model where decision-making, knowledge, and resources are controlled centrally by a top management team.

    All gathered knowledge from the external settings is shared inside the business and utilized by workers involved in developing new services and products. Businesses need to decentralize decision-making in areas where the knowledge is situated rather than trying to move knowledge up the business for top management to make decisions with insufficient knowledge. Freedom of speech and action are important elements of a market economy, just as workers require experiencing the liberty to question and communicating improvements in their work environment

    The Principles of Market-Based Management:

    The ten guiding principles are the solution to the internal culture of a business: integrity – carry out all affairs lawfully and with great integrity, value creation – produce real, long-term value by moving on economic freedom. Recognize, develop, and apply Market-Based Management to get better outcomes and remove waste, compliance. Striving for 100% compliance on the part of employees, principled entrepreneurship. Show the sense of discipline, urgency, work ethic, judgment, accountability, economic and critical thinking skills, initiative, and the risk-taking attitude essential to create the greatest input to economic freedom, knowledge.

    Look for and use the most excellent knowledge in decisions making and proactively share the knowledge while accepting challenge, measure outcomes whenever practical, customer focus. Understand and build up associations with those who can most efficiently advance economic freedom, change. Embrace change; foresee what could be, test the status quo, and make inspired destruction, respect. Treat others with respect, dignity, honesty, and compassion. Be glad about the value of diversity.

    Support and observe collaboration, humility – practice intellectual honesty and modesty. Regularly seek to recognize and profitably deal with actuality to produce value and attain personal development, and fulfillment. Produce outcomes that produce value to understand the complete potential and find accomplishment in the work. When put into actions all these principles join to create a positive culture and a dynamic.

    There are ten-points principles of MBM:

    • Integrity: Conduct all affairs with integrity, for which courage is the foundation. Honor donor intent.
    • Compliance: Strive for 10,000% compliance with all laws and regulations, which requires 100% of employees fully complying 100% of the time. Stop, think, and ask.
    • Value creation: Contribute to societal well-being by advancing the ideas, values, policies, and practices of free societies. Understand, develop, and apply MBM to achieve superior results by making better decisions, eliminating waste, optimizing, and innovating.
    • Principled entrepreneurship: Apply the judgment, responsibility, initiative, economic and critical thinking skills, and sense of urgency necessary to generate the greatest contribution, consistent with the organization’s risk philosophy.
    • Customer focus: Discover, collaborate, and partner with those who can most effectively advance free societies.
    • Knowledge: Seek and use the best knowledge and proactively share your knowledge while embracing a challenging process. Develop measures that lead to more effective action.
    • Change: Anticipate and embrace change. Envision what could be, challenge the status quo, and drive creative destruction through experimental discovery.
    • Humility: Exemplify humility and intellectual honesty. Constantly seek to understand and constructively deal with reality to create value and achieve personal improvement. Hold yourself and others accountable.
    • Respect: Treat others with honesty, dignity, respect, and sensitivity. Appreciate the value of diversity, including, but not limited to, diversity in experiences, perspectives, knowledge, and ideas. Encourage and practice teamwork.
    • Fulfillment: Find fulfillment and meaning in your work by fully developing your capabilities to produce results that create the greatest value.

    The guiding principles of MBM are clearly linked to the tenets of the Austrian school of economics. The principles of integrity and respect tie into Hayek’s “rules of conduct” notion and the principle of knowledge can be paralleled to Hayek’s 1937 and 1945 essays on knowledge.  Under the broad notion of competition, the principles of entrepreneurship, value creation, and customer focus follow the economic theories of Schumpeter, Hayek, and Kirzner. Let us review the five dimensions of MBM.

    Dimensions of Market-Based Management:

    A business’s culture is the basis of victory, and a strong, flourishing workplace is a requirement of being able to explain problems using the five dimensions of Market-Based Management. By screening businesses throughout five special dimensions, problems are more simply detected and solved.

    The Five Dimensions of MBM:

    According to the Charles Koch Institute, there are five dimensions to MBM:

    1. Vision – Determining where and how the organization can create the greatest long-term value.
    2. Virtue and Talents – Helping ensure that people with the right values, skills, and capabilities are hired, retained, and developed.
    3. Knowledge Processes – Creating, acquiring, sharing, and applying relevant knowledge, and measuring and tracking profitability.
    4. Decision Rights – Ensuring the right people are in the right roles with the right authority to make decisions and holding them accountable.
    5. Incentives – Rewarding people according to the value they create for the organization.

    They are – Vision – determining how and where the business can produce the most long-term worth. The development of a successful vision needs recognizing how a business can make better value for the client and most fully benefit from it. The procedure begins with a practical evaluation of the business’s core potential (new, improved or existing) and a preliminary determination of the chances for which these competencies can create the most worth. This preliminary determination must be established through the improvement of a point of view concerning what is going to occur in the industries where the business consider these chances exist.

    To be a truly successful business, one that stands and excels the test of time, virtue, as well as talent, must be highlighted. Virtue and talents help to ensure that individuals are with the correct skills, values, and capabilities are employed, retained, and developed. Businesses applying market-based management reward workers according to their virtue and their inputs.

    Businesses struggle to find individuals who can produce the most value through a variety of experience, perspectives, knowledge, and abilities. Diversity within a business is also significant to assist to improve understanding and relating to its clients and communities in this diverse world. The skill to create genuine value depends on an ethical, entrepreneurial culture in which the workers are passionate about finding.

    Although workers are chosen and kept on the basis of their beliefs and values, they must also have the required talent to produce outcomes. Virtue without the needed talent does not generate worth. But talent not including virtue is dangerous and can put the business and other workers at risk. Workers with inadequate virtue have done far more harm to businesses than those with inadequate talent.

    Market economies are flourishing, in large part, because they are better at creating helpful knowledge. Knowledge processes are market economies that make them mainly because they are well-equipped to produce useful knowledge. Acquiring, creating, sharing, and applying appropriate knowledge, and tracking and measuring profitability. The main methods of this knowledge creation are market signs from trade to prices, loss, and profit to and free speech.

    Businesses are most wealthy when knowledge is abundant, available, important, cheap and growing. Such situations are most fully brought about by trade. Knowledge increases success by indicating and guiding resources to most valued uses. Besides allowing producers to build goods that create better value for customers, new knowledge also assist producers to do so with the smaller amount of resources. The detection and application of knowledge directly to the enhanced use, consumption and of resources.

    Within a business, knowledge is necessary for creating better value for its clients and the business. A knowledge procedure is a way by which businesses develop, replace, apply and share knowledge to create value. To be successful in an uncertain future, a business must draw on the dispersed knowledge among its workers. It must also give them the confidence to find out new means to create value. Workers must innovate, not just in technology, but in all features and at all levels of the company.

    Decision rights are ensuring the correct individuals are in the right roles with the exact power to make decisions and holding them responsible. Decision rights should reproduce a worker’s established relative advantages. A worker has a relative advantage among a group of workers when he/she can carry out an activity more efficiently at a lesser opportunity cost than others. Decision rights constitute a worker’s liberty to act separately in carrying out the tasks of a given role.

    They normally take the form of limits for diverse types of capital expenditures, operating expenses and contractual commitments. The right to make some decisions, but not others, is supported on the degree to which a worker has established the skill to achieve outcomes in diverse areas. Decisions should be taken by workers with the best knowledge, taking the comparative advantage into consideration.

    Finally, incentives – gratifying people according to the value they generate for the business. These dimensions each offer a lens through which to be aware of and solve multifaceted obstacles that businesses face. For example, Koch industry used incentives to try to align the interests of every worker with the interests of the business.

    This means striving to pay workers a part of the value created. Profit is an influential incentive that motivates entrepreneurs to be aware and take risks to foresee and satisfy client demands. Finding less costly ways to make existing goods and developing new and improved ones is not only painful for the discovering entrepreneur, but it is also advantageous for business.

    However, there is the sixth dimension which is the brute physical force. The brute physical force dimension follows this basic pattern, first at the individual level; it is helpful to pump iron daily. At the organizational level, it is beneficial to strive to have employees whose standard shirt-collar size is in the low 20s, at least; and finally, at the societal level, wealth is usually increased.

    In order to completely capture the influence of market-based management, a business must not only keep away from fruitless tendencies but frequently strive to develop its capability to internalize and apply appropriate mental models. This needs the most complex and painful of all changes. Achieving such a change entails a prolonged and focused effort to build up new habits of the idea based on these mental models. Achievement in relating new mental models comes only after frequent practice.

    Market-Based Management_ Meaning Principles and Dimensions - ilearnlot

  • Personnel Management: Functions, Nature, Principles, and Importance!

    Personnel Management: Functions, Nature, Principles, and Importance!

    Explain and learn, Personnel Management: Functions, Nature, Principles, and Importance! 

    Personnel Management (staffing function of Management), also known as Human Resource Management. The concept of Personnel Management study is – Functions of Personnel Management, Nature of Personnel Management, Principles of Personnel Management, and Importance of Personnel Management. Personnel management is concerned with the proper use of human factors. Per­sonnel management may be defined as that part of the management process, which is prima­rily concerned with the human constituents of an organization. Also learned with PDF Reader, free Download, Personnel Management: Functions, Nature, Principles, and Importance!

    Personnel management can also be defined as, that field of management which is con­cerned with the planning, organising, directing and controlling various operative functions of procurement, development, maintenance and utilisation of a labour force in such a way that objectives of company, those of personnel at all levels and those of community are achieved.

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    Functions of Personnel Management:

    Functions of Personnel Management are of two types: 1. Managerial Functions 2. Operative Functions!

    1. Managerial Functions:

    The Managerial functions of a personnel manager involve POSDCORB (Luther Gullick) i.e., Planning, organization, staffing, directing, coordinating, reporting and budgeting of those who actually perform the operative functions of the Personnel Department.

    The following are the managerial functions (viz. planning, organizing, directing and controlling) performed by a personnel department:

    Personnel Planning:

    Planning lays down a pre-determined course to do something such as what to do, how to do, where to do, who is to do etc. A personnel manager plans in advance the trend in wages, labor market, union demands etc. Through planning, most of the future problems can be anticipated.

    Organizing:

    According to J.C. Massic, “An organization is a structure, a framework and a process by which a co-operative group of human being allocates its task among its members, identify relationships and integrates its activities towards common objectives.” The personnel manager has to design the structure of relationships among jobs, personnel, and physical factors so that the objectives of the enterprise are achieved.

    Directing:

    This function relates to guidance and stimulation of the subordinates at all levels. The personnel manager directs and motivates the employees of his department so that they work willingly and effectively for the achievement of organizational goals,

    Controlling:

    A personnel manager has to constantly watch whether there is any deviation from the planned path. Controlling is concerned with remedial actions. Continuous monitoring of the personnel policies relating to training, labor turnover, wage payments, interviewing new and separated employees etc., is the backbone of controlling.

    If deviations are unavoidable, corrective action can be planned in advance. Controlling helps the personnel manager to evaluate the performance of employees in the personnel department so far as the operating functions are concerned.

    1. Operative Functions:

    The operative functions of the Personnel Department are also called service functions. 

    These include.

    (a) Procurement function

    (b) Development

    (c) Promotion, transfer and termination function

    (d) Compensation function

    (e) Welfare function

    (f) Collective bargaining function

    (g) Miscellaneous functions.

    These functions of the Personnel Department are discussed below:

    (1) Procurement:

    It includes:

    (a) Recruitment i.e., tapping the possible sources from where prospective labor supply will come.

    (b) Getting information regarding prevailing wage rates and job requirements.

    (c) Selecting the best candidate by following a systematic selection procedure.

    (d) Maintaining the records of employees.

    (e) Introducing the new employee to the officers of the other departments such as Security Officer, Time Keeper, and Cashier etc.

    (2) Training or Development Function:

    The training of the new employees and also of those who are being promoted is the crucial function of Personnel Department. A training programme is devised for this purpose. The training increases the skills and abilities of the employees.

    The various aspects of training are:

    (a) Training to new employees, instructors, and supervisors.

    (b) Training in safety equipment and various policies of companies.

    (c) Training through improvement of education such as evening classes, films, Entertainment programmes etc.

    (d) Encouraging employees to give suggestions.

    (3) Promotion, Transfer, and Termination:

    The performance of the employees is evaluated for the purpose of making decisions concerning the employment. Merit rating is undertaken for evaluation of the performance of the employees.

    The functions of the Personnel Department in this regard are given below:

    (a) To lay down a promotion policy.

    (b) To formulate policies regarding transfer and termination.

    (c) Analysis of voluntary separations and knowing the possible causes of such separations.

    (4) Compensation:

    The employees should get adequate and equitable remuneration for the work being done by them.

    The functions of the Personnel Department concerned with fixation of fair wages is:

    (a) To evaluate jobs and determine their worth in terms of money.

    (b) To collaborate with those who formulate wage plans.

    (c) To assist in the formulation of policies regarding pension plans, profit sharing programmes, non-monetary benefits, etc.

    (d) To compare the wages of the enterprise with the industry and remove inconsistencies, if any.

    (5) Welfare Activities:

    These activities relate to the physical and social well-being of the employees and include:

    (a) Provision of medical facilities such as first aid, dispensaries, etc.

    (b) Suggesting ways and means by which accidents can be eliminated or minimized.

    (c) To make provisions for restaurants and other recreational facilities.

    (d) To apply the labor laws effectively.

    (e) To publish a plant magazine.

    (6) Collective Bargaining:

    It includes:

    (a) To assist in the negotiations which are held with the union leaders?

    (b) To know the grievances of employees and following their problems properly.

    (7) Miscellaneous:

    (a) To advise the line managers regarding administration of personnel policies.

    (b) To secure co-ordination of all personnel activities.

    (c) To have an effective communication system.

    (d) To provide good working conditions.

    Nature of Personnel Management:

    1. Personnel management includes the function of employment, development, and compensation- These functions are performed primarily by the personnel management in consultation with other departments.
    2. Personnel management is an extension of general management. It is concerned with promoting and stimulating competent workforce to make their fullest contribution to the concern.
    3. Personnel management exists to advise and assist the line managers in personnel matters. Therefore, personnel department is a staff department of an organization.
    4. Personnel management lays emphasize on action rather than making lengthy schedules, plans, work methods. The problems and grievances of people at work can be solved more effectively through rationale personnel policies.
    5. It is based on human orientation. It tries to help the workers to develop their potential fully to the concern.
    6. It also motivates the employees through its effective incentive plans so that the employees provide fullest co-operation.
    7. Personnel management deals with human resources of a concern. In the context of human resources, it manages both individuals as well as blue-collar workers.

    Principles of Personnel Management:

    Principles of personnel management help the personnel managers to conduct and direct the policies in a proper way.

    These principles are:

    1. The principle of Maximum Personnel Development:

    By this principle, the workers are developed to the maximum extent, so that their developed ability, cleverness, productivity, and efficiency can be used for the firm’s objective.

    1. The principle of Scientific Selection:

    This principle enables to have a right person for the right job.

    1. The principle of High Morale:

    Ideal wage policy should be offered to the workers so that their morale becomes high and they work with interest.

    1. The principle of Dignity of Labour:

    The labor should feel proud of their work.

    1. The principle of Team Spirit:

    Team spirit must be developed among the workers. They should work collectively with collective responsibility and should have a sense of cooperation, unity and mutual trust.

    1. The principle of Effective Communication:

    There must be effective communication be­tween the management and workers otherwise complex problems like mistrust, hatred and ill- will arise which in turn affects the production of the organization.

    1. The principle of Joint Management:

    This creates responsibility in the labor with in­creasing mutual faith and friendship. This improves the labor relations.

    1. The principle of Fair Reward:

    Labour should be given proper compensation for the work. This develops the industrial piece.

    1. The principle of Effective Utilisation of Human Resources:

    Personnel management should be developed for the effective use of the human resources. Proper training should be awarded to the personnel for their development.

    Importance of Personnel Management:

    Personnel management is important for avoiding the following consequences:

    1. To hire the wrong person for the job
    2. To experience high turnover
    3. To find your people not doing their best
    4. To waste time with useless interviews
    5. To have some of one’s employees think their salaries are unfair and inequitable relative to others in the organization.
    6. To allow a lack of training to undermine one’s department’s effectiveness.
    7. To commit any unfair labor practices.

    The acquisition of skilled, talented and motivated employees is an important part of personnel management. The acquisition phase involves recruiting, screening, selecting and placing personnel. Retaining competent individuals is also important to an organization. If qualified individuals regularly leave a company, it becomes necessary to continuously seek new personnel, which costs money and time.

    The opposite of retention is, of course, termination, an unpleasant part of any manager’s job. Occasionally, some employees must be terminated for breaking rules, failing to perform adequately or job cutbacks.

    Developing human resources involves training, educating, appraising and pre­paring personnel for present or future jobs. These activities are important for the material and psychological growth of employees. It is not possible to satisfy the need for personnel in an organization if it does not have an active employee development programme.

    For utilizing the full potential of manpower, there is need to understand both individual and organizational needs. It is also necessary to match two things: availability of different types of manpower, over time and organizational needs for such manpower. Personnel management is normally regarded as a staff function whose role is to serve the organization and help it achieve its objectives.

    Personnel Management Functions Nature Principles and Importance - ilearnlot

  • Managerial Economics: Nature, Scope, and Principles

    Managerial Economics: Nature, Scope, and Principles

    Managerial Economics can define as the amalgamation of economic theory with business practices to ease decision-making and future planning by management. The Concept of Managerial Economics Study: Meaning, Definition, Nature of Managerial Economics, Scope of Managerial Economics, and Principles of Managerial Economics. Managerial Economics assists the managers of a firm in a rational solution to obstacles faced in the firm’s activities. It makes use of economic theory and concepts. It helps in formulating logical managerial decisions.

    Learn, Explain Managerial Economics: Nature, Scope, and Principles. 

    The key to Managerial Economics is the microeconomic theory of the firm. It lessens the gap between economics in theory and economics in practice. Managerial Economics is a science dealing with the effective use of scarce resources. It guides the managers in taking decisions relating to the firm’s customers, competitors, suppliers as well as relating to the internal functioning of a firm. It makes use of statistical and analytical tools to assess economic theories in solving practical business problems.

    Study of Managerial Economics:

    They help in the enhancement of analytical skills, assists in rational configuration as well as a solution to problems. While microeconomics is the study of decisions made regarding the allocation of resources and prices of goods and services, macroeconomics is the field of economics that studies the behavior of the economy as a whole. Managerial Economics applies microeconomic tools to make business decisions. It deals with a firm.

    The use of Managerial Economics not limits to profit-making firms and organizations. But it can also use to help in the decision-making process of non-profit organizations (hospitals, educational institutions, etc). It enables optimum utilization of scarce resources in such organizations as well as helps in achieving the goals in the most efficient manner. Managerial Economics is of great help in price analysis, production analysis, capital budgeting, risk analysis, and determination of demand. Managerial economics uses both economic theories as well as Econometrics for rational managerial decision making.

    Econometrics defines:

    As the use of statistical tools for assessing economic theories by empirically measuring the relationship between economic variables. It uses factual data for the solution of economic problems. Managerial Economics associates with the economic theory which constitutes “Theory of Firm”. The theory of the firm states that the primary aim of the firm is to maximize wealth. Decision making in managerial economics generally involves the establishment of a firm’s objectives, identification of problems involving in the achievement of those objectives, development of various alternative solutions, selection of best alternative, and finally implementation of the decision.

    Nature of Managerial Economics:

    Managers study managerial economics because it gives them insight to reign the functioning of the organization. If the manager uses the principles applicable to economic behavior in a reasonably, then it will result in the smooth functioning of the organization.

    Managerial Economics is a Science:

    Managerial Economics is an essential scholastic field. It can compare to science in the sense that it fulfills the criteria of being a science in the following sense:

    • Science is a Systematic body of Knowledge. It bases on methodical observation. Managerial economics is also a science of making decisions about scarce resources with alternative applications. It is a body of knowledge that determines or observes the internal and external environment for decision making.
    • In science, any conclusion arrives at after continuous experimentation. In Managerial economics also policies are made after persistent testing and training. Though the economic environment consists of the human variable, which is unpredictable, thus the policies made are not rigid. A managerial economist takes decisions by utilizing his valuable experience and observations.
    • Science principles are universally applicable. Similarly, policies of Managerial economics are also universally applicable partially if not fully. The policies need to change from time to time depending on the situation and attitude of individuals to those particular situations. Policies are applicable universally but modifications are requiring periodically.

    Managerial Economics requires Art:

    The managerial economist requires to have an art of utilizing his capability, knowledge, and understanding to achieve the organizational objective. The managerial economist should have art to put in practice his theoretical knowledge regarding elements of the economic environment.

    Managerial Economics for the administration of the organization:

    Managerial economics helps the management in decision making. These decisions are based on the economic rationale and are valid in the existing economic environment.

    Managerial economics is helpful in optimum resource allocation:

    The resources are scarce with alternative uses. Managers need to use these limited resources optimally. Each resource has several uses. It is the manager who decides with his knowledge of economics that which one is the preeminent use of the resource.

    Managerial Economics has components of microeconomics:

    Managers study and manage the internal environment of the organization and work for the profitable and long-term functioning of the organization. This aspect refers to the microeconomics study. The managerial economics deals with the problems faced by the individual organization such as the main objective of the organization, demand for its product, price and output determination of the organization, available substitute and complementary goods, the supply of inputs and raw material, target or prospective consumers of its products, etc.

    Managerial Economics has components of macroeconomics:

    None of the organizations works in isolation. They affecting by the external environment of the economy in which it operates such as government policies, general price level, income and employment levels in the economy, stage of the business cycle in which economy is operating, exchange rate, the balance of payment, general expenditure, saving and investment patterns of the consumers, market conditions, etc. These aspects are related to macroeconomics.

    Managerial Economics is dynamic:

    Managerial Economics deals with human-beings (i.e. human resources, consumers, producers, etc.). Nature and attitude differ from person to person. Thus to cope up with dynamism and vitality managerial economics also changes itself over some time.

    The Scope of Managerial Economics:

    Managerial Economics deals with allocating scarce resources in a manner that minimizes the cost. As we have already discussed, Managerial Economics is different from microeconomics and macroeconomics. Managerial Economics has a more narrow scope – it is solving managerial issues using micro-economics. Wherever there are scarce resources, managerial economics ensures that managers make effective and efficient decisions concerning customers, suppliers, competitors as well as within an organization. Also, understand the scope of managerial economics below is.

    The fact of scarcity of resources gives rise to three fundamental questions:

    • What to produce?
    • How to produce?
    • For whom to produce?

    To answer these questions, a firm makes use of managerial economics principles.

    The first question;

    Relates to what goods and services should produce and in what amount/quantities. The managers use demand theory for deciding this. The demand theory examines consumer behavior with respect to the kind of purchases they would like to make currently and in future; the factors influencing purchase and consumption of a specific good or service; the impact of change in these factors on the demand of that specific good or service; and the goods or services which consumers might not purchase and consume in future. To decide the number of goods and services to produce, the managers use methods of demand forecasting.

    The second question;

    Relates to how to produce goods and services. The firm has now to choose among different alternative techniques of production. It has to decide on the purchase of raw materials, capital pieces of equipment, manpower, etc. The managers can use various managerial economics tools such as production and cost analysis, project appraisal methods, etc for making these crucial decisions.

    The third question;

    It is regarding who should consume and claim the goods and services producing by the firm. The firm, for instance, must decide which is its niche market-domestic or foreign? It must segment the market. It must conduct a thorough analysis of the market structure and thus take price and output decisions depending upon the type of market.

    Managerial economics helps in decision-making as it involves logical thinking. Moreover, by studying simple models, managers can deal with more complex and practical situations. Also, a general approach implements. Managerial Economics take a wider picture of the firm, i.e., it deals with questions such as what is a firm, what are the firm’s objectives, and what forces push the firm towards profit and away from profit.

    In short, managerial economics emphasizes the firm, the decisions relating to individual firms, and the environment in which the firm operates. It deals with key issues such as what conditions favor entry and exit of firms in a market, why are people paid well in some jobs, and not so well in other jobs, etc. It is a great rational and analytical tool. Managerial Economics is not only applicable to profit-making business organizations but also non- profit organizations such as hospitals, schools, government agencies, etc.

    Managerial Economics Nature Scope and Principles
    Managerial Economics: Nature, Scope, and Principles, #Pixabay.

    Principles of Managerial Economics:

    Managerial Economics principles assist in rational reasoning and define thinking. They develop the logical ability and strength of a manager.

    Some important principles of managerial economics are:

    Marginal and Incremental Principles:

    These principles state that a decision says to be rational and sound if, given the firm’s objective of profit maximization, it leads to an increase in profit, which is in either of two scenarios:

    • If total revenue increases more than the total cost.
    • If total revenue declines less than total cost.

    The marginal analysis implies judging the impact of a unit change in one variable on the other. Marginal generally refers to small changes. Marginal revenue is the change in total revenue per unit change in output sold. The marginal cost refers to change in total costs per unit change in output produced (While incremental cost refers to change in total costs due to change in total output). The decision of a firm to change the price would depend upon the resulting impact/change in marginal revenue and marginal cost. If the marginal revenue is greater than the marginal cost, then the firm should bring about the change in price.

    The incremental analysis differs from marginal analysis only in that its analysis the change in the firm’s performance for a given managerial decision, whereas marginal analysis often generates a change in outputs or inputs. Incremental analysis is a generalization of the marginal concept. It refers to changes in cost and revenue due to a policy change.

    For example – adding a new business, buying new inputs, processing products, etc. Change in output due to change in process, product or investment considers as an incremental change. The incremental principle states that a decision is profitable if revenue increases more than costs; if costs reduce more than revenues; if the increase in some revenues is more than the decrease in others; and if the decrease in some costs is greater than the increase in others.

    Equi-marginal Principles:

    Marginal Utility is the utility derives from the additional unit of a commodity consumed. The laws of Equi-marginal utility state that a consumer will reach the stage of equilibrium when the marginal utilities of various commodities he consumes are equal. According to modern economists, this law has been formulating in the form of the law of proportional marginal utility. It states that the consumer will spend his money-income on different goods in such a way that the marginal utility of each good is proportional to its price, i.e.,

    MUx / Px = MUy / Py = MUz / Pz

    Where MU represents marginal utility and P is the price of the good.

    Similarly, a producer who wants to maximize profit (or reach equilibrium) will use the technique of production which satisfies the following condition:

    MRP1 / MC1 = MRP2 / MC2 = MRP3 / MC3

    Where MRP is the marginal revenue product of inputs and MC represents the marginal cost.

    Thus, a manager can make the rational decision by allocating/hiring resources in a manner which equalizes the ratio of marginal returns and marginal costs of various use of resources in specific use.

    Opportunity Cost Principles:

    By opportunity cost of a decision is meant the sacrifice of alternatives require by that decision. If there are no sacrifices, there is no cost. According to Opportunity cost principle, a firm can hire a factor of production if and only if that factor earns a reward in that occupation/job equal or greater than it’s an opportunity cost.

    Opportunity cost is the minimum price that would be necessary to retain a factor-service in it’s given us use. It also defines the cost of sacrificed alternatives. For instance, a person chooses to forgo his present lucrative job which offers him Rs.50000 per month and organizes his own business. The opportunity lost (earning Rs. 50,000) will be the opportunity cost of running his own business.

    Time Perspective Principles:

    According to these principles, a manager/decision-maker should give due emphasis, both to the short-term and long-term impact of his decisions, giving apt significance to the different periods before reaching any decision. Short-run refers to a period in which some factors are fixed while others are variable. The production can increase by increasing the number of variable factors.

    While long-run is a period in which all factors of production can become variable. Entry and exit of seller firms can take place easily. From consumer’s point of view, the short-run refers to a period in which they respond to the changes in price, given the taste and preferences of the consumers, while long-run is a period in which the consumers have enough time to respond to price changes by varying their tastes and preferences.

    Discounting Principles:

    According to these principles, if a decision affects costs and revenues in the long-run, all those costs and revenues must discount to present values before the valid comparison of alternatives is possible. This is essential because a rupee’s worth of money at a future date is not worth a rupee today. Money has a time value. Discounting can define as a process uses to transform future dollars into an equivalent number of present dollars. For instance, $1 invested today at 10% interest is equivalent to $1.10 next year.

    FV = PV*(1+r)t

    Where FV is the future value (time at some futures time), PV is the present value (value at to, r is the discount (interest) rate, and t is the time between the future value and present value. Maybe you’d better know about Managerial Economics and their topics Nature, Scope, and Principles.

  • Environmental Education: Aim, Principles, and Concept

    Environmental Education: Aim, Principles, and Concept

    Environmental education (EE) concerns with those aspects of human behavior which are more directly related to man’s interaction with the biophysical environment and his ability to understand this interaction. The article explaining Environmental Education – with their topic Aim, Principles, and Concept. EE is a methodology in which people pick up familiarity with their surroundings and secure learning, abilities, values, experiences, and passion, all of which will empower them to act – separately and aggregately – to take care of present and future environmental issues.

    Learn and understand the Environmental Education: Aim, Principles, and Concept, deeply explain.

    One of the most glaring problems which the world faces today is environmental pollution. The man has exploited nature excessively at the cost of the environment. There is an immediate need to make people aware of environmental degradation. What is Pollution and Types of Environmental Pollution? Education and public participation may change and improve the quality of the environment.

    Explain it each one of Environmental Education (EE): Definition, Objectives of Environmental Education, Aim of Environmental Education, Principles of Environmental Education, and Concept of Environmental Education! Environmental Education in India – Concept, and Role of Environmental Education.

    Definition of Environmental education (EE):

    According to UNESCO,

    “Environmental education is a way of implementing the goals of environmental protection. It is not a separate branch of science but the lifelong interdisciplinary field of study.”

    It means education towards the protection and enhancement of the environment and education as an instrument of development for improving the quality of life of human communities.

    Objectives of Environmental Education (EE):

    The following are the objectives of environmental education:

    1] Awareness:

    To help social groups and individuals to acquire knowledge of pollution and environmental degradation.

    2] Knowledge:

    To help social groups and individuals to acquire knowledge of the environment beyond the immediate environment including the distant environment.

    3] Attitudes:

    To help social groups and individuals to acquire a set of values for environmental protection.

    4] Skills and Capacity Building:

    To help social groups and individuals to develop the skills required for making discriminations in form, shape, sound, touch, habits, and habitats. Further, to develop the ability to draw unbiased inferences and conclusions.

    5] Participation:

    To provide social groups and individuals with an opportunity to actively involve at all levels in environmental decision making.

    There are four areas of decision making:

    • Types of environmental issues on which decisions might make.
    • The physical setting of the prospective environmental decision, including its spatial scale.
    • Types of social groups and individuals who might interact in a process leading up to an environmental decision, and.
    • The time frame within which the decision must make.

    The aim of Environmental Education (EE):

    UNESCO has highlighted the following aims of environmental education:

    The aim of environmental education is clearly to show the economic, social, political and ecological interdependence of the modern world, in which decisions and actions by different countries can have international repercussions. They should, in this regard, help to develop a sense of responsibility and solidarity among countries and regions as the foundation for a new international order which will guarantee the conservation and improvement of the environment.

    The main aim of environmental education at the grass-root level is to succeed in making individuals and communities understand the complex nature of the natural and the built environments. Further, to acquire the knowledge, values, attitudes, and practical skills to participate responsibly and effectively in anticipating and solving social problems, and in the management of the quality of the environment.

    Therefore, necessary steps for environmental education are:

    • Awareness.
    • Knowledge.
    • Attitude building for motivating to protect the environment.
    • Evaluation of environmental measures, and.
    • Skill and capacity building.

    According to D.H. Meadows’, environmental educators on every continent develop materials and methods as varied as the different cultures and ecosystems on earth. He lists some key concepts which underlie all environmental education. These are food for thought, levels of being, complex systems, population growth and carrying capacity, ecologically sustainable development, socially sustainable development, knowledge, uncertainty, and sacredness.

    Guiding Principles of Environmental Education (EE):

    The Principles of Environmental Education is deeply explaining – These are as follows:

    1] Resource Principles:
    • Resource use demands long-term planning if we are to achieve truly sustainable development.
    • Rationale utilization of a renewable source is a sensible way of preserving the resources while obtaining maximum benefits from it.
    • A mode of life heavily dependent upon rapidly diminishing non­-renewable energy sources (i.e. fossil fuel) is unstable.
    2] Soil Principles:
    • The protection of soils and the maintenance of sustainable agriculture are essential factors in the survival of civilizations and settlements.
    • Soil erosion is the irreversible loss of essential resources and must prevent.
    • A vegetation cover (grass, forest) is important for the balance of nature and the conservation of soil, besides being exploitable natural resources.
    3] Wildlife Protection Principles:
    • Wildlife population is important aesthetically, biologically and economically.
    • Nature reserves and other protected wilderness areas are of value in protecting endangered species because they preserve their habitats.
    • The survival of humanity is closely linked to the survival of wildlife both being dependent on the same life-supporting systems.
    4] Environmental Management Principles:
    • Sound environmental management is beneficial to both man and the environment.
    • Management of natural resources should do rationally.
    • Elimination of wastes through recycling and the development of clean.
    • Technologies are important to modern societies to help reduce the consumption of resources.
    • Human activities and technologies influence considerably the natural environment and may affect its capacity to sustain life, including human life.
    5] Other Principles:
    • The relations between humans and their environment are mediated by their culture i.e.
    • Cultural, historical and architectural heritage are much in need of protection.
    Environmental Education Aim Principles and Concept
    Environmental Education: Aim, Principles, and Concept #Pixabay

    The Concept of Environmental Education (EE):

    Any curriculum should base on well-thought-out and clearly define concepts that one wishes the learner to acquire. Some important concepts of environmental education have interdisciplinary significance such as environmental pollution, carrying capacity, ecosystems, ecology, and conservation, etc.

    Environmental Education (EE) in India:

    The prosperity and well-being of a nation depend on the effective utilization of human and physical resources through industrialization based on science and technology. But there is a perennial controversy between development and the environment. Also, the question is whether we shall go for industrial or modernization or we shall protect the environment.

    On one hand, we know that the development of a nation depends on industrialization, and on the other hand, rapid industrial and agricultural development entails many adverse effects on the environment of the countries concerned. So we have to apply our wisdom in striking a balance between these two contradictory factors. Also, Development and the environment are concerned with global ecology. We should, therefore; clearly, know the basic concepts of environment or ecology and its relation to our developmental activities at the macro as well as micro-level.

    Basic Concept of Environmental Education:

    Everything that surrounds us and on which our life depends is our environment. Our room, our home, our village or town, our family and friends, the air we breathe, the water we drink, the sunshine and the rain – all are part of our environment. Even the environment of two individuals is different. But these environments are interrelated so closely that in a sense we all belong to the same environment.

    This interrelatedness is a matter of ecology. The term “ecology” has been deriving from the Greek word “Oikos” which means home. So, ecology is literally, the science that deals with the home conditions of all living beings. Also, Ecology deals with the interrelationships between living beings and their environment.

    Previously, in the old days, a natural balance was maintained between all living beings including men and plants. Also, They were living together in harmony and the natural setting. Human beings live in harmony with Nature including the Forest which was providing most of the necessities for living. But over recent years, due to rapid industrialization, urbanization, nature has been adversely affecting.

    Extra explain:

    The environment seriously degrades and there are imbalance and disharmony. Also, the water and air have been polluted to a great extent because of the destruction of the vast forest on the earth. Because, the forest plays an important role in the conservation of water, purification of air and supplying many useful things to human beings.

    Another disaster that is posed before us is that due to the rapid growth of urbanization. Also, the living conditions of the people in the cities and towns have been deteriorating. There is the pollution of water, air, and noise, etc. due to the rapid expansion of industries, power stations, and motor vehicles, etc. Everywhere, there is pollution. It has been proving harmful to the physical and mental health of the people.

    All the Influences on the growth of the individual constitute the environment. As well as, the environment includes several situations or experiences that influence the development of the individual. So the environment of an individual comprises all the physical and social factors around him which directly affect his living including the working conditions.

    The various environmental factors are interrelated. Also, the physical environment includes living and non-living, the geographical landmarks, topography, and climatic conditions, man-made features like buildings, roads, transport and other facilities like health, sanitation, nutrition aspects. As well as, the social environment consists of the family and community life, fairs and festivals, modes of production and supply of essential commodities.

    The various environmental factors are inter-related. We know the environment of an individual comprises all the physical and social factors. Then only the individual can survive on his earth. For this reason, our environment is to protect.

    Role of Environmental Education (EE):

    Education regards as an important instrument and means for generating proper awareness and adequate knowledge and skills regarding environmental protection. It is, therefore, felt essential to develop education about the environment, education for the environment and education through the environment.

    So as a whole, it will be environmental education.

    • They should integrate into the whole system of formal education at all levels.
    • It adopts a holistic perspective that will examine the ecological, social, cultural and other aspects of particular problems.
    • They should center on practical problems related to real life.
    • They should aim at building up a sense of values.

    However, it universally agrees that environmental education should be interdisciplinary, drawing from biological, sociological, anthropological, economic, and political and human resources. It is also agreed that a conceptual approach in teaching environmental education is the best.

    It also involves decision-making and development strategies for promoting environmental protection. As well as, it treats as a discipline in which various subjects like Zoology, Botany, Chemistry, Mathematics, and Physics are including. This makes it imperative to train specialists in environmental education for planning,’ management, development, and taking remedial measures for solving the problems.

    The NCERT developed the guidelines for the school curriculum based on the Education Commission, 1964-66. It has also prepared a resource material on the use of the environment as a basis for meaningful learning in Primary Education.

    The National Policy on Education 1986 has also given a special place of significance to education and the environment. So a great need is being felt to create awareness for the protection of the environment by redesigning the objectives, methods, and curriculum in the field of education.

  • Explain essay on the Direction of an Organization!

    Learn, Explain essay on the Direction of an Organization!

    Before start studying, you must know what common question types asked around the place. Essay for Articles: What is the Essay on the Meaning of Direction? What is the Essay on the definition of Direction? What is the Essay on the Elements of Direction? What is the Essay on the Importance of Direction? What is the Essay on Written VS Oral Directives? What is the Essay on the Techniques of Direction? and What is the Essay on the Principles of Direction? Also learned, The Importance of Directing in an Organization! Explain essay on the Direction of an Organization!

    Now Explain it:

    #The Essay on Meaning of Direction:

    Direction involves communication and providing leadership to the subordinates and motivating them to contribute to the best of their capability for the achievement of organizational objectives. It is concerned with influencing the behavior of human resources for the accomplishment of organizational objectives.

    Directing concerns the total manner in which a manager influences the actions of his subordinates. It is the final act of a manager getting others to act after all preparations have been completed. It starts with issuing orders and instructions to the subordinates and ends with getting the work done. Related question – Explain Principles for Achieving Effective Direction in Management!

    #The Essay on the Definition of Direction:

    In the words of Ernest Dale, “Direction is telling people what to do and seeing that they do it to the best of their ability. It includes making assignments. Corresponding procedures, seeing that mistakes are corrected, providing on-the-job instructions and, of course, issuing orders.”

    According to Theo Haimann, “Directing consists of the processes and techniques utilized in issuing instructions and making certain that operations are carried out as originally planned.”

    According to Koontz and O’Donnell, “Directing is the interpersonal aspect of managing by which subordinates are led to understand and contribute effectively and efficiently to the attainment of enterprise objectives.”

    #The Essay on Elements of Direction:

    These are four elements of direction discussed below:

    #Supervision:

    It is the process by which conformity between planned and actual results is maintained. Effective supervision ensures greater output of high quality. It reaches the subordinates the way their tasks are to be performed.

    #Leadership:

    It is the process by which a manager guides and influences the work of others in choosing and attaining specified goals. According to Chester Barnard, “Leadership is the quality of the behavior of the individuals whereby they guide people and their activities in the organized effort.”

    #Communication:

    A manager has to tell the workers what they are required to do how to do and when to do it. He has to create an understanding in the minds of the subordinates of the work to be done. This is done by the process of communication.

    #Motivation:

    Motivation is the function of a manager to motivate the people working under him to perform the work assigned. A successful manager has made proper use of motivation to enthuse the people to work harmoniously for the attainment of desired objectives.

    #The Essay on Importance of Direction:

    These are some of the importance of direction discussed below:

    The direction is the function of management which follows planning, organizing, and staffing. Once objectives have been formulated and plans have been drawn, it is necessary to implement the plans. This can be accomplished by directing the people and their activities.

    It is through directing that managers get the work done through people. The direction is the process of guiding, supervising, leading and motivating the subordinates to work in a way that is beneficial to the enterprise. The manager not only shows the right path but also leads the subordinates to achieve the objectives of the enterprise. He creates a sense of belongingness, faith, and loyalty among the subordinates.

    The importance of direction in an organization can be viewed by the fact that every action is initiated through direction. Since, human, beings in the organization handle the physical resources that are men, money, material, machinery, etc. to accomplish certain functions by which organizational objectives are to be achieved. This necessitates the importance of the direction function as an important factor for achieving organizational efficiency and effectiveness.

    In this context, the importance of direction is discussed as follows.

    #Direction Initiates Action:

    Through direction, management conveys and motivates individuals in the organization to function in the desired way in order to achieve organizational objectives. Without direction, other managerial activities like planning, organizing, and staffing become ineffective.

    #Direction Integrates Group Efforts:

    Management uses various techniques of direction to integrate the efforts of different individuals in the organization. Since their actions are inter-related in such a way that each individual’s performance affects the performance of others in the organization. Direction integrates the activities of the employees by supervision, guidance, and counseling.

    #Direction Facilitates Changes:

    As we all know, organizations exist as a part of the ever-changing environment, the dynamic nature of environment often require changes in the business enterprise. Direction helps the management to incorporate and implement these changes through better communication and leadership.

    #Direction Improves Efficiency through Motivation:

    Direction deals with an essential and sensitive factor of production that is the human factor. Every individual in the organization has a potential which can be utilized optimally only through motivation, leadership and effective communication which are essential elements of direction.

    #Direction Provides Stability and Balance in the Organization:

    Effective leadership, communication, and motivation provide stability and maintain balance in individual and organizational interest. The organization with the help of direction expands and grows in the right direction in order to achieve a stable existence.

    “Direction Helps Initiating Action and Integration”:

    The human resources available to management in an organization must be properly activated. It is through the combined efforts of people that various resources are utilized for the achievement of organizational objectives. Therefore, the direction of human efforts is a central responsibility of management everywhere.

    The effectiveness with which human resources are led, motivated and utilized determines the success in achieving organizational objectives. The need for direction arises to deal effectively and efficiently with the human factor for the accomplishment of goals of the enterprise.

    People working in the enterprise have to be told what they should do and they have also to be guided and induced to accomplish this. Moreover, individuals have their own goals which they expect to fulfill through the enterprise. These goals may be entirely different from those of the enterprise.

    The effective direction is a must to achieve congruency in the goals of the enterprise and those of the individuals. It will lead to replacing the existing behavior patterns of the individuals by those which are in conformity with the requirements of the organization.

    #The Essay on Written VS Oral Directives:

    The directives may be either written or oral.

    Some of the advantages of written directives are as follows:

    • Written orders are comparatively more intelligible and the chances for misunderstanding and duplication of effort will be minimized.
    • Written orders lead to clarity of thought and the quality of directive is, thus improved considerably.
    • A written order can be consulted readily to maintain accuracy.
    • The subordinate also gets an ample opportunity to study directive carefully.
    • The written order also makes it possible to communicate it to all interested parties simultaneously.
    • In case of written orders, every member of the organization is certain of his job. This improves the accountability aspect of management.

    In spite of numerous advantages, written directives suffer from the following disadvantages:

    • Written instructions are expensive and more time-consuming.
    • Written instructions might lead to an undesirable degree of inflexibility. Revision of written instructions is difficult. But it is not so difficult to revise an oral order.

    According to Theo Haimann, “Oral orders are almost invariably used when the action required is relatively simple in character. Also in times of emergency oral orders are almost always used. In order to strike a happy medium between the advantages and disadvantages of a written instruction, it is often expedient to put merely the important points of the instruction in writing and to give additional information orally.”

    #The Essay on Techniques of Direction:

    The main techniques of direction are given below:

    • Consultative Direction.
    • Free Rein Direction, and.
    • Autocratic Direction.

    Now Explain it:

    #Consultative Direction:

    Under this technique of direction, the executive consults with his subordinate concerning the feasibility, the workability, and the extent and the content of a problem before the superior makes a decision and issues a directive. It does not weaken the manager’s formal authority because the right to decide still remains with him. Here participation can occur at every level of organization.

    To make this technique a success, it is essential that the subordinate must be in favor of it. If the subordinate is the kind of a person who believes that the boss knows best and that making decisions and giving directives is none of his concern then there is a little likelihood that the opportunity to participate induces better motivation and better morale.

    One of the clear disadvantages of this technique is that the directive emerging from this consultation does not appear to the subordinate as an order, but as a solution which came directly from him or in which he participated. This assures the subordinate’s best cooperation and enthusiasm in carrying it out.

    Some other disadvantages of this technique are as follows:

    (i) There is a danger that the executive, in his desire to consult with his subordinates, might give them the impression of being not able to come to a decision.

    (ii) At times the subordinates consider it their right and prerogative to be consulted before a directive is given to them by their superior.

    #Free Rein Direction:

    This technique of direction encourages and enables the subordinate to contribute his own initiative, independent thought, drive perspicacity and ingenuity to the solution of the problem. This does not mean no- rein technique. He assigns the task not in a specific way but in general terms.

    In this technique, the initiative remains with the subordinate. The subordinate will have to select the solution and carry it out. This technique of direction will probably show the best and quickest results if the subordinate is the brilliant young man, highly educated, who has a sincere desire to become a top-level manager.

    #Autocratic Technique:

    The antithesis of free rein technique is the autocratic method where the executive substitutes command for the more informal methods and hands down detailed and precise orders in connection with the close supervision of subordinates.

    When the autocratic technique is adopted, the manager gives direct, clear and precise orders to his subordinates with detailed instructions as to how and what is to be done. The most democratic manager will find himself forced into issuing autocratic commands.

    #The Essay on Principles of Direction:

    The basic principles of direction are discussed below:

    • Harmony of Objectives.
    • Unity of Command.
    • Direct Supervision.
    • Effective Communication, and.
    • Effective Leadership.

    These are explained in brief as follows:

    #Harmony of Objectives:

    Every individual is assigned a particular job and he himself is responsible to complete that. He can do it in a better way only when he thinks that it is going to attain his personal objectives which may be different from the organizational objectives. So, the manager must try to reconcile the personal objectives of his subordinates with those of organizational objectives.

    #Unity of Command:

    This principle of direction states that a subordinate should get orders and instruction from one boss. He is responsible to one boss only. It is the best principle if it is not affected by the dual command.

    #Direct Supervision:

    Supervision refers to the direct and immediate guidance and control of subordinates in the performance of their task. Direct supervision by the boss and his direct advice to the subordinates boosts their morale resulting into renewed and vigorous effort. It also increases loyalty among the subordinates which is better for effective direction.

    #Effective Communication:

    Effective communication fosters mutual understanding, secures greater efforts from the subordinates and helps in co­ordinating the activities of an organization. Effective communication is an instrument of direction.

    Communication is complete only when the receiver receives and accepts the message intended. Two-way communications give the subordinates a chance to express their feelings and the boss to know the feelings of the subordinates. Misunderstanding, if any, can be removed through effective communication. Participation of subordinates in decision-making and responsibility is essential to make communication really effective and meaningful.

    #Effective Leadership:

    The success of an organization depends upon the quality of leadership exhibited by its managers at every level. Subordinates are happy if they get effective leadership from their boss. The boss must possess the qualities of a good leader if he is to get the work done with and through subordinates.

    The style of leadership adopted by a manager may be directive or democratic depending upon the needs of the situation, In any case, the manager cannot afford to overlook the interests of the subordinates. A person can exercise leadership over his subordinates only when he can fulfill their aspirations, and when they are satisfied with the type of leadership provided.