IGNOU & All Indian Univ.

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MCS-052

PRINCIPLES OF

MANAGEMENT &

INFORMATION SYSTEMS

MCS–52

For Masters In Computer Applications [MCA]

By Dinesh Verma Prof. S. Roy

Useful For IGNOU, KSOU (Karnataka), Bihar University (Muzaffarpur), Nalanda University, Jamia Millia Islamia, Vardhman Mahaveer Open University (Kota), Uttarakhand Open University, Kurukshetra University, Himachal Pradesh University, Seva Sadan’s College of Education (Maharashtra), Lalit Narayan Mithila University, Andhra University, Pt. Sunderlal Sharma (Open) University (Bilaspur), Annamalai University, Bangalore University, Bharathiar University, Bharathidasan University, Centre for distance and open learning, Kakatiya University (Andhra Pradesh), KOU (Rajasthan), MPBOU (MP), MDU (Haryana), Punjab University, Tamilnadu Open University, Sri Padmavati Mahila Visvavidyalayam (Andhra Pradesh), Sri Venkateswara University (Andhra Pradesh), UCSDE (Kerala), University of Jammu, YCMOU, Rajasthan University, UPRTOU, Kalyani University, Banaras Hindu University (BHU) and all other Indian Universities.

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Preface This book is mainly targeted for the exam of Principles of Management and Information Systems for all Universities. It has been introduced in market after seeing the huge demand of ready to grasp material for exams with high level of quality, and its un-availability in market. We the GullyBaba Publishing House took a step ahead to publish the quality material focusing on exams at the same time giving you indepth knowledge about the subject. GPH Book is the pioneer effort that provides a unique methodology so as to perform better in exams. If your goal is to attain higher grade use this powerful study tool independently or along with your text. On the Web : www.gullybaba.com is the vital resource for your exams acting as catalyst to boost up your preparation. Now you can access us on the net through www.doeacconline.com, www.ignouonline.com, and www.astrologyeverywhere.com. We gratefully acknowledges the significant contributions of Mr. S.K. Goel, Mr. Dinesh Verma, Mr. Mahesh Chand, Mrs. Bimla Devi, Mrs. Bhawna Verma and our experts in bringing out this publication. New Delhi

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Topics Covered

Block-1

Management Systems

Chapter-1 Chapter-2 Chapter-3 Chapter-4

Organisational Overview.......................................................1 Management Functions and Business Process...............12 Management Systems............................................................22 Business Values of Information System............................39

Block-2

Information Management

Chapter-5 Chapter-6 Chapter-7 Chapter-8

Portfolio Management and IT Applications...................55 Enterprise Resource Planning (ERP) System..................66 Intelligence Information Systems.......................................86 Social, Ethical and Legal Aspects....................................105

Question Papers

(1) June 2007 (Solved)...............................................................................126 (2) Dec 2007 (Solved)....................................................................................128 (3) June 2008 (Solved)....................................................................................132 (4) Dec 2008 (Solved).....................................................................................135 (5) June 2009.....................................................................................................139 (6) Dec 2009.....................................................................................................140 (7) June 2010....................................................................................................141 (8) Dec 2010 (Solved).....................................................................................143 (9) June 2011....................................................................................................153 (10) Dec 2011 (Solved)...................................................................................154 (11) June 2012 (Solved)...................................................................................161 (12) Dec 2012 (Solved)....................................................................................166 (13) June 2013 (Solved)...................................................................................170 (14) Dec 2013 (Solved)..................................................................................178 (15) June 2014....................................................................................................186 (16) Dec 2014...................................................................................................187 (17) June 2015...................................................................................................188 (18 ) Dec 2015....................................................................................................189 (19) June 2016 (Solved)....................................................................................190 (20 ) Dec 2016....................................................................................................195 (21) June 2017 ................................................................................................196 (22 ) Dec 2017.....................................................................................................197 (23) June 2018 (Solved)................................................................................198

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Management Systems

Q1. What are Vertical and horizontal Organisations? Explain their Organisational Structures and the benefits? [June 2007, Q1(b)] Ans. Vertical and Horizontal Organisations Vertical Organisation : Vertical organization is a hierarchically structured organization where all management activities are controlled by a centralized management staff. This traditional type of organization often develops strong bureaucratic control over all organizational activities. In other words vertical organization (Organization by function) brings together in one department everyone engaged in one activity or several related activities that are called functions. For example, an organization divided by function might have separate manufacturing, marketing, and sales departments. A sales manager in such an organization would be responsible for the sale of all products manufactured by the firm. Advantages : Functional organization is perhaps the most logical and basic form of departmentalization. It is used mainly by smaller firms that offer a limited line of products because it(a) makes efficient use of specialized resources. Another major advantage of a functional structure is that (b) it makes supervision easier, since each manager must be expert in only a narrow range of skills. In addition, (c) a functional structure makes it easier to mobilize specialized skills and

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bring them to bear where they are most needed. Horizontal Organisation : It refers to the degree of differentiation between units based on the orientation of members, the nature of tasks they perform and their education and training. Structure of Vertical Organisation (based on functions) concepts of such Organisation are – • Specialization of labour • Decomposition of Business processes into narrower and narrower tasks. • Focused on improving the performance of those individual tasks • Organisational units (functional departments) also reflected this narrow specialization. • Pictorical representation of Vertical Organisational is given below:

Process Oriented (Horizontal) Organisation Structures : A Process oriented organization has to be based on core processes. The core processes comprise of : • End-to-end work, information and material flows. • Extends across a business (and even beyond the business boundaries) and drives the achievement of fundamental performance objective to an organisation’s strategy. • Usually not more than 4 to 10 in a typical organization, which also depends on the business strategy of the organization. Typical major (Core) Business Process in an organization are : • Order Acquisition Process transforms a sales potential into a firm order in hand. • Order Fulfillment Process transforms an order into delivered goods, a satisfied customer, and the paid bill. www.GullyBaba.com

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Product Development Process transforms a customer need and/or an advanced concept into a manufacturable design that satisfies the value proposition. • New Business Development Process transforms technological and conceptual advancement into new businesses. • Customer Support Process transforms customer concerns and needs into value adding solutions. Major processes are divided into sub-processes, which are then describable in terms of basic tasks or activities. Common Characteristics of Horizontally Structured Organisation are : • Core processes group employees according to the sets and scope of multiple skills needed to meet performance objectives. • Teams constitute the fundamental units of the organization and are largely self-supervised. • Process owners are responsible for leading and managing the entire core processes. • The primary focus is external rather than internal, emphasizing the delivery. A typical process based organization structure is shown below in Figure :

Benefits/Merits of a Process based Organisation Structure are: (a) Eliminates the numerous handoffs that occur in functionally organized www.IgnouOnline.com

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companies. Facilitates a light alignment with what the customer wants. Highly compatible with the “learn paradigm:. Fewer levels of hierarchy, reduced “overhead” effort, Facilitates agility, rapid re-configuration, as external environment changes, (f) Performance measures and incentives/rewards can be tied more directly to tangible work progress. (g) Enhances morale. (b) (c) (d) (e)

Q2. Write the elements of Organisational structure. Ans. Elements of Organisational Structure are as follows : Work Specialization : It refers to the degree to which tasks in the organization are subdivided into separate jobs. In work specialization :• the entire job is broken down into steps, each step completed by a separate individual • individual workers specialize in doing part of an activity • involves repetitive performance of a few skills • can be viewed as a means to make the most efficient use of employee’s skills • some task requires highly developed skills • others can be performed by the untrained

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Departmentalization : After reviewing the plans, usually the first step in the organizing process is departmentalization. Once jobs have been classified through work specialization, they are grouped so those common tasks can be coordinated. Departmentalization is the basis on which work or individuals are grouped into manageable units. The Chain of Command : Chain of command is the unbroken line of authority that connects each level of management with the next level. The chain of command helps organizations function smoothly by making two things clear: who is responsible for each task, and who has the authority to make official decisions. Span of Control : The Span of Control in an organization is defined as the number of employees reporting directly to one supervisor. Traditionally, the Span of Control has been defined as a number between 4 and 7 subordinates under one manager. The Span of Control is a concept which developed during the 19’th Century for the organization of large European armies into smaller and smaller subunits, i.e. one could have 7 soldiers in one Platoon with 1 leader, 7 platoons with one higher-ranking leader, etc. to form a large army which was relatively easy for one General at the top to manage under conditions of combat. Centralization and Decentralization : Centralization is the retaining of power or authority to upper-levels of management. The advantages to centralization involve a closer control of company operations-including policies and practices. By retaining power at the top, those decisions that directly affect a company will be made by the proper governing board. Decentralization is the degree to which authority is dispersed throughout the lower levels of an organization. One of the main advantages to decentralization is that decisions can be made considerably faster, without having to seek approval from upper levels of authority. Also, the presence of decentralization acts as a motivational tool for employees to work their way through the ranks. Decentralization also eases the workload for busy executives who may not have time to oversee all aspects of the company. Formalization- The degree to which jobs within the organization are standardized High Levels • minimum amount of discretion over what, when, and how • consistent output • explicit job descriptions • organizational rules • clearly defined procedures www.IgnouOnline.com

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Low Levels • unprogrammed behaviors • exercise discretion • great deal of freedom • less standardization • consider alternatives Q3. What are the types of Organisations at macro level? What is the distinctive feature for each of these types? [Dec 2008, Q1(c)] Ans. Organisations at a macro level can be divided in three types. • Extraction, • Manufacturing including Construction, and • Services. These three types have distinct features : (a) Extraction Organisations: These produce good by extracting them from the earth. Examples of such organizations are Agriculture, Mining, Oil and Gas exploration and producing companies. (b) The manufacturing Organisations: These produce goods by conversion or by processing of one type of goods designated as raw materials into other type of goods designated as finished goods. Examples of this type are Car manufacturing, Fertilizer manufacturing, pharmaceutical and drug manufacturing companies etc. (c) The service Organisations do not produce any tangible good but produce services only. Services are intangible items having no shape or colour. Banking, Insurance, Transportation, Universities, Hospitals, Management Consultancy, Legal Firms etc. are example of these types of organizations. These three types of organizations have quite distinct structure, characteristics and functions. Q4. Four common and five unique characteristics of an Organisation. Ans. Four common features of Organisations are : (i) Formal Structure, (ii) Principal of Division of labour, (iii) Standard Operating Procedures, (iv) Decision Making Process. And five unique characteristics of Organisation are : (i) Organisational Type, (ii) Environment, www.GullyBaba.com

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(iii) Size of the Organisation, (iv) Locations Involved, (v) Business Processes. Q5. Explain the role that the environment plays on the Organisation. Ans. The general environment encompasses four influences that emanate from the geographic area in which the organization operates. These are : (a) Cultural values, which shape views about ethics and determine the relative importance of various issues. (b) Economic conditions, which include economic upswings, recessions, regional unemployment, and many other regional factors that affect a company’s ability to grow and prosper. Economic influences may also partially dictate an organisation’s role in the economy. (c) Legal/political environment, which effectively helps to allocate power within a society and to enforce laws. The legal and political systems in which an organization operates can play a key role in determining the long-term stability and security of the organisation’s future. These systems are responsible for creating a fertile environment for the business community, but they are also responsible for ensuring-via regulations pertaining to operation and taxationthat the needs of the larger community are addressed. (d) Quality of education, which is an important factor in high technology and other industries that require an educated work force. Business will be better able to fill such positions if they operate in geographic regions that feature a strong education system. Q6. What do you understand by formal and informal Organisations? Ans. Formal Organisations : Formal organization is a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leave little discretion for interpretation. In some societies and in some organization, such rules may be strictly followed; in others, they may be little more than an empty formalism. Key characteristics of the formal organization: • enduring, unless deliberately altered • top-down • missionary • static • excellent at alignment • plain to see • equates “person” with “role” www.IgnouOnline.com

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• hierarchical • bound together by codified rules and order • easily understood and explained • critical for dealing with situations that are known and consistent Informal Organisations : The informal organization is the interlocking social structure that governs how people work together in practice. It is the aggregate of behaviors, interactions, norms, personal and professional connections through which work gets done and relationships are built among people who share a common organizational affiliation or cluster of affiliations. It consists of a dynamic set of personal relationships, social networks, communities of common interest, and emotional sources of motivation. The informal organization evolves organically and spontaneously in response to changes in the work environment, the flux of people through its porous boundaries, and the complex social dynamics of its members. Tended effectively, the informal organization complements the more explicit structures, plans, and processes of the formal organization: it can accelerate and enhance responses to unanticipated events, foster innovation, enable people to solve problems that require collaboration across boundaries, and create footpaths showing where the formal organization may someday need to pave a way. Key characteristics of the informal organization: • evolving constantly • grass roots • dynamic and responsive • excellent at motivation • requires insider knowledge to be seen • treats people as individuals • flat and fluid • cohered by trust and reciprocity • difficult to pin down • essential for situations that change quickly or are not yet fully understood. Difference between formal and informal organization : Formal rules are often adapted to subjective interests – social structures within an enterprise and the personal goals, desires, sympathies and behaviors of the individual workers – so that the practical everyday life of an organization becomes informal. Practical experience shows no organization is ever completely rulebound: instead, all real organizations represent some mix of formal and informal. Consequently, when attempting to legislate for an organization and to create a www.GullyBaba.com

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formal structure, it is necessary to recognize informal organization in order to create workable structures. However, informal organization can fail, or, if already set in order, can work against mismanagement. Formal organizations are typically understood to be systems of coordinated and controlled activities that arise when work is embedded in complex networks of technical relations and boundary-spanning exchanges. But in modern societies, formal organizational structures arise in highly institutional contexts. Organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy of the acquired practices and procedures. There can develop a tension between on the one hand, the institutionalized products, services, techniques, policies, and programs that function as myths (and may be ceremonially adopted), and efficiency criteria on the other hand. To maintain ceremonial conformity, organizations that reflect institutional rules tend to buffer their formal structures from the uncertainties of the technical activities by developing a loose coupling between their formal structures and actual work activities. - (John Meyer and Brian Rowan, 1976). Q7. What are the five most acceptable stages during Organisational life cycle. Describe each stage. Ans. Life Cycle of an Organisation : Organizations go through different phases of growth. For sustained growth, it is important to understand what phase of the organizational life cycle one is in. Many will enter decline unless there are transformational leaders who can renew the organization. Different experts argue on how many phases there are in an organizational life cycle, but the Five most acceptable stages, during Organisational life cycle are: • Startup, • Growth. This is sometimes divided into an early growth phase (fast growth) and maturity phase (slow growth or no growth). However, maturity often leads to. • Decline. When in decline, an organization will either undergo. • Renewal Phase. • Failure. The Start-up Phase : This phase commences from the time an entrepreneur conceives the idea of a particular business and for giving shape to the business, a management group is formed and a business plan is written. Resources are deployed and the organization is established Start-up ends when business is declared open. www.IgnouOnline.com

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Also Available MCS-011 : Problem Solving and Programming MCS-012 : Computer Organization and ALP MCS-013 : Discrete Mathematics MCS-014 : Systems Analysis and Design MCS-015 : Communication Skills MCSL-017 BCSL-021,022:C & Assembly Language Programming (Lab Manual) MCS-021: Data and File Structures and Programming MCS-022: Operating System Concepts and Networking Management MCS-023: Intro. to Database Management Systems MCS-024: Object Oriented Technologies and Java Prog. MCS-031 : Design and Analysis of Algorithms MCS-032 : Object Oriented Analysis and Design MCS-033 : Advanced Discrete Mathematics MCS-034 : Software Engineering MCS-035 : Accountancy and Financial Management MCS-041 : Operating System MCS-042 : Data Communication & Computer Networks MCS-043 : Advanced DBMS MCS-051 : Advanced Internet Technologies MCS-052 : Principles of Management & Information Systems MCS-053 : Computer Graphics and Multimedia

MCSE-003 : Artificial Intelligence and Knowledge Management MCSE-004 : Numerical and Statistical Computing MCSE-011 : Parallel Computing

ISBN 978-93-81638-71-2

9 789381 638712