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business studies notes - chapter 7 - BY BODMAS CAREER ACADEMY

business studies notes cbse - chapter 7

Directing

Directing is the first execution function in the management process as all the preceding functions of planning, organising and staffing are concerned with determination of objectives and plans and making the required resources available. It is the direction function of management which initiates action of people in desired direction through effective supervision, leadership, motivation and communication. Thus, direction bridges the gap between planning and actual performance.

Meaning of direction The managerial function of directing involves issuing instructions and orders to subordinates, and guiding and motivating them in such a manner that individual as well as organisational goals are achieved.

Importance of direction

•   It initiates action in a desired manner for execution of plans.

•   It   integrates   the  efforts  of  employees  at  all   levels  so  as   to  achieve
organisational goals.

•   It   helps  to  motivate  employees  and   stimulates   them   towards  betterperformance.

•   It provides stability in the organisation by creating a balance between

•   individual goals and group goals.

•   It facilitates the process of change in the organisation by securing cooperationof employees.

Elements in direction The elements in the process of direction are supervision, leadership, motivation and communication.

Meaning of supervision Supervision means the process of overseeing of the work of a subordinate by a superior.

Role of the Supervisor

•   The supervisor acts as a link between the top-level management and theworkers.

•   He acts as an advisor for workers and guides them on work-related matters.

•   He acts as a counsellor for workers and helps to solve their problems.

•   He acts.as a facilitator for the execution of organisational plans and policies.

Functions of a Supervisor

•   The supervisor prepares the schedule for activities to be performed.

•   In accordance with the schedule he issues instructions and guidance to theworkers.

•   He controls the activities of the subordinates in order to ensure that they are' in accordance with the plans.

•   He motivates workers to perform better.

•   He acts as a linking pin between the top-level management and the workers.Importance of Supervision

•   Supervisors set people into action by issue of orders and instructions.

•   Supervision    facilitates   control    through    continuous    monitoring    ofsubordinates performance.

•   Supervision ensures optimal utilization of resources by avoiding needlessaction and wastage of resouces.

•   Supervision helps to maintain discipline by ensuring strict adherence to rulesand schedules.

•   Supervisors   ensure   smooth   flow   of   information   between    top-level
management and lower-level management by acting as an intermediary.

'  • Supervisors stimulate subordinates towards higher performance through continuous guidance and support.

Meaning of motivation

Motivation is a psychological phenomenon that stimulates people to desired action by arousing their needs and desires.

Importance of motivation

Motivation induces people towards desired action.

•   Motivation enhances the work efficiency of employees by stimulating their
willingness to perform through various incentives.

•   Motivation helps in achieving organisational goals as it helps to implement
plans efficiently.

•   Motivation   helps   to   develop   Healthy   employee-employer   relationshipthrough efficient system of rewards.

" Motivation leads to stability in workforce by providing job satisfaction.

•  Motivation facilitates change as it helps to build a supportive workforce.Human needs

The following needs govern human motivation in a definite order.

•   Psychological physical needs

•   Safety security needs

•   Social needs

•   Esteem needs

•   Self-actualisation needs

Meaning of incentives

The term 'incentive' refers to an act or promise that induces an individual towards desired beha^icur.

Forms of Incentives

•   Monetary incentives me directly or indirectly associated with money likebonus, housing facility,, free education for children, etc.

•   Non-monetary incentives are the once which cannot be measured in terms of
money like recognition, assigning challenging jobs, etc.

Meaning of leadership

Leadership is the process of influencing the behaviour of subordinates through effective support and guidance in order, to achieve both individual and organisational goals.

Importance of Leadership

•   If   helps   in   guiding   and   inspiring   employees   towards   attainment   oforganisational goals.

•   It helps to secure the cooperation of lire members of the organisation by.winning their faith and understanding their needs and. problems.

•   It helps to create confidence in employees by providing them support and*
guidance.

•   It helps to develop a healthy work environment! conducive to- maximum)effort inspiring employees for higher productivity and also considering their
individual goals.

Qualities of a Good Leader

•  A leader should be intelligent, practical and have a broad outlook.

• A lender should possess good communication skills to interact with and'influence the followers.

•   A   leader   .should   follow   an   unbiased   and   objective   approach   fordecision-making and!judgement.

•   A leader should have good knowledge of work.

•   A leader should develop healthy relations, with his followers.

•   A leader should possess confidence and will power.

•   A lender should adopt an empathetic attitude towards.his followers.

•   A leader should have a deep sense of responsibility for his. work andbehaviour.

Meaning of Communication

Communication is a two-way process of exchange of information, ideas and opinions among two or more persons and is said to be complete only when the receiver gives his feedback to the sender.

Importance of Communication

•    Communication facilitates planning as the plans are based on forecastsBusiness forecasts greatly depend on facts and figures, ideas about futuretrends and exchanges between managers.

•    Communication helps in decision-making as in  the absence of relatedinformation it will not be possible for managers to take the right decisions.

•    Communication   facilitates   coordination   among   and   within   variousdepartments of an enterprise.

•    Communication helps to develop employee-employer relationship through
regular interaction and counselling.

•    Communication facilitates the process of motivation as it is the meansthrough which employees are encouraged towards higher performance.

Types of Communication

•   Formal communication relates to official matters. If may flow in upward,downward, horizontal and diagonal directions.

•   Informal communication refers to the communication which satisfies thesocial needs of employees and is not on official lines, i.e., grapevine.

Channels of Communication

•   Oral communication refers to information which is exchanged verbally orwith the help of a mechanical device between two or more persons.

•    Written communication refers to the process of exchanging information in
writing through reports, memos or invoices between two or more persons.

Barriers to Effective Communication

The most common barriers to effective communication are lack of clarity, loss by transmission, lack of attention, lack of trust and premature evaluation of message.

Business studies cbse

*Q. What do you understand by the term EQUITY CULT ?*

Answer .
*EQUITY CULT*
Some stocks, regardless of their current fundamentals, are regarded as next big thing in the market based on the belief/rumors/stories that company will make a miraculous discovery or will receive a massive contract from the government or any clients. This discovery or contract has to be so massive that it will multi-fold the growth of the company. Such stocks are followed by many investors who believe this. Forget about the success of event.

So, "Equity cult" , refers to behavior when one stock creates a heavy interest among investors who wants to invest in the equity markets even though the company’s current fundamentals are insignificant.

For example,

XYZ Ltd. manufactures LED bulb in India. The company’s current annual sales is Rs. 50 million and it is making insignificant profit / loss.

Let’s say on Jan 1st, the share price of XYZ Ltd. is Rs. 40 per Share. All the publicly available information about the company (its earnings, contracts, operations, future plans) has already been factored into current share price.

On Jan 2nd, The news of possibility of XYZ Ltd. receiving massive order of LED bulbs worth Rs.100 million from Govt. of India came into market. Just based on the story, lots of retail investors buy the shares neglecting its insignificant fundamentals and due to heavy demand in the market, the share price goes up drastically up to Rs.60 in a day or two.

If the story turns out to be true, its potential growth & earnings are already partially factored in and will be fully factored in the share price once supply-demand stabilizes. If the XYZ Ltd does not receive an order, the retail investors may sell heavily and the price may come down to its actual level.

This entire Craze among investors about XYZ Ltd shares, based on the story described above, is equity cult.