Define Organisational Behaviour and its elements. Discuss the role of Taylor in the development of Scientific Management Approach.

Q. Define Organisational Behaviour and its elements. Discuss the role of Taylor in the development of Scientific Management Approach.

Ans. Meaning of Organisational Behaviour: Organisational Behaviour consists of two words ‘organisation + behaviour’. Organisation means a unit in which two or more people work jointly for the attainment of an objective. On the other hand, behaviour means the actions and reactions of an individual or a group towards their activities. For example, an individual or a group is extremely happy on getting some important assignment. This is his behaviour. In this way, organisational behaviour means the behaviour of people while working in the organisation.

It refers to the study of human behaviour in the organisation so that the organisational effectiveness is improved.

Definition of Organisational Behaviour:

1. According to Davis and Newstram, “Organisational Behaviour is the study and application of knowledge about how people act within organisations.”

Thus, Organisational Behaviour is a term used to explain the actions and reactions of individuals and groups to the stimuli surrounding them as they interact with one another while doing their jobs.

Elements: OB is the study of an individual, group and environmental characteristics. Apart from it, people work in an organisation structure and while working they make use of some techniques also. In this way, OB consists of a sum total of five components, e.g. individual, group, organisation structure and environment.

(1) Individual: Individuals help in the formation of organisation. Therefore, an individual is the most important component of OB. It is a special characteristic of an individual that each individual differs in their behaviour under OB, individuals behaving in almost a similar manner are placed in one category. Then studies are conducted for each category with their own specialities in behaviour. Each category helps in the discovery of techniques regarding explanation, prediction and control in respect of OB.

(2) Group: Organisation means that unit where more than two people work in a group. Therefore, human group has a special significance in the organisational behaviour. Each individual behaves differently as an individual and collectively. Under OB, efforts are made to study that when people happen to be in a group, how do they behave so that the conduct of the people in groups can be controlled.

(3) Job and Technology: Job means the total work allotted to individuals at the place of work. Job itself affects the behaviour of the people. Therefore, it is important to focus attention on the job. It is, however, important to see whether the job allotted to an individual or a group is liked by them or not. The behaviour of people is also influenced by their interaction while handling the job. Therefore, special attention has to be focused on the allotment of job. Similarly, behaviour is also influenced by the technique and equipment used for the completion of the job. The behaviour of the people remains positive if they are provided technique and equipment of their choice, otherwise, the effect is the reverse. Thus, we find that job and technique happen to be important parts of OB.

(4) Organisation Design: Organisation design does influence the work relationship of the people. Under this the power and responsibility is also distributed among the people. Moreover, the reporting technique, recording technique, rules, work procedure are also determined. They happen to be different in every type of organisation design. Organisation design is created keeping in view the nature of the job. Under OB, it is always kept in mind as to what type of organisation design will be suitable in a particular situation. The control on the behaviour of the employees is easier when the organisation design happens to be effective.

(5) Environment: No organisation is established in a vacuum. It is very much a part of the society where it is established. Different parts of society, e.g., family, government, social organisation together create environment. The behaviour of the people is affected by these factors. It is the function of OB to study the effect of these factors of the environment on the behaviour of the people.

Role of Taylor in the development of Scientific Management Approach: F.W. Taylor is the father of scientific management. In his company, he conducted a number of experiments and came to conclusion that the amount of work a labourer was doing was far less as compared to what he was supposed to be doing. He gave number of suggestions to solve this problem and, in doing so, he gave scientific outlook to management.

● Meaning of Scientific Management: The literary meaning of scientific management is performing the work of management in a scientific manner. In other words, discarding the traditional approaches to management and adopting newer and more scientific approaches in their place is called scientific management.

Scientific Management refers to that management which thinks that by scientifically analysing work, it would be possible to find one best way to do it.

● Principles of Scientific Management: The Scientific Management Approach propounded by F.W. Taylor is based upon the following five principles:

(1) Principle of Use of Science for the Rule of Thumb: According to this principle, all the activities bring performed in an organisation should be analysed in detail with the aim of developing a technique of accomplishing the maximum possible work in an efficient manner and at the minimum possible cost. This principle says that we should not get stuck in a set routine and continue with the old techniques of doing work, rather we should be constantly experimenting to develop new techniques which make the work much simpler and easier.

(2) Principle of Scientific Selection and Training of Workers: According to this principle, the selection and raining of workers should be done in a scientific manner. Scientific appointment means appointing only those people to do a particular work who possess the necessary capabilities to do it. However, only scientific selection of workers is not adequate in itself, the workers should also be imparted the necessary training from time to time. Proper training of workers increases their efficiency and hence benefits both the workers as well as the organisation.

(3) Principle of Cooperation between Labour and Management: As per this principle, such an atmosphere should be created in the organisation that labour (the major factors of production) and management consider each other other indispensable. Labour should understand that it cannot proceed in its work without the existence of Management, and Management should understand that it has no identity without the existence of Labour. If such an atmosphere prevails in an organisation, then both the parties would aim for the achievement of the same goal (i.e. the maximum and good quality production) and hence both of them will be successful in achieving the goals. Taylor has referred to such a situation as a ‘Mental Revolution’.

(4) Principle of Maximum Output: As per this principle, both the labour as well as management should make full efforts to produce the maximum output. They should spare no efforts for the maximum utilisation of the factors of production available in the organisation. This will have a direct impact on the profits of the organisation and the organisation will earn the maximum possible profits. Higher profits will results in higher wages for the workers and thus make them more dedicated towards the organisation.

(5) Principle of Equal Division of Responsibility: According to this principle, the work of the organisation and the related responsibilities should be clearly divided among the two main groups in the organisation (Management and Labour). Each group should be assigned work which it can accomplish more efficiently. For example, Management should be the one to.decide the time required to do a particular work, while the responsibility for actually doing the work should be with the labour. In this way, if the time required for doing the work is not properly determined, the manager would be accountable, and if the work has not been properly performed the labourer would be responsible. Hence, on proper implementation of this principle, the credit for doing work efficiently would be divided among both the groups and in case of any defaults, the responsibility would also be shared by both the groups.

● Techniques of Scientific Management: Taylor has devised the following techniques for actually implementing the principles of scientific management:

(1) Scientific Study of Work: Scientific management requires deep analysis of all the activities being performed in the organisation with the aim of producing the maximum possible output with the minimum possible efforts. In simple words, it may be said that Taylor was strictly opposed to incompetence and wanted to remove incompetence with whatever possible means. In his efforts to do so, he conducted a number of experiments and proved that (i) if the various parts of the process of production are reduced to the minimum, (ii) while working, unnecessary movements of the body are eliminated, (ii) the time required for doing every work is determined and (iv) recognising that human beings are not inanimate objects and hence are likely to feel fatigued, proper arrangements for their resting are made, then incompetence will be totally eliminated from the organisation. On this basis, he has divided work study into the following four parts: 

(i) Method Study,

(ii) Motion Study.

(iii) Time Study, and

(iv) Fatigue Study.

(2) Scientific Task Planning: Scientific task planning implies analysing all the different aspects of the work before actually commencing upon it, such as what is to be done? how is it to be done? where is it to be done? and when is it to be done? Taylor has advised the managers of industrial organisations to establish a separate Planning Department for this purpose.

(3) Scientific Selection and Training of Workers: First, it is determined that for a particular work, persons possessing what qualities and capabilities are required. Next, through conducting various examinations, capable persons are selected. Scientific selection is selecting the right person for the right position without any bias. According to the traditional techniques of management, this was usually done by the Foreman, however Taylor has advised the establishment of a Personnel Department for this purpose. After selecting suitable persons, they should be imparted proper training before deploying them on the job. Scientific management requires that training should be imparted only through modern techniques as it increases the efficiency of the workers.

(4) Standardisation: Standardisation means setting standards for different factors, after due deliberation. For example, the amount of work to be done by a worker in a day may be standardised. In other words, the worker is expected to do the standard amount of work everyday. In the same manner, standards may also be set for raw materials, machines and tools, techniques, conditions of work, etc.

Standardisation of Work?

It refers to the process of setting standards for various business activities.

(5) Differential Wage System: Taylor has advised the adoption of differential wage systems in order to motivate the employees. According to this system, wages are paid on the basis of work done and not on the basis of time spent in doing the work. In this system two different wage rates are used: one is the high wage rate and the other the low wage rate. Those workers who are able to produce the standard number of units within a fixed duration are paid as per the high wage rate, and those workers who are not able to produce the standard number of units within the same time are paid as per the lower wage rate.

Differential Wage System?

It refers to that technique of scientific management which differentiate between efficient and inefficient workers.

(6) Specialisation or Functional Foremanship: F.W. Taylor has propounded the functional organisation. This form of organisation is totally based on the principle of specialisation and makes full utilisation of the expertise of various experts. In a functional organisation, work is divided into many small parts and each part is assigned to an expert. In this manner, all the benefits of specialisation are availed of.

Functional Foremanship?

It refers to that technique of scientific management which makes possible the full utilisation of the principle of specialisations.

(7) Mental Revolution: Mental Revolution calls for a change in the mindset of both the managers and the workers. According to Taylor, a revolution in mindset of both the managers and the workers is required as it will promote feelings of cooperation, and will be beneficial for both the parties. Normally, it is seen that a conflict between the managers and the workers results in division of profits, with both the parties demanding a larger share of profit. This is the main reason that a mental revolution is required. According to Taylor, instead of fighting over division of profits, both the parties should make efforts for increasing the profits. Such a situation will results in an increase in production, and such a high increase in profits will make any talk of division of profits meaningless.

Mental Revolution?

It refers to the change in the attitude of management and workers towards one another from competition to cooperation.

What is MNC? Discuss the beneficial and harmful effects of MNCs on Indian economy.

 Q. What is MNC? Discuss the beneficial and harmful effects of MNCs on Indian economy.

Ans. Meaning of Multinational Enterprise/Corporation

Multinational corporation is that corporation whose sphere of activity is spread over more than one country. These corporations are known by several names e.g. Transnational Corporation, International Corporation or Global Corporation. Various MNCs are working in our country like Hindustan Unilever, Johnson and Johnson, Philips, Colgate, Coca-Cola, Pepsi, LG, Nestle, Samsung, Hyundai,Cadbury, Vodafone etc.

In the words of President of I.B.M. a world famous corporation, “Multinational Corporation is one that (i) operates in many countries, (ii) carries out research, development, marketing and manufacturing in many countries, (iii) has a multinational management, (iv) has a multinational stock ownership.”

The United Nations defines MNCs as, “Enterprises whose area of working – factories, mines, sales, offices and the like are in two or more countries.”

The Encyclopedia of Management (2005) put multinational companies as business concern with operation in more than one country.

In short, multinational corporation is a big firm, whose headquarter is located in one country but whose trading and manufacturing activities are spread over many other countries.

Beneficial effects of MNCs on Indian economy: 

(1) Availability of Capital: Multinational corporations help to solve the problem of capital faced by underdeveloped countries. Underdeveloped countries suffer from lack of capital. Consequently, their rate of economic growth is low. By making investment in underdeveloped countries, MNCs help them to achieve the objective of higher economic growth.

(2) Availability of Modern Techniques and Management: MNCs provide modern technology and managerial services to enterprises established by them. As a result, the productivity of those enterprises increases and resources are optimally utilised. It is through the medium of multinational corporations that technology has been transferred from developed countries to developing countries. MNCs are providing managerial, administrative and technical skills to developing countries. In many areas MNCs are providing complex and modern technology.

(3) Availability of Marketing Services: Multinational corporations make available marketing services especially related to export marketing, advertising, market research, storage facilities, transport, packaging, branding, etc. All these services are efficiently performed by multinational corporations.

(4) Availability of Foreign Exchange: Multinational corporations bring their capital in foreign currency. It increases the inflow of foreign currency in domestic country. This increases the availability of foreign exchange with the domestic country. It helps the country to make payment of essential imports.

(5) Increase in Employment: Countries, wherein multinational corporations (MNCs) establish their subsidiaries, get employment opportunities. By increasing investment, these subsidiaries set up new enterprises. Consequently, employment increases.

(6) Increase in Knowledge: MNCs impart training to local employees in respect of modern management, marketing, finance, export, etc. In this way, their ability and skill to organise and conduct their activities on modern lines enhances.

(7) Increase in Exports: The multinational corporations utilise cheap domestic labour and their huge capital resources to convert raw materials into finished products. The managerial skill, availability of capital, modern technology and other sources of MNCs result in proper utilisation of resources. Because of better technology, the quality of products is better and these products find easy entry in foreign markets. It leads to increase in exports of the country.

(8) Increase in Competition: Entry of MNCs promotes competition in the domestic economy. Increased competition results in lower prices, which is beneficial for consumers e.g., entry of LG, Samsung, Sony, etc. in electronics has promoted competition in India. It has resulted in decrease in prices of electronic goods.

(9) Increase in Industrialisation: Multinational corporations make important contribution in the industrialisation of developing countries. They provide managerial skills, technical know-how and adequate funds required for starting a new industry. Many industries are set up in India by the MNCs, e.g. Phillips, Glaxo, Colgate, Hindustan Uni lever, Proctor and Gamble, Nestle, BPL, Ceat, MRF, etc.

Harmful effects of MNCs on Indian economy:

(1) Outflow of Funds from Host Country: Host country is one where multinational corporations set up their subsidiaries. The main objective of these MNCs is to earn maximum profit. To achieve this objective they invest their capital in underdeveloped countries. Such an investment proves very profitable. Big chunk of profits earned in underdeveloped countries goes to the headquarters of MNCs. Moreover, MNCs take large amount of foreign exchange out of country by way of dividend, royalty, management fees, etc. Because of the operations of MNCs in India, large amount of foreign exchange has gone out of the country. So, in the long run balance of payments becomes unfavourable.

(2) Harmful for Indigenous Producers: MNCs prove harmful to indigenous producers. By making use of improved technology in their production system, these corporations fix lower price of their products and thus compete out indigenous producers. Once the indigenous industry is completely destroyed by this competition, MNCs take full control over the market. By virtue of their competitive strength, they throw out indigenous producers from highly profitable, progressive and developed sectors. It is difficult for local industries to stay in the market for long in the face of huge capital resources, high technology, competent management possessed by these corporations.

(3) Unbalanced Regional Development: Foreign investors set up industries in developed cities and towns whiere infrastructural facilities are easily available and not in backward areas. This leads to further development of already developed areas and the backward areas remain untouched. Thus, regional disparities increase.

(4) Less use of Modern Technology: MNCs do not make much use of modern technology in underdeveloped countries. These corporations use new equipments and technologies only if the same are helpful in reducing the costs and raising their profits. But they take no interest in developing technology for underdeveloped countries because without spending anything on the improved technology, they succeed in raising their profits.

(5) Tax Evasion: Government of the host country imposes corporation tax on the income of companies and corporations, with a view to increase its revenue. In order to avoid corporation tax, MNCs reduce the amount of their profit by adopting transfer pricing methods. According to this method, MNCs buy intermediate goods from their subsidiaries abroad at high price and thus reduce their local profits. Similarly MNCs export their products to their subsidiaries abroad at lower prices, so as to under-value the exports to show lower local profits. Thus, MNCs over-invoice the imports and under-invoice the exports, so as to show less profits. That way through manipulation of bills MNCs evade tax.

(6) Lack in Morality and Ethics: Some MNCs indulge in unethical and corrupt practices for their self-interest They do not hesitate to offer bribe to highly placed officials and politicians of other countries to allow them to enter into such transactions which only serve their own interest.

(7) Political Interference: MNCs prove detrimental to the economic and political freedom of the host countries. These interfere in the politics of the country. These corporations make all efforts to bring that political party to power in the host country which is favourably inclined to them.

(8) Encourage Demonstration Effect: The MNCs incur heavy expenditure on advertisement and publicity. It results in wasteful expenditure whose burden is ultimately born by Indian consumer. MNCs produce products for upper class of consumers like cold drinks, ice-creams, cosmetics, washing machine, cars, high priced shoes etc. This creates demonstration effect. People of underdeveloped countries are crazy about the products of MNCs. It also leads to diversion of resources toward production of non-essential goods.

(9) Competition with Small-Scale Industries: Various MNCs are allowed production in the area where small-scale industries were doing well e.g. potato chips, wafers, biscuits, jam, cosmetics, etc. Because of heavy advertisement and brand image of MNCs, our small-scale industries fail to compete with MNCs e.g. entry of Uncle Chips has resulted in failure of many SSI units (small-scale units) who were producing potato chips. Similarly, entry of Hindustan Unilever Ltd. in consumer goods industry has badly affected many small-scale units producing consumer goods.

(10) Production of Prohibited Goods: The main objective of the multinational corporations is to earn profits. In order to get more profits they indulge in the production of even those goods which are harmful for the consumers. Many of the medicines and other products, the production of which has been prohibited in foreign countries are being manufactured and sold in India by multinational corporations. As such the multinationals earn profits even at the cost of the health of consumers.

(11) Problem of Brain Drain: MNCs recruit qualified and skilled engineers, technicians, experts in India and after sometime, these Indian experts are posted abroad in the foreign subsidiaries of MNCs. So that way, MNCs are draining Indian talent and expertise to the other countries.

(12) Non-Essential Products: MNCs are producing such products as can be produced with the help of local technology such as lipstick, toothpaste, cosmetics, ice-cream, biscuits, colas, processed foods, etc. Most of the MNCs are producing consumer goods which are not essential for the economic development of a nation. The main aim of these corporations is to earn profit. These corporations take no interest in the production of capital goods, wage goods and development of scarce resources of the country.

(13) Multiple Collaborations: It means more than one technology agreements for the import of same or similar technology. If a particular technology has already been imported and now the country is importing same or similar technology through another collaboration with foreign country, then it is known as multiple collaboration. This results in repetitive payments for the import of similar technology. The problem of multiple collaboration is common in developing countries. It puts extra burden on foreign exchange reserves.

(14) Unsuitable Technology: The technology brought by MNCs was unsuitable for India. MNCs brought capital intensive technology which does not suit India as our economy is capital scarce and labour abundant economy. Keeping in view, the unemployment problem and scarcity of capital, labour intensive technology is suitable for India, but MNCs use capital intensive technology.

(15) Less Bargaining Capacity of Indian Entrepreneurs: Foreign collaboration agreements are largely in favour of foreign collaborators. Due to less bargaining power of the Indian side, foreign collaboration agreements are largely in favour of foreign collaborators and not in favour of Indians.

(16) Growth of Monopoly Powers: MNCs join hands with big industrial houses in India which lead to growth of monopolies.

(17) Harmful for Consumers: MNCs are harmful to consumers because of following:

(i) Excessive advertisements, thus charging high price from consumers.

(ii) Adopting unfair trade practices like deceptive advertisement.

(18) Purchase of Raw Material and Intermediate Goods from Foreign Subsidiaries: MNCs often purchase raw materials and intermediate goods from the foreign subsidiaries.This results in losses to Indian industries supplying raw materials and intermediate goods. 

In short, the multinationals have both the merits as well as demerits. The government should take special policy measures to avoid the demerits. It will be more appropriate if such multinationals are encouraged which guarantee the export of their production and utilise appropriate technology.

Define Operating System and explain how it acts as a Resource Manager.

 Q. Define Operating System and explain how it acts as a Resource Manager. 

Ans. Operating System: An operating system is an integrated set of specialised programs that are used to manage overall resources and operations of the computer. It is a specialised software that controls and monitors the execution of all the programs that reside in the computer. It is the interface between user and the computer.

A simple way of defining the operating system can be:

An operating system is a program that acts as an interface between the user and the computer hardware and controls and manages the overall resources of computer system.

O.S. as a Resource Manager in following ways:

1. Memory (Storage) Management 

(a) It keeps track of primary memory i.e. what part of it are im use by whom, what part are not in use etc.

(b) In multiprogramming it decides which process will get memory when and how much.

(c) Allocates the memory when the process or program request it to do so.

(d) Declaims (deallocate) the memory when the process no longer needs it or has been terminated. 

2. Processor Management

(a) Keep track of the processor and status of process.

(b) In multiprogramming it decides which process gets the processor & how much time. This function is called process scheduling.

(c) Allocate the processor (CPU) to a process.

(d) Deallocate processor when processor is no longer required.

3. Device Management 

(a) Keeps track of all devices.

(b) Decides which process gets the device when & for how much time.

(c) Allocate the device in the efficient way.

(d) Deallocate devices.

4. File Management 

(a) It keeps track of information, its location, uses, status etc. This collective facilities are often known as file system.

(b) Decides who get the resources.

(c) Allocates the resources.

(d) Deallocates the resources.

5. Security 

By means of passwords & similar techniques, preventing unauthorized access to programs & data.

6. Control over system performance 

Recording delays between request for a service & response from the system.

7. Job accounting

Keeping track of time & resources used by various jobs and/or users.

8. Interaction with the operators

The interaction takes place via the console of the computer in the form of the instructions from the operator acknowledging the same, action thereon, as well as informing the operation by means of a display screen of works & problem encountered.

9. Error -detecting aids

Production of dumps, traces, error messages and other debugging and error-detecting aids.

10. Coordination between other softwares and users

Coordination and assignment of compilers, interpretiers, assemblers and other software to the various users of the computer systems.

Is economics a science or an art.

 Q. Explain whether Economics is a science or art or both.

Ans. Economics is a discipline that has debated either a science or an art or combination of both. Whether Economics is a science or art or both can be concluded by studying the characteristics of science and an art separately. 

Is Economics a Science?: In order to find out whether Economics is a science or not, it is necessary to know:

(i) What is a Science?

(ii) What are the features of Science?

(i) What is Science? The term ‘Science’ has its origin in term ‘Scientia’ of Latin language. It means ‘to know’. Science is a systematic body of knowledge concerning the relationship between causes and effects of a particular phenomenon. In science, we must collect, classify and analyse the facts systematically. In Economics also one collects, classifies and analyses economic facts systematically.

(ii) Features of Science: A detailed study of features of Science will testify that Economics is a science.

(1) Collection of Facts: In science, initially, facts concerning a subject are collected. In Economics also facts relating to economic activities are collected. For example, an economist observes that when price rises, ordinarily demand contracts. Similarly, when a consumer buys more of a commodity then the utility of that commodity diminishes. In this way, an economist collects facts relating to economic activities.

(2) Measurement: In science, efforts are made to measure the facts. To do so, facts are classified and properly presented. In Economics also facts are measured. An economist will try to measure as to how much demand has contracted due to rise in the price. If there is unemployment in the country, what is the number of unemployed? What is the rate at which the national income of the country is growing? In the measurement of these facts an economist seeks help of mathematics, statistics and econometrics. The facts which are collected in written form are called data.

(3) Explanation: After collecting and measuring the facts, the same are sought to be explained. In other words, the same are put to systematic study. By establishing a relationship between cause and effect of a fact, economic laws are framed. For example, on the basis of study of mutual relationship between change in price and consequent change in demand, law of demand is formulated.

(4) Verification or Validity of the Laws: The final feature of science is to verify the validity of scientific laws by applying the same to real life situation. In other words, whether the same conforms to the facts or not. Every science seeks to verify the validity of its laws. This verification can be done in two ways: (i) If a law is based on real assumptions, it is considered valid. (u) If the prediction based on any law comes true, then also it is taken as valid. Experiments are also conducted in this respect. Validity of economic laws is also subject to verification. For instance, many laws of Economics like, law of diminishing returns, law of diminishing marginal utility, etc. are treated as valid because the same apply to real life situations.

It is evident from the above discussion that Economics is a science. However, some scholars do not consider Economics as a science because laws of Economics are not as exact and universal as the laws of physics and chemistry are. In fact their disagreement is not justified. According to Seligman, there are two broad branches of science: (i) Social science, and (ii) Natural science. Economics is a social science as it deals with human beings, whereas physics and chemistry etc, are natural sciences as they deal with lifeless matter.

(1) Arguments in favour of Economics being a Social Science.

Following arguments may be advanced in favour of Economics being a Social science:

(i) Systematic Study: Social Science refers to that science which studies man as a member of the society. It studies those activities of such social men that are concerned with wealth. In other words, it studies mutually dependent activities regarding consumption, production, exchange, etc. of wealth. Facts relating to economic activities are collected, classified and measured. 

(2) Scientific Laws: Laws of Economics like law of demand, law of supply etc. are scientific laws. These laws establish cause and effect relationship between economic phenomenon. Law of demand states that with an increase in the price of a commodity, say Rasgullahs, its demand will contract. In this way, the law establishes relationship between change in price (that is cause) and the resultant change in demand (that is effect).

(3) Validity of Laws: Every science verifies validity of laws. If a law of is based on realistic assumptions or its predictions come true, then it will be treated as valid. Many laws of Economics like law of diminishing returns, law of diminishing marginal utility, being based on real experiences of life, are treated as valid.

It is evident from the above account that Economics is a social science. It makes a systematic study of the economic activities of the human beings on the basis of scientific laws. 

(2) Arguments against Economics being a Natural Science 

Those who believe that Economics is not a science, as a matter of fact, mean that Economics is not an exact science like that of a natural science. They put forward following arguments against Economics being a natural science.

(1) Difference among Economists: There are differences among economists with regard to most of the economic problems. On the contrary, there are very little differences among natural scientists with regard to their subject.

(2) Exact Lawsı Laws of natural science like law of gravitation of physics is an exact law in all respects. According to this law anything thrown up must come down because of gravitational pull. On the contrary, laws of Economics are not perfectly exact. For example, law of demand will be valid only if there is no change in the income, fashion, etc., of the consumer.

(3) Universal Laws: Laws of natural science are universally applicable. They hold good at all places and at all times. However, laws of Economics are not universal laws. They are not valid at all places and at all times. The same are subject to change.

(4) Verification of Truth: Natural scientists can verify the truth of the laws relating to their science in the laboratories by conducting experiments. On the basis of these laws correct predictions can be made to a large extent. But no laboratory exists to verify the correctness of economic laws. The only apparatus available with the economists to measure economic activities is money as a measuring-rod but even this measure is not exact. Value of money itself goes on changing, and so cannot serve as a dependable measure. Consequently, predictions made on the basis of economic laws prove wrong very often. It can, however, be said that compared to other social sciences, Economics is a more exact science because it possesses a measuring-rod in the form of money.

In short, it can be asserted that Economics is not a natural science but a social science.

Is Economics An Art? Whether Economics is an art or not, is yet another controversial subject among the economists. Some economists do not consider Economics to be an art. However, some are of the opinion that Economics is not only a science but also an art. 

Before taking any final decision in this regard, it is essential to know what is an art? Science is concerned with ‘knowing’ and art is concerned with ‘dong’. Art is the practical application of knowledge for achieving definitely ends.

As an art, Economics helps us in the solution of our practical problems. Its study enables us to know the best methods of achieving economic ends.

Arguments in favour of Economics being an Art.

Many economists consider Economics as an art on the following grounds:

(1) Solution of the Problem: Most of the problems of the world are economic problems. Economics can prove to be a more useful subject for the people if it can help in the solution of their economic problems. Study of Economics tells us how an economy can make efficient and optimum use of its scarce resources.

(2) Realistic Situation: Actual situation with regard to the study of Economics is that economists spend most of their time seeking solution to real economic problems like inflation, unemployment, depression, economic development etc. Economics is therefore an art. As an art Economics formulates policies designed to promote economic welfare of the people.

(3) Empirical Basis of Assumptions: (Empirical means based on direct observation or experience rather than just theory or ideas.) By dividing Economics into science and art, one can dispel doubts that arise in respect of the real nature of economic laws.

(4) Verification of Economic Theory: Study of Economics as an art facilitates verification of economic theories. It is through art that their validity can be verified. 

Arguments against Economics being an Art:

Following arguments are advanced against Economics being an art:

(1) Different nature of Science and Art: Science and art have different nature of their own. If Economics is a science then it cannot be an art. On the contrary, if it is taken as an art, it will have no claim on science.

(2) Nature of Economic Problems: Economic problems are not purely economic in nature. They are influenced by political, religious and social conditions also. It may not therefore be possible for the economists to tackle their problems purely on the basis of economic point of view.

(3) Uncertainty: If Economics is recognised as an art, then different economists will formulate different policies and suggest different solutions to different problems. Such solutions may be mutually contradictory. Consequently, an element of uncertainty will be imparted to Economics.

(4) Lack of Immediate Solution: Economics may not be made use of to seek immediate solution of economic problems. Its laws cannot be applied immediately to solve economic problems.

Conclusion: From the above analysis it can be well concluded that, Economics is both a science as well as an art. In the words of Cossa, “Science requires art, art requires science, each being complementary to each other.” Prof. Mehta, suggests that as a science it should be called ‘economics’ and as an art it should be christened as ‘economy’.

is economics science or art

“Business without efficient management is a house built on sand, which can fall at any time”. Explain this statement.

 Q. “Business without efficient management is a house built on sand, which can fall at any time”. Explain this statement. 

[Write meaning, characteristics and importance  of management]

Ans. This statement means that Just as a house built on sand lacks a strong foundation and collapses easily, a business without effective management lacks direction, coordination, and control, making it highly vulnerable. The following facts clarifies the statement. 

(1) Achieving Pre-determined Objectives: Each organisation is established with certain aim. Management is the only medium and power which can help in the successful attainment of these objectives. A manager with the help of his expertise and cleverness makes an assessment of future events. He makes plans, creates an organisation, distributes work, grants requisite authority, direct the employees and control them. 

(2) Ensuring Maximum Utilization of Resources of Production: Management is that power which by establishing an effective coordination between the various resources of production makes an optimum use of these resources. In every big enterprise a train-load of gold is provided. It can be achieved by making a better use of resources and putting an end to useless or meaningless expenses. It means that all the available resources of the organisation have been likened with gold but to profit from the available resources requires their proper utilization. It is, therefore, clear that the most efficient use of the limited resources is the key to the successful business. This fact can be converted into reality with the help of management.

(3) Overcoming Competition: These days business is not localised but it has assumed national or even intemational dimensions. Competition is increasing with the widening of area and larger dimension of business. A modern producer faces competition not only from a local producer or competition at the national level but international competition is also getting sharper. In such a competitive atmosphere only that organisation can survive which can make available to its customers the best quality of goods at the cheapest rates. Only an efficient and clever manager can make it a reality and save the reputation of an organisation.

(4) Ensuring Integration with Changing Environment: Management is not only limited to various internal functions of an organisation but it has to compromise with the outer atmosphere also. On the one hand technical experts are devising new ways of production and, while on the other hand progressive organisations are applying modern marketing techniques. Even customers do not easily accept the produced goods because they are now wide awake and their standard of living has also improved and their tastes have also undergone a change. Thus, only an efficient manager can coordinate his work with the fast changing atmosphere. With the help of efficient and effective management a coordination between the new and prevalent work system and methods can be established to save the reputation of an organisation.

(5) Ensuring Smooth Running of Large Scale Business: Keeping in view the profits of large scale production, Importance of management has started getting preference. In view of the large scale production the means of production (Men, Money, Material, Machine, etc.) will also be required on a large scale. Apart from this, business shall have to face various legal formalities. To perform these functions efficiently and in a controlled manner, the need of an efficient manager is paramount. Therefore, without an efficient manager smooth running of large scale business is not possible.

(6) Maintaining a Sound Organisational Structure: A sound organisational structure is needed for the success of any enterprise. A sound organisational structure means defining a clear relationship between the superiors and their subordinates. It has to be decided what work will be done by various persons and what rights and duties they enjoy. It will lead to the creation of a team spirit and keep the work atmosphere clean and healthy. All the superiors and subordinates will work without any tension. A sound organisational structure can be created by an efficient manager.

(7) Establishing Good Labour-Owner Relationship: Labour and capital are the two main resources of production. The owners invest capital and determine objectives while the labour tries to transform those objectives into reality. Therefore, existence of a sweet relationship between the two is of paramount importance. There was a time when there were no labour unions and the owners thought it fit to exploit the labour to the maximum possible extent. Now the labour unions exist and they are sufficiently organised to exert pressure on the owners to get their demands conceded. Industrialists too have realised their importance. It is clear to them that without the efficiency of labour more profits cannot be expected. The efficiency of labour can be increased only when their problems are effectively solved. This can be possible only through management. An efficient manager, with the help of his knowledge and experience, understands the feelings of labour and tries to remove their grievances. He makes arrangements for their training to increase their efficiency. He offers them an opportunity to be partners in the process of management. He also establishes a system of sharing the profits, establishing their individual identity and making timely efforts to solve their problems.

(8) Giving importance to Research and Investigation: A recent research has brought out the fact that only those companies or business enterprises which are constantly taking interest in research activities are developing fast. In the context of business, research and investigation mean finding out new products and new markets for the extension of business field, new methods of distribution and adopting the use of new techniques to solve financial problems and using new techniques in the field of communication, It is thus abundantly clear that research is needed to develop business at a rapid pace and this job can be accomplished by an efficient manager. Efficient managers invariably establish research and investigation department to achieve this important purpose.

(9) Fulfilling the Social Responsibility: A business establishment starts its activities in society. prospers and reaches the climax of development in the same social surroundings. Thus, no organisation can remain aloof from society and yet survive. That is why every enterprise is considered as an integral part of society. When an enterprise is so much indebted to society, it should also realise its responsibilities towards society. The social responsibilities of a business organisation include ensuring the safety of the capital and sufficient profit, proper remuneration and work conditions for the employees, making available to the consumers goods of good quality at the right time and proper prices, making available the opportunities of employment to the people and making efforts to raise their standard of living. An enterprise can ensure these expectations only through the medium of management. Thus, management has a special significance in the task of fulfiling the social responsibilities of business

(10) Aiming at Increased Profits: In order to increase the profits of any organisation it is the basic principle either to increase the sales revenue or reduce costs. Increasing the sales revenue is beyond the control of an organisation to some extent but to affect a reduction in costs is primarily an internal affair of the organisation and it can certainly be accomplished with the help of good quality raw material, modem machinery and trained employees. By reducing costs the profits of an organisation can be achieved by the management and future development can be expected.

In conclusion, it can be said that management is the life-breath of business and it will not be wrong to say, business without efficient management is a house built on sand, which can fall any time.

Importance of efficient management in business

Secret Reserves: Advantages and Disadvantages

 Q. What are Secret Reserves? Give their advantages and disadvantages. 

Ans. MEANING OF SECRET RESERVES: A Secret reserve is one which is not disclosed by the Balance Sheet. These reserves are created by showing profit at figure much lower than actual and by showing the assets at a lower figure and liabilities at a higher figure. When secret reserves exist, the actual position of the firm is much better than what is disclosed by the Balance Sheet.

Secret reserves may be created in the following ways:

(i) Writing off excessive depreciation;

(ii) Charging Capital expenditure (such as addition to assets) to Profit & Loss Account.

(iii) Treating a revenue receipt as a capital receipt (such as rent received credited to building account)

(iv) Undervaluation of assets (such as undervaluation of closing stock)

(v) Showing an actual asset as a contingent asset;

(vi) Showing a contingent liability as an actual liability;

(vii) Suppressing the sales;

(viii) Creating excessive or unnecessary provision for doubtful debts and other contingencies.

ADVANTAGES OF SECRET RESERVES: 

(i) Financial Stability: Creation of secret reserves strengthens the financial position of the enterprise without disclosing this fact to the shareholders or the public.

(ii) Helpful in Absorbing Unforeseen Losses: The presence of secret reserves enable such concerns to absorb any unexpected losses with any public discomfiture.

(iii) Regularity of dividends: Such reserves help the enterprise in maintaining the rate of dividend during the adverse trading conditions without disclosing this fact to shareholders or the public.

(iv) Avoidance of Competition: Because of concealment of actual profitability of the enterprise, the entry of the competing firms in the particular line of business is avoided.

DISADVANTAGES OF SECRET RESERVES:

(i) Unfair Presentation of Financial Statements: Statement of Profit & Loss fails to disclose true profit and the Balance Sheet fails to disclose a true and fair view of the financial position of the enterprise.

(ii) Loss to Shareholders: Shareholders who wish to sell their shares may not get actual price of their shares because of understatement of profits and financial position of the enterprise.

(iii) Misuse by Management: Fraudulent management may take undue advantage by creating secret reserves. Profits may be suppressed to enable them to buy the shares of the company at a lower price and then the profits may be enhanced by eliminating the secret reserves to enable them to sell the shares at a higher price.

(iv) Cover for Misdeeds of Management: Secret reserves may be utilised by management to cover their mistakes or misleads. 

The creation of secret reserves is not allowed under the Companies Act, 1956 as it requires a full disclosure of all material facts and significant accounting policies followed in preparing financial statements.

secret reserves: advantages and disadvantages

Celebrities makes a very good living out of media attention and have chosen to live in the public spotlight. They have no right to complain when they feel the media is intruding their privacy. To what extent do you agree or disagree?

Q. Celebrities makes a very good living out of media attention and have chosen to live in the public spotlight. They have no right to complain when they feel the media is intruding their privacy. To what extent do you agree or disagree?

Everything in life comes with a cost. It may not always be in terms of money but in the sense of struggle and hard work. A grand lifestyle, limelight, stardom, crazy fans could be the dream of many but it results in the absolute loss of privacy. Stars are under the constant eye of the media, spying every move they make and turning it into news. Some people feel that celebrities have no right to raise an objection on the media intruding their privacy. I do not agree to this and elaborate the same in my writing.

To embark on, there are umpteen reasons to support my disagreement. First of all, celebrities are also humans like others who have worked hard to reach a level of popularity and this does not give the media a right to invade their privacy. For example, recently a website posted some pictures of a Bollywood superstar, Shahrukh Khan’s daughter with her friend. I find that this was as natural a thing and did not require being hyped by the media because as all other teenagers, she too had a friend. Such meaningless and useless interference is not needed and also the media should be kind enough to spare certain aspects of life as personal and meant to become a public headline.

Furthermore, we live in a country where the rights for all citizens are equal and if others can complain against or speak for their grievances then why should the stars be an exception to it? Everyone has the right to choose any profession and wear or eat what they want but media should not make everything public because they are public figures. Besides, increasing the viewers for a channel or the sales of a newspaper or magazine by making the life of stars a public affair and making it for granted that they will at all times be happy to gain popularity no matter what the reason, is a wrong notion that the media should get rid of.

To conclude, I would like to say that stars have all rights to complain whenever and wherever they feel there is an encroachment in their personal life and the media should be sensible to realise and draw a line of demarcation between personal and public life.

POINTS TO REMEMBER:

Everything in life comes with struggle and hard work. // Stars have worked really hard to achieve fame. // They should have every right to complain if they feel that media invades their privacy. // Their family affairs, are not meant to be discussed in public. // Their hard work and effort should be paid in the form of popularity and fan following. // Privacy is an aspect that no individual can afford to lose and celebrities are no exception to it.

VOCABULARY:

Intruding: invading, attacking // Umpteen: several // Grievances: complaints // Popularity: publicity // Encroachment: intrusion