Foundation of Business Management

The essentials of an effective control system are that it should be suitable, timely, accurate, economical, flexible, simple and understandable, objective, focused on critical points (exceptions), and corrective, that is, it should lead to action on deviations and be acceptable to the people controlled.

Also, a group's output is the sum of individual contributions, whereas a team creates synergy so that the result is greater than the sum of its parts.

Nepalese business operates in a developing, landlocked and import-dependent economy. Its major problems are as follows.

• Small size and weak capital base: Most firms are small, family-owned and under-capitalized, which limits growth and technology use.
• Political instability and policy inconsistency: Frequent changes of government and policy create uncertainty for long-term investment.
• Inadequate infrastructure: Shortage of reliable electricity, poor roads and weak transport, communication and storage facilities raise costs.
• Lack of skilled manpower: Brain drain and foreign employment leave a shortage of skilled labour and managers.
• Labour problems: Trade-union politicism, strikes, bandhs and low productivity disrupt operations.
• Dependence on imports and on India: Heavy import reliance and a trade deficit make firms vulnerable to price and supply shocks and to transit problems.
• Corruption and bureaucratic red tape: Complex procedures, delay in permits and informal payments increase cost and discourage entrepreneurs.
• Limited access to finance: High interest rates, strict collateral requirements and weak capital markets.
• Outdated technology and weak R&D: Low productivity and poor competitiveness against imports.
• Informal sector and unhealthy competition: Tax evasion, smuggling, adulteration and syndicate practices.
• Lack of professional management: Many businesses are run on a traditional, personal basis without proper planning or systems.
• Small domestic market and low purchasing power.

Conclusion: Stable policy, better infrastructure, skill development and good governance are needed to overcome these problems.

Organizational culture is the system of shared values, beliefs, norms, assumptions and customs that members of an organization hold in common. It shapes how people behave and distinguishes one organization from another. It is often described as "the way things are done here".

A team is a small group of people with complementary skills who are committed to a common purpose, performance goals and approach for which they hold themselves mutually accountable.

Types of team

1. Functional (departmental) teams: members from one department with a common supervisor, such as the accounts team.
2. Cross-functional teams: members from different departments and specialities who work on a shared task, such as new product development.
3. Problem-solving teams: employees from the same area meet temporarily to find ways to improve quality or processes (quality circles).
4. Self-managed (self-directed) teams: members plan, organize and control their own work with little supervision and share leadership.
5. Virtual teams: members in different places collaborate through technology such as video calls and online tools.
6. Project / task force teams: temporary teams formed for a specific project and disbanded when it is complete.
7. Management teams: managers from different levels who coordinate work across units.

Control is the process of monitoring performance, comparing it with standards and taking corrective action. For control to be effective, the system should have the following essentials.

• Suitability: it should fit the nature, size and needs of the organization and the activity controlled.
• Accuracy: it should provide correct, reliable data, since wrong information leads to wrong decisions.
• Timeliness: deviations should be reported quickly so that corrective action can be taken before damage grows.
• Economy: the cost of the control system should be less than its benefits.
• Flexibility: it should adapt to changes in plans and the environment.
• Understandability: standards and reports should be simple and clear to all users.
• Objectivity: standards should be measurable and free from personal bias.
• Focus on critical points: control should concentrate on key result areas where deviations matter most (management by exception).
• Emphasis on exceptions: only significant deviations should be reported to higher management.
• Corrective action: the system must show who is responsible and what action to take.
• Acceptability and integration with planning: employees should accept the standards, and control should be tied to the plans.

Technology, globalization and competition are changing how companies are organized. The emerging issues in organization design and architecture are as follows.

1. Flatter and leaner structures: firms remove middle layers (delayering) and widen spans of control to speed decisions and cut costs. Employees get more responsibility and empowerment.
2. Boundaryless organization: barriers between departments, levels and outside parties (suppliers, customers) are reduced. Cross-functional teams and information technology support free flow of information and ideas.
3. Virtual organization: a small core firm uses networks of outside partners and technology to perform non-core functions, so it is flexible and low in cost.
4. Network (modular) structure: the firm outsources manufacturing, distribution or accounting to specialist suppliers and keeps core competencies.
5. Team-based structure: self-managed and cross-functional teams replace rigid departments, giving quicker response and more innovation.
6. Learning organization: the structure encourages continuous learning, knowledge sharing and adaptation to change.
7. Outsourcing and offshoring: use of outside agencies, domestic or foreign, for activities, to gain cost and skill advantages.
8. Flexible work arrangements: remote work, flexi-time, part-time and contract staff supported by information technology.
9. Organic and adaptive design: moving from mechanistic, formal structures to flexible, decentralised ones suited to a turbulent environment.
10. Strategic alliances and joint ventures: cooperation with competitors and partners to share resources and risk.
11. Diversity and global design: structures that manage multicultural workforces and global operations.

Implication: managers must balance flexibility with coordination and control, and prepare people for change with training and communication.

Control system: A control system is the set of processes and mechanisms by which a manager sets performance standards, measures actual performance, compares it with the standards, and takes corrective action to ensure that organizational goals are achieved. It consists of four steps: set standards, measure performance, compare, and take corrective action.

Essentials of an effective control system

1. Suitability: The system should fit the nature and needs of the organization, the job and the level of the manager.
2. Timeliness: Information on deviations must arrive in time to take corrective action, ideally giving early warning.
3. Accuracy: Data and measurements must be reliable, or wrong decisions follow.
4. Economy: The cost of control must be less than its benefits.
5. Flexibility: The system must adapt to changing plans and conditions.
6. Simplicity and understandability: Standards and reports should be easy for users to understand.
7. Objectivity: Standards should be clear, measurable and quantifiable, not personal opinion.
8. Focus on critical points (strategic control): Control should concentrate on key result areas and exceptions (management by exception).
9. Forward-looking and corrective: It should point to who is responsible and how to correct deviations, not just find fault.
10. Acceptability and organizational fit: Employees should accept the system, and it should be integrated with the plans and structure.

An effective control system improves performance, reduces waste and keeps the organization on track.

Organization design is the process of deciding how tasks, authority and relationships are arranged. Architecture is the overall structure, systems and culture. Nepalese organizations are changing their designs because of globalisation, technology, federalism, competition and the pandemic. The emerging issues are:

1. Flatter and leaner structures: Firms such as banks, telecoms and large private companies remove management layers and use delayering and downsizing for faster decisions and lower costs. The issue is the loss of promotion paths and job insecurity.
2. Decentralisation and empowerment: Branch and provincial units, particularly in banks and the public sector after federalism, receive more authority. The issues are coordination, control and capacity at the lower level.
3. Team-based and cross-functional structures: Project teams and task forces replace rigid departments. The issues are role conflict, dual reporting and team management skills.
4. Matrix and network or virtual forms: Outsourcing, strategic alliances and joint ventures are growing. Examples are outsourced IT and call-centre work, and franchising. The issues are dependence on partners and loss of control.
5. Technology-driven design and remote work: ERP, digital banking, e-commerce and work from home are reshaping jobs and structure. The issues are the digital skills gap, cybersecurity and supervision.
6. Flexible and boundaryless organizations: Fluid roles, flexible hours and temporary or contract staff. The issues are commitment and legal protection.
7. Culture, family business and professionalisation: Many firms are family owned and are moving to professional management and corporate governance. The issues are resistance to change, nepotism and succession.
8. Learning organization and change management: The need for continuous learning, innovation and resilience after Covid-19.
9. Public sector restructuring: Reorganisation of public enterprises and the shift from centralised to three-tier government create issues of overlapping authority and capacity.

Conclusion. Nepalese organizations are moving from tall, centralised and bureaucratic forms to flexible and participative ones. Success depends on matching design to strategy, skilled people, clear authority and a supportive culture.

Business management is the process of planning, organising, staffing, directing and controlling the people, money and other resources of a business so as to achieve its objectives efficiently and effectively.

Four of Henri Fayol's principles of administrative management are:

1. Division of work: specialisation of tasks increases efficiency.
2. Authority and responsibility: the right to give orders goes with accountability.
3. Unity of command: an employee should receive orders from only one superior.
4. Scalar chain: a clear line of authority runs from top to bottom.

(Others include discipline, unity of direction, esprit de corps and equity.)

Social responsibility of business is the obligation of a business to act in ways that benefit society as well as earn profit, by operating ethically, protecting the environment, treating employees, customers and the community fairly and contributing to social welfare.

A standing plan is a plan made for repeated or recurring situations that remains in use over a long period. It guides managers in handling routine matters consistently. Policies, procedures and rules are examples.

A programmed decision is a routine, repetitive decision made by following established rules or procedures. Examples are reordering stock when inventory reaches the reorder level, paying monthly salaries on a fixed date, and approving a standard leave application.

Source of authority refers to where a manager's right to command comes from. The main theories are:

• Formal (top-down) theory: authority comes from the owners or top of the organisation and flows down the hierarchy through delegation.
• Acceptance theory: authority exists only when subordinates accept the orders.

Other sources include law, position, personal expertise and personality.

Two natures of organisational culture:

1. Shared and learned: culture is a set of values, beliefs and norms shared by members and passed on to new members through socialisation.
2. Relatively stable but evolving: it develops over a long time, guides behaviour and is distinct for each organisation, yet can slowly change.

The communication process can be sketched as a loop:

Sender --(encoding)--> Message --> Channel --> Receiver --(decoding)--> Understanding
   ^                                  |                                     |
   |                                  +------ Noise (barriers) ------+     |
   +------------------------------- Feedback <----------------------------+

Steps: the sender has an idea, encodes it into a message, sends it through a channel, the receiver decodes it, and gives feedback to the sender. Noise may disturb any stage.

Four major manufacturing firms of Nepal:

1. Bottlers Nepal Limited (Coca-Cola)
2. Surya Nepal Private Limited (cigarettes, garments, soap)
3. Unilever Nepal Limited
4. Himal Cement (or Hetauda Cement Industries / Arghakhanchi Cement)

(Others include Nepal Lube Oil, Gorkha Brewery and Jyoti Spinning Mills.)

Robert L. Katz identified three basic skills a manager needs, and later writers added a fourth.

1. Technical skill. The ability to use specific knowledge, methods and tools to do a particular job, for example accounting, engineering or computing. It is most important for first-line (supervisory) managers.

2. Human (interpersonal) skill. The ability to work with, understand, motivate and lead people, and to build teams and communicate well. It is needed equally at all levels.

3. Conceptual skill. The ability to see the organisation as a whole, analyse complex situations, understand how parts relate and plan for the future. It is most important for top managers.

4. Design and diagnostic skills. The ability to find solutions to problems, and to analyse their causes (diagnostic skill).

The relative importance varies with level: top managers need more conceptual skill, middle managers need a balance of all three, and lower managers need more technical skill, while human skill is vital everywhere.

The contingency theory (situational approach) holds that there is no single best way to manage. The most effective management action depends on the situation, that is, on the internal and external factors facing the organization. Its guiding idea is "if-then": if a certain situation exists, then a certain management practice is most suitable.

Key points

• Organizations differ in size, technology, environment, people and tasks, so universal principles (as in classical theory) cannot fit all.
• Managers must diagnose the situation first and then choose the technique that fits it.
• Important contingency variables: organizational size, technology, environmental uncertainty, individual differences and the nature of the task.
• Contributors include Fred Fiedler (leadership contingency model), Joan Woodward (technology and structure), and Lawrence and Lorsch (environment and organization design).

Example: An autocratic style may suit a crisis or an unskilled workforce, while a participative style suits a skilled, creative team.

Evaluation: It is flexible and realistic and encourages situational thinking, but it lacks a unified framework and is difficult to apply because situations are complex and keep changing.

Rational decision making is a logical, step-by-step process in which the manager chooses the alternative that maximizes the achievement of objectives, assuming complete information and clear criteria.

Steps in the process

1. Identify and define the problem: recognize the gap between the desired and actual situation and find its real cause.
2. Identify decision criteria: decide what is relevant, such as cost, quality, time and risk.
3. Allocate weights to the criteria: give priority to the more important criteria.
4. Develop alternatives: list possible courses of action that could solve the problem.
5. Analyse the alternatives: evaluate each alternative against the weighted criteria, noting strengths and weaknesses.
6. Select the best alternative: choose the one with the highest total score.
7. Implement the decision: communicate it to those affected and obtain their commitment.
8. Evaluate the decision (follow-up): compare results with the objectives and take corrective action if needed.

Assumptions: The problem is clear, all alternatives and their consequences are known, preferences are clear and stable, there are no time or cost limits, and the final choice maximizes the outcome. In practice, managers face bounded rationality, so these conditions are only partly met.

Business ethics means the moral principles and standards of right and wrong that guide business behaviour. In Nepal, weak enforcement of law, informal practices and the small size of many firms give rise to several ethical issues.

Major ethical issues in Nepalese business

• Tax evasion and underreporting: keeping two sets of accounts, under-invoicing and avoiding VAT and income tax.
• Corruption and bribery: paying or taking commissions in licensing, customs, procurement and tenders.
• Adulteration and poor product quality: adulterated food, spices, milk and fuel, and the sale of expired or substandard goods.
• Black marketing, hoarding and artificial scarcity: especially of daily necessities, fuel and cooking gas during shortages and festivals.
• Syndicate and cartel practices: in transport and trade, fixing prices and restricting competition.
• Misleading advertising and false claims: exaggerated promises, fake discounts and concealed product information.
• Exploitation of labour: low wages, long hours, child labour, no social security and discrimination in recruitment.
• Environmental irresponsibility: pollution from brick kilns, factories and waste dumped into rivers.
• Insider dealing and fraud in finance: cooperative and financial frauds, misuse of depositors' funds and unfair loan practices.
• Piracy and counterfeit goods: copying branded products and software.
• Neglect of consumer rights: weak after-sales service and poor handling of complaints.

Remedies: Stronger enforcement of laws, codes of ethics, transparency, consumer awareness, ethical leadership and corporate social responsibility can reduce these problems.

Organizational conflict is a disagreement or clash between individuals, groups or departments arising from incompatible goals, scarce resources, differences in values or poor communication. Managing it means keeping it at a functional level and resolving harmful conflict.

Approaches to managing conflict

1. Avoidance (withdrawal): ignoring or postponing minor conflict, useful when the issue is trivial or emotions need to cool.
2. Accommodation (smoothing): giving in to the other side to preserve the relationship, suitable when the issue matters more to them.
3. Competition (forcing): using authority to impose a decision, needed in emergencies or unpopular but essential actions.
4. Compromise: each party gives up something, giving a partial win for both. It suits issues with equal power and time pressure.
5. Collaboration (problem solving): both parties work together to find a win-win solution. This is the best long-term approach for important issues.

Other techniques

• Set superordinate goals that require cooperation.
• Improve communication and hold open discussions.
• Use mediation or arbitration by a neutral third party.
• Clarify roles, responsibilities and authority, and allocate resources fairly.
• Restructure or rotate staff, and provide training in negotiation and interpersonal skills.
• Use formal grievance-handling procedures.

A good manager chooses the style according to the nature of the conflict and the situation.

Social responsibility is the obligation of a business to act in ways that benefit society as well as the owners, beyond what the law strictly requires. Managers must balance economic objectives (profit) with the varied expectations of customers, employees, community, government and environment.

Friedman doctrine (classical view)

Economist Milton Friedman argued that "the social responsibility of business is to increase its profits." According to this view:

• Managers are agents of the shareholders and must use the owners' money only for their interests, mainly maximizing profit within the law and ethical custom.
• Spending on social causes is spending someone else's money (shareholders', customers' or employees') without their consent.
• Social problems should be solved by government and individuals, not by business, and managers lack the expertise for social tasks.
• Social spending raises costs and prices, and weakens competitiveness.
• Businesses that use social goals to gain power may become too powerful.

Arguments for social responsibility (socioeconomic view)

1. Public expectations: Society expects business to act responsibly, and businesses exist with society's permission.
2. Long-term profit: Socially responsible firms build a good image, customer loyalty and brand value, which brings long-run profit.
3. Ethical obligation: It is simply the right thing to do.
4. Better public image: It improves reputation and attracts talent and investors.
5. Better environment: Business is part of the community and benefits from a healthy, stable society and environment.
6. Discouraging government regulation: Voluntary responsibility reduces the need for further laws and controls.
7. Balance of power and responsibility: Because business has great power, it should bear responsibility.
8. Stockholder interest: Socially responsible firms may have higher share prices and lower risk.
9. Resources and problem solving: Business has the funds, skills and management expertise to solve social problems, and prevention is cheaper than cure.

Conclusion: Modern management accepts a balance: profit is necessary for survival, but long-term success depends on meeting the legitimate expectations of society.

Changes in technology and globalization have forced organizations to move away from rigid, tall, bureaucratic structures toward flexible, boundaryless and learning-oriented designs. The emerging issues in organization design and architecture are as follows.

1. Networked (network) organization: The firm keeps core functions and outsources others (such as manufacturing, logistics and IT) to specialist partners linked through information technology. It reduces cost and increases flexibility, but control over partners is weaker.
2. Virtual organization: A temporary or permanent network of people and firms connected electronically, with little physical presence. It allows work across locations and quick response, but demands trust and strong communication.
3. Boundaryless organization: It removes the vertical, horizontal and external barriers (rigid chains of command, departmental walls, and the separation from customers and suppliers) to improve speed and cooperation.
4. Modular organization: Non-core parts of the product or activity are outsourced as modules and assembled, giving cost and speed advantages.
5. Learning organization: It encourages continuous learning, knowledge sharing, openness, empowerment and teamwork so that it can adapt to change and innovate.
6. Team-based and cross-functional structure: Work is organized around self-managed and cross-functional teams rather than departments, which brings faster decisions and creativity.
7. Flat structure, empowerment and decentralization: Fewer levels, wider spans of control and greater authority at lower levels.
8. Global structure: Global product, area or matrix designs for competing in multiple countries.
9. Telecommuting, flexible work and outsourcing, and use of e-business: Employees work remotely using ICT.
10. Knowledge management and talent diversity: The emphasis moves from physical assets to people and knowledge; workforce diversity must be handled.

Issues: These designs raise challenges of coordination, trust, security of information, culture clash, employee commitment and loss of control, so managers need to design carefully to balance flexibility with control.

The industry (task) environment consists of the forces that directly affect a firm's profitability and competitive position. Michael Porter's Five Forces model analyses the attractiveness and competitiveness of an industry. The stronger the forces, the lower the industry's profit potential.

The five forces

1. Threat of new entrants: New firms bring new capacity and intensify competition. The threat is low when there are entry barriers such as economies of scale, high capital requirements, brand loyalty, product differentiation, access to distribution channels, government policy and switching costs.
2. Bargaining power of suppliers: Suppliers can raise prices or reduce quality. Their power is high when there are few suppliers, unique inputs, high switching costs, or no substitutes for the inputs, or when they may integrate forward.
3. Bargaining power of buyers: Customers push for lower prices and better quality. Their power is high when buyers are few and large, purchase in volume, products are standardized, switching costs are low, or buyers are price-sensitive and well informed.
4. Threat of substitutes: Products from other industries that meet the same need (for example, tea versus coffee, or messaging apps versus SMS) limit the price a firm can charge. The threat is high when substitutes offer a better price-performance ratio and switching costs are low.
5. Rivalry among existing competitors: The intensity of competition on price, advertising, product features and service. It is high when there are many equal competitors, slow industry growth, high fixed costs, low differentiation and high exit barriers.

Use in analysis

• Managers assess each force as high, medium or low to judge industry attractiveness.
• The firm then formulates strategy, such as cost leadership, differentiation or focus, to defend its position against the strongest forces.
• It helps in deciding whether to enter or leave an industry, and in monitoring competitors.

Limitation: The model is static and may underrate collaboration and the role of complementors, but it is a widely used tool for monitoring competitors and the industry environment.

Teamwork means a group of people with complementary skills working together toward a common goal and sharing accountability for results. In the modern business environment, teams are important for quality, speed and innovation. The position of teamwork in Nepali organizations can be evaluated as follows.

Position (present situation)

• Teams are used in project work, banks, hospitals, NGOs/INGOs, hydropower and construction, and in multinational and larger private companies.
• Family-owned small businesses and many government offices still rely on hierarchical, individual-based work.
• Committees and task forces are common in the public sector, but they are often formal and slow.
• Awareness of team-building through training, workshops and outdoor activities is growing, especially in the service and IT sectors.

Culture of teamwork

Positive aspects

• Strong collectivist traditions, family and community bonds, and a culture of cooperation (parma, sahayog).
• Respect for seniors and social harmony help team cohesion.
• Willingness to share during festivals, crises and social events.

Negative aspects

• High power distance: team members hesitate to disagree with the leader, so participation and creativity are limited.
• Centralized decision making and lack of empowerment.
• Favouritism, nepotism (afno manchhe) and political affiliation influence team formation and reward.
• Lack of trust, personality clashes and weak communication.
• Individual rather than team-based rewards and appraisal.
• Low accountability, social loafing and caste, gender or regional bias.
• Shortage of training in team skills and weak leadership.

Critical evaluation

Nepali society is naturally collective, but organizations have not turned this into effective teamwork because of hierarchy, politics and a weak performance culture. Effective teamwork needs empowerment, clear goals, trust-building, team-based rewards, professional leadership and training. Where these have been adopted (such as in banks, telecom and development projects), teams show better results; broadly, there is still large scope for improvement.

(a) Landscape of the case: major issues and problems

Google is a strong, innovative company that spends 15 percent of its revenue on research and development and regularly features among the best companies to work for. Its market strategy (innovation, a large product portfolio, broad coverage and effective marketing) and its human resource planning have supported fast growth. The case, however, reveals these problems:

• High employee turnover: the average tenure is only 1.3 years, even though Google offers generous benefits and incentives.
• Weak retention strategy implementation: retention plans exist, but poor implementation has pushed top managers to leave for competitors.
• Motivation gap for part-time and project employees: many receive no allowances, which reduces their morale and disrupts human resource development.
• Over-reliance on perks: benefits alone do not give meaningful work, growth or belonging.
• Intense competition from rivals such as Microsoft in a cutthroat labour and product market.
• Opportunity not fully used: partnerships with software developers to integrate services and attract more users.

(b) Google's biggest challenge in keeping employees motivated

The biggest challenge is that Google relies on extrinsic rewards (perks, benefits, incentives), which only prevent dissatisfaction. In Herzberg's terms these are hygiene factors. Real motivation needs motivators such as challenging work, recognition, growth, autonomy and career progression. Knowledge workers are in demand and can easily move to competitors, so perks are easily matched. Poorly implemented retention strategies and the neglect of part-time employees add to the problem. Google must therefore build commitment through purpose, development and fair treatment, not benefits alone.

(c) Managing and motivating a Google team

• Set clear, challenging goals and involve members in setting them (goal-setting and participative management).
• Give autonomy and ownership of projects, with time for creative work.
• Recognise good performance quickly through praise, bonuses and promotion.
• Provide career paths, training and mentoring so that people see a future in the firm.
• Ensure equity: pay and allowances for part-time and project staff should be fair.
• Keep open two-way communication and regular feedback, and hold exit and stay interviews to find the reasons for dissatisfaction.
• Build team spirit and an inclusive culture, and balance workload to avoid burnout.

(d) Suggestions and prescriptions

1. Redesign the retention strategy and make sure it is implemented, with accountability for managers (the HR department monitors turnover).
2. Move from perks to motivators: job enrichment, career ladders, stock ownership and recognition.
3. Provide allowances and benefits to part-time employees, and include them in development programmes.
4. Retain top managers through succession planning, competitive packages and a real voice in decisions.
5. Use exit interviews and employee surveys to find why people leave.
6. Exploit external opportunities by partnering with software developers such as Microsoft where it is beneficial.
7. Continue to invest in research and development, and keep the inclusive culture that sustains morale.

A line manager is a manager who is directly responsible for the primary activities of the organization, such as production and sales, and has authority over the people who do that work. Line managers hold line authority: they give orders to their subordinates and are accountable for achieving operating results.

According to Robert Katz, managers need three basic skills:

• Technical skill: the ability to use specific knowledge, methods and tools of a field. It is most important for first-line managers.
• Human (interpersonal) skill: the ability to work with, understand, communicate with and motivate people. It is needed at all levels.
• Conceptual skill: the ability to see the organization as a whole, analyse complex situations and plan. It is most important for top managers.

Some writers add diagnostic, analytical and communication skills.

Business ethics is the set of moral principles, values and standards of right and wrong that guide the conduct of business people and organizations in dealing with customers, employees, shareholders, competitors and society. It requires honesty, fairness and social responsibility in business decisions beyond what the law demands.

Two features of non-programmed decisions:

1. Unique and non-recurring: they deal with novel, unstructured problems for which no ready-made procedure, rule or policy exists, for example entering a new market.
2. Need judgment and creativity: they are made mostly by top management, involve high uncertainty and risk, and have large and long-term consequences.

Two advantages of centralization of authority:

1. Uniformity and consistency: decisions and policies are the same across the organization, which gives better coordination and control.
2. Strong leadership and economy: top managers with wide experience take the decisions, so duplication is avoided and costs and resources are used more economically. It also gives quick action in a crisis.

Noise in the communication process is any disturbance or interference that distorts, blocks or reduces the clarity of the message between the sender and the receiver. It can be physical (loud sounds, poor telephone line), psychological (prejudice, inattention), semantic (difficult words, jargon) or technical (system failure). Noise causes the message received to differ from the message sent.

• CSR: Corporate Social Responsibility
• SWOT: Strengths, Weaknesses, Opportunities and Threats
• PEST: Political, Economic, Social and Technological (factors)
• CEO: Chief Executive Officer

Managers today work in a fast-changing and complex environment. The main challenges to management are as follows.

1. Globalization: Competition from foreign firms, cross-border trade and the need to manage across cultures, markets and regulations.
2. Technological change: Rapid growth of information technology, automation, e-commerce and artificial intelligence requires continuous adaptation and reskilling.
3. Workforce diversity: Differences in gender, age, culture, ethnicity and abilities must be managed fairly for productivity and harmony.
4. Ethics and social responsibility: Pressure to act ethically, avoid corruption and respond to the expectations of society and the environment.
5. Quality and productivity: Customers demand better quality at lower cost, so continuous improvement is necessary.
6. Innovation and change: Managers must encourage creativity, manage resistance to change and keep the organization competitive.
7. Customer focus and service: Meeting rising customer expectations and building loyalty.
8. Managing knowledge and human capital: Attracting, retaining and motivating skilled workers; employee empowerment and engagement.
9. Environmental sustainability: Reducing pollution and using resources efficiently.
10. Political and economic uncertainty: Particularly in developing countries like Nepal, instability, inflation and unreliable infrastructure.

To meet these challenges managers need strong conceptual, human and technical skills, flexibility and a continuous learning attitude.

Contingency theory (situational approach) states that there is no one best way to manage in all situations. The appropriate management technique depends on (is contingent upon) the situational factors, such as organizational size, technology, environmental uncertainty, task nature and people. The approach applies "if-then" thinking: if a particular situation exists, then a particular practice is the most effective.

Contributors: Fiedler (leadership), Woodward (technology), Burns and Stalker (mechanistic and organic systems) and Lawrence and Lorsch (differentiation and integration).

Main points

• Organizations are open systems that differ from one another.
• Managers must analyse the situation before acting.
• Structure, leadership style and control should match the environment.

Significance

1. It encourages flexible, situation-based decisions instead of universal rules.
2. It integrates earlier approaches (classical, behavioural and quantitative), using each where it fits.
3. It makes managers analyse internal and external factors, improving diagnosis and problem solving.
4. It is realistic and practical for varied business conditions.
5. It supports adaptation to change and to uncertainty.

Limitation: It provides no single guiding framework, and it is hard to identify and weigh all the contingency factors.

Rational decision making is a logical process of choosing the alternative that best achieves objectives. The steps are:

1. Identify the problem: recognize and define the gap between the desired and actual situation.
2. Identify decision criteria: determine the factors relevant to the decision (cost, quality, time, risk).
3. Allocate weights to the criteria: rank them by importance.
4. Develop alternatives: generate possible courses of action.
5. Analyse alternatives: evaluate each against the criteria and weights.
6. Select the best alternative: choose the one with the highest value.
7. Implement the alternative: communicate and put the decision into action.
8. Evaluate decision effectiveness: compare results with the goals and take corrective action when necessary.

The model assumes a clear problem, complete information and consistent preferences, which are only partly true in practice.

The service sector (banking, insurance, hotels, tourism, transport, education, health, telecom and trade) contributes the largest share of Nepal's GDP, but it faces several common problems.

• Shortage of skilled and trained manpower: low professionalism and high labour turnover, with migration of qualified people abroad.
• Poor quality of service: weak customer care, delays, and lack of standards and quality control.
• Inadequate infrastructure: unreliable electricity, poor roads, airports and internet connectivity.
• Limited capital and high cost of finance for expansion and technology.
• Low use of technology: manual processes and weak digital services in many areas.
• Political instability, strikes and bandhs, which hamper operations, especially in tourism and transport.
• Seasonality and demand fluctuation: for example in tourism and hospitality.
• Weak regulation and unhealthy competition: syndicates, informal operators, price fixing and tax evasion.
• Bureaucratic procedures and corruption in licensing and renewals.
• Lack of consumer awareness and weak protection of consumer rights.
• Poor marketing and branding, particularly for tourism products.
• Vulnerability to external shocks such as earthquakes, pandemics and economic slowdowns.

Training, technology adoption, stable policy and service-quality standards are needed to solve these problems.

Organizational culture is the shared values, beliefs and norms that shape behaviour in an organization. A strong, positive culture contributes to organizational success in the following ways.

1. Gives identity and sense of belonging: employees feel part of the organization, which builds commitment and loyalty.
2. Guides employee behaviour: it acts as an informal control and sets standards of conduct, reducing the need for close supervision.
3. Improves motivation and morale: shared values and recognition raise satisfaction and productivity.
4. Supports strategy implementation: when culture fits the strategy, change and goals are achieved more easily.
5. Creates competitive advantage: a distinctive culture (such as customer focus or innovation) is hard for rivals to copy.
6. Promotes cooperation and teamwork: common values reduce conflict and improve coordination and communication.
7. Attracts and retains talent: people prefer to work and stay in organizations with a healthy culture, lowering turnover.
8. Encourages innovation and adaptability to change.
9. Enhances ethical behaviour and corporate image among customers and the public.

A weak or negative culture, in contrast, creates resistance to change and conflict, and reduces performance.

Control is the process of ensuring that actual performance matches plans and standards. Controls can be classified in the following ways.

1. By timing

• Feedforward (preliminary) control: applied before an activity begins to prevent problems, by controlling inputs such as raw materials, skilled people and budgets. Example: quality inspection of materials before production.
• Concurrent (steering) control: applied during the activity so that problems are corrected as they occur. Example: supervision, and real-time monitoring of production.
• Feedback (post-action) control: applied after the activity to compare results with standards and learn for the future. Example: financial statements, performance appraisal and sales analysis.

2. By level or area

• Strategic, tactical and operational control at top, middle and lower levels.
• Financial control (budgets, ratio analysis, audits), quality control, inventory control, marketing control and human resource control.

3. By approach

• Bureaucratic control: rules, procedures, policies and authority.
• Market control: use of price and market competition (such as profit centres).
• Clan control: shared values, culture and norms.
• Preventive and corrective control: avoiding deviations versus correcting them.

A good system uses a combination of these types.

Communication barriers are obstacles that prevent or distort the effective exchange of messages between sender and receiver.

1. Physical (environmental) barriers: noise, distance, poor equipment, and bad timing.

2. Semantic (language) barriers: unclear words, jargon, ambiguous symbols, and different meanings in different languages.

3. Psychological (personal) barriers: prejudice, emotions, perception differences, lack of attention, fear and mistrust, and poor listening.

4. Organizational barriers: complex hierarchy, long chains of command, status differences, poor information flow, and rigid rules and policies.

5. Cultural barriers: differences in values, customs, gestures and ways of thinking.

6. Technological barriers: failure of equipment, information overload and unsuitable media.

7. Filtering and selective perception: the sender manipulates information to please the receiver, or the receiver hears only what he or she wants to hear.

Overcoming barriers: use clear and simple language, active listening, feedback, suitable channels, reduced noise, empathy and flatter structures.

Meaning

The systems theory views an organization as a system: a set of interrelated and interdependent parts (subsystems) that work together to achieve a common goal. A change in one subsystem affects the others, so the manager must look at the organization as a whole, not at isolated departments. The theory is based on the general systems theory of Ludwig von Bertalanffy and was applied to management by writers such as Kast and Rosenzweig.

Types of systems

• Closed system: not influenced by the environment and does not interact with it.
• Open system: interacts continuously with its environment. Business organizations are open systems.

Model of an organization as an open system

$\text{Inputs} \rightarrow \text{Transformation process} \rightarrow \text{Outputs} \rightarrow \text{Feedback}$

• Inputs: human, financial, material and information resources taken from the environment.
• Transformation process: production, management and technology convert inputs into outputs.
• Outputs: goods, services, profit, employee satisfaction.
• Feedback: information on results from customers and the market, used to correct the system.
• Environment: the external forces (economic, political, social, technological) in which the organization operates.

Key concepts

1. Subsystems: departments such as production, marketing, finance and HR, which are interdependent.
2. Synergy: the whole is more effective than the sum of its parts.
3. Entropy: a closed system tends to decay; open systems avoid it by taking in new inputs.
4. Equifinality: the same goal can be achieved by different paths.
5. Boundaries: separate the system from its environment, and are permeable in open systems.

Significance

• Encourages a holistic, integrated view and coordination between departments.
• Shows the importance of the environment and feedback.
• Helps managers foresee the effect of a decision on other parts.

Limitations: it is abstract, gives few specific guidelines, and is difficult to apply to complex organizations.

Michael Porter's five forces model analyses the competitive structure of an industry and its profit potential. The stronger the forces, the lower the industry's profitability. The five forces are as follows.

1. Threat of new entrants: new firms bring extra capacity and take market share. The threat is lower when barriers to entry are high, such as economies of scale, high capital needs, brand loyalty, access to distribution, government policy and switching costs.
2. Bargaining power of buyers (customers): buyers force prices down or demand higher quality when they are few or buy in large volumes, when products are standardised, switching costs are low or substitutes exist.
3. Bargaining power of suppliers: suppliers can raise prices or cut quality when they are few, when their inputs are unique or important, and when switching is costly.
4. Threat of substitutes: products from other industries that meet the same need (for example, tea or coffee, or mobile calls instead of landlines) limit the prices an industry can charge.
5. Rivalry among existing competitors: intense when there are many firms of similar size, slow industry growth, high fixed costs, low product differentiation and high exit barriers. It leads to price wars, advertising battles and low profit.

Use of the model

Managers assess each force as high, medium or low, find the industry's attractiveness, and design a strategy such as cost leadership, differentiation or focus, to defend against the forces or to influence them.

Limitation: it is a static model, which pays little attention to complementors and fast change.

Overview

Nepalese businesses range from small family-owned shops and cottage industries to large banks, manufacturers and joint ventures. Management practices differ with their nature, size and ownership.

Existing practices

1. Family and owner-centred management: in small and medium firms, the owner makes almost all decisions, hires relatives and keeps control. Professional management is limited and succession is by family.
2. Centralised decision making: authority is concentrated in top management or the owner. Subordinates have little participation, so the response is slow.
3. Informal planning: most firms have short-term, intuitive plans. Formal strategic planning is found mainly in banks, insurance companies, telecommunications and multinationals.
4. Weak organizing: job descriptions are often unclear, and delegation is limited because of mistrust. Many firms use simple functional structures.
5. Personal and relationship-based staffing: recruitment frequently depends on connections (nepotism and favouritism) more than merit. Training and performance appraisal are weak, though the large private banks and companies are improving.
6. Autocratic and paternalistic leadership: a commanding style is common. Motivation depends largely on pay and job security, with limited recognition and growth.
7. Control by direct supervision: formal control systems and budgets are used less, particularly in small firms; in large firms audits and reporting systems are used because of regulation.
8. Growing professionalism in the modern sector: in banks, finance, hospitality, IT and multinationals, management is more professional, using modern human resource practices, corporate governance and information technology.
9. Influence of culture, politics and regulation: hierarchy, political connections, trade-union politics, tax and licence procedures affect decisions.

Critical evaluation

• Strengths: flexible, quick decisions in small firms; loyalty; low cost; growing adoption of modern methods in the formal sector.
• Weaknesses: lack of professionalism, nepotism, poor planning and delegation, inadequate training, resistance to change, ethical problems such as tax evasion and weak governance.

Conclusion: management in Nepal is a mix of traditional and modern. To compete, firms need to professionalise through merit-based staffing, delegation, strategic planning, training, ethical behaviour and the use of technology.

(a) Issues and problems in the case

• TGSS is an e-commerce business whose management believes profitability follows customer satisfaction, and it promised delivery on the day after the order.
• Lack of communication and coordination among departments caused delays in delivery, so the commitment was broken.
• Loss of reputation and customer complaints as a result.
• Routine, consistency-oriented management shows managers take little interest in daily operations, with weak monitoring and control.
• Capacity not matched to demand: orders grew quickly in Kathmandu, Lalitpur and Bhaktapur without a matching logistics system.
• Over-promising and weak planning of operations, and a lack of systems for tracking orders.

(b) SWOT analysis of e-commerce in Nepal (based on the case)

(c) Need of communication for effective service delivery

1. Coordination: departments such as order processing, stock, packing and delivery must share information on orders and stock to deliver on time.
2. Meeting commitments: customers should be informed of the order status and delays, which keeps trust.
3. Understanding customer needs: two-way communication through email, call centres and feedback lets the firm respond to demands and complaints.
4. Fast decisions and problem solving: quick, accurate information lets managers solve problems early.
5. Employee motivation and clarity of roles: clear instructions avoid confusion and duplication.
6. Reputation: good communication, including promotion and after-sale contact, builds the brand and loyalty.

In this case, poor internal communication is the direct cause of the loss of reputation.

(d) Suggestions to improve service quality of e-business in Nepal

1. Install an integrated information system linking orders, stock, packing and delivery, with order tracking for customers.
2. Improve communication and coordination through regular inter-departmental meetings and clear responsibilities.
3. Make realistic delivery promises and increase delivery capacity (riders, vehicles, warehouses) before expanding.
4. Introduce proactive monitoring and control with delivery-time targets, and feedback from customers.
5. Provide training for staff in customer service and technology.
6. Offer a good complaint handling and return/refund policy.
7. Improve payment security and website reliability, and build trust.
8. Collaborate with logistics partners and expand gradually to other cities.
9. Government should provide clear e-commerce laws, digital address systems and infrastructure.

Management is the process of planning, organizing, staffing, leading and controlling the human, financial, physical and informational resources of an organization to achieve its goals efficiently and effectively.

Managerial skills are the abilities and competencies a manager needs to perform his or her roles and functions successfully. According to Robert Katz they are technical, human and conceptual skills, supported by communication, diagnostic and analytical skills.

Two classical theories of management are:

1. Scientific management (F. W. Taylor), which focuses on improving worker efficiency through scientific methods.
2. Administrative (general administrative) theory (Henri Fayol), which focuses on the principles and functions of management. (Weber's bureaucratic theory is also a classical theory.)

Managerial ethics refers to the standards of right and wrong, and the moral principles, that guide the conduct and decisions of managers. It means that managers act honestly, fairly and responsibly towards employees, customers, owners and society while making decisions and using their authority.

Various styles of decision making are:

1. Directive style: low tolerance for ambiguity and a rational, fast, logical approach.
2. Analytic style: high tolerance for ambiguity and a rational approach; wants more information and considers many alternatives.
3. Conceptual style: high tolerance for ambiguity and an intuitive approach; creative, with a broad outlook.
4. Behavioural style: low tolerance for ambiguity and an intuitive approach; supportive of others, and concerned about people and harmony.

In a multidivisional (M-form) structure, the organization is divided into self-contained divisions based on product, market or geography. Each division works like an independent business with its own functions, while top management (the corporate headquarters) controls overall strategy and finance.

                  Top management (HQ)
                          |
        +-----------------+-----------------+
        |                 |                 |
   Division A         Division B        Division C
 (Product/Area)     (Product/Area)    (Product/Area)
        |                 |                 |
  Production,        Production,       Production,
  Marketing,         Marketing,        Marketing,
  Finance, HR        Finance, HR       Finance, HR

Two advantages of decentralization of authority:

1. Faster decisions: decisions are made at the level closest to the problem, so there is less delay and better response to local conditions.
2. Motivation and development of managers: lower-level managers gain responsibility and experience, and feel more motivated and ready for higher positions. It also reduces the burden on top management.

Two features of organizational culture:

1. Shared by members: the values, beliefs and norms are common to the people in the organization and are learned and passed to new members.
2. Distinctive and guides behaviour: every organization has its own unique culture, which influences how members think, act and make decisions.

1. Formation: A formal group is deliberately created by the organization to achieve its goals (e.g. a department or committee). An informal group forms spontaneously from social relations and common interests (e.g. a lunch group).
2. Structure and rules: A formal group has defined authority, rules, and roles shown in the organization chart. An informal group has no written rules; its norms and leaders emerge naturally and it does not appear in the chart.

1. Shortage of skilled manpower and weak training: Many service firms (tourism, hospitality, banking) lack trained staff, and skilled workers often migrate abroad.
2. Poor infrastructure and unstable policy: Unreliable electricity, transport and internet, along with frequent political and policy changes, raise costs and make service quality hard to maintain.

Henry Mintzberg grouped managerial work into ten roles in three categories.

1. Interpersonal roles

• Figurehead: performs ceremonial and legal duties, such as receiving guests or signing documents.
• Leader: motivates, directs and develops subordinates.
• Liaison: builds contacts with people outside the unit or organization.

2. Informational roles

• Monitor: scans the environment and collects information.
• Disseminator: passes information to subordinates and colleagues.
• Spokesperson: speaks for the organization to outsiders such as the press, government and customers.

3. Decisional roles

• Entrepreneur: initiates change and improvement projects.
• Disturbance handler: responds to crises and conflicts.
• Resource allocator: decides how money, time and people are distributed.
• Negotiator: bargains with unions, suppliers and customers for the organization.

Together these roles show that a manager links people, handles information and makes decisions, and how much each role matters varies with the manager's level.

Corporate social responsibility (CSR) is the obligation of a business to act in ways that benefit society as well as owners, by considering its effect on employees, customers, community and environment, beyond what law requires.

Friedman doctrine

Economist Milton Friedman (1970) argued that "the social responsibility of business is to increase its profits." The main points are:

• Managers are agents of the shareholders, so their duty is to maximize shareholder wealth within the law and ethical custom.
• Spending company money on social causes is spending the owners' money without their consent, in effect a tax imposed by managers.
• Social problems belong to government and individuals; managers are not trained or elected to decide social policy.
• Business contributes to society by producing goods, providing jobs and paying taxes, and if profits are maximized society gains automatically.
• Social spending that also raises profit (such as goodwill or better employee morale) is acceptable, but only as a means to profit.

Critics say this ignores stakeholders, long-term reputation and the harm firms can do to society, and modern thinking favours the stakeholder view of CSR.

Authority is the legitimate right to command and take decisions. The main theories of its source are:

1. Formal (classical) theory: Authority flows from the top. Owners get it from private property and the state, and delegate it down the hierarchy as a legal right of the position.

2. Acceptance theory (Chester Barnard): Authority comes from below. An order has authority only if the subordinate accepts it, which happens when they understand it, find it consistent with the organization's purpose and their own interests, and are able to comply.

3. Competence (functional) theory: Authority arises from personal expertise and knowledge. People follow an expert because of his or her skill, regardless of position.

4. Charismatic and personal sources: Personality, character and the ability to inspire loyalty give a leader influence over followers.

5. Situational (Mary Parker Follett) theory: Authority comes from the demands of the situation, so whoever knows best what the situation needs commands, and the law of the situation rules.

In practice, formal authority is combined with expertise and acceptance to make a manager effective.

Managers take decisions under three conditions, depending on how much is known about outcomes.

1. Certainty: The manager knows exactly the alternatives and the outcome of each. Decisions are easy and the best alternative is picked, for example investing in a fixed deposit at a known interest rate.

2. Risk: The manager knows the alternatives and can estimate the probability of each outcome, using past data or statistics. The choice is made using expected value, for example launching a product when market research suggests a 60% chance of success.

3. Uncertainty: Neither the outcomes nor their probabilities are known, usually because the environment is dynamic and information is lacking. The manager relies on judgment, intuition, experience, flexibility and sometimes on criteria such as maximin or maximax. Entering a new foreign market is an example.

Some writers add ambiguity or conflict, where the goals themselves are unclear or competing. Most strategic decisions are made under risk or uncertainty.

Organizational architecture is the overall design of an organization, the combination of its structure, processes, culture and people and the way they are arranged to achieve its strategy and goals. It is the framework showing how work is divided, coordinated and controlled.

Main elements

1. Work specialization (division of labour): breaking jobs into specific tasks.
2. Departmentalization: grouping jobs into departments by function, product, geography, customer or process.
3. Chain of command and authority: the unbroken line of authority and who reports to whom.
4. Span of control: the number of subordinates a manager can supervise effectively.
5. Centralization and decentralization: where decision-making power rests.
6. Formalization: the extent of rules, procedures and written documentation.
7. Coordination mechanisms: meetings, committees, integrating roles and information systems that link units.
8. Culture and people: the shared values and the human resources that make the structure work.

Team conflict is disagreement between members over goals, ideas, resources or personalities. Based on the Thomas-Kilmann model, which weighs concern for self against concern for others, five styles are used.

1. Competing (forcing): high self-concern, low concern for others. A manager imposes a solution, suited to emergencies or unpopular but necessary decisions.
2. Accommodating (smoothing): the manager yields to the other party to preserve harmony, suitable when the issue matters more to the other side.
3. Avoiding: the manager withdraws or postpones, useful for trivial issues or when emotions must cool down, but it leaves problems unresolved.
4. Compromising: each side gives up something to reach a middle ground, good when time is short or power is equal.
5. Collaborating (problem solving): both parties work together to find a win-win solution. It is the most effective for important issues but needs time and trust.

The best style depends on the importance of the issue, the time available and the relationships involved.

Principles of management are fundamental guidelines or truths, based on experience and experiment, that guide managers' decisions and actions. They are flexible, universal in application, and developed from observation of managerial practice.

F. W. Taylor's principles of scientific management

Frederick W. Taylor, the "father of scientific management", proposed that management should replace rule-of-thumb methods with science. His four principles are:

1. Science, not rule of thumb: Study each job scientifically (time and motion study) to find the one best method and standard time for it.
2. Scientific selection and training of workers: Select workers by suitability for a job and train them in the best method, instead of letting them train themselves.
3. Cooperation between management and workers: Management should work harmoniously with workers so that work is done by the scientific method, replacing conflict with a "mental revolution".
4. Equal division of work and responsibility: Management plans and supervises, while workers carry out the work, each doing what they are best fitted for.

Other techniques he used were the differential piece-rate system, functional foremanship, standardization of tools and methods, and the fatigue study.

Contribution to effective management

• Raised productivity and efficiency through standard methods and time study.
• Introduced scientific selection, training and development of workers.
• Promoted incentive wage systems that link pay with output.
• Reduced waste and costs through standardization.
• Established management as a discipline separate from ownership and laid the base for industrial engineering, work study and later theories.

Criticism: He treated workers as economic beings, ignored social needs, over-specialized jobs, and the mechanical approach caused union opposition. Yet it remains the foundation of modern efficiency practice.

The statement is true because the business environment has become fast-changing, global and competitive. Modern managers face the following challenges and tasks.

Emerging challenges

1. Globalization and competition: Managers must deal with foreign competitors, cross-border trade and varying cultures and laws.
2. Technological change: Rapid digitization, automation, artificial intelligence and e-commerce require continuous learning and investment.
3. Workforce diversity: Employees differ in age, gender, culture and values, and managers must manage them fairly and inclusively.
4. Ethics and social responsibility: Stakeholders demand ethical behaviour, transparency, good governance and environmental care.
5. Quality and customer expectations: Customers want high quality, low price, speed and personalized service.
6. Knowledge workers and talent retention: Attracting, motivating and retaining skilled people is harder, especially with migration of talent.
7. Change and uncertainty: Economic, political and pandemic shocks demand flexibility and crisis management.
8. Sustainability and stakeholder pressure: Environmental concerns and demands from regulators, communities and investors.

Tasks of modern managers

• Plan strategically and set a clear vision, adapting to change.
• Build flexible, flat and team-based structures.
• Develop and empower employees through training and participation.
• Use information technology for decisions and efficiency.
• Practise ethical leadership and CSR.
• Manage innovation, quality and customer relationships.
• Manage diversity and cross-cultural relations.
• Balance short-term performance with long-term sustainability.

Therefore managers need conceptual, human, technical and global skills along with continuous learning to succeed.

(a) Major problems at Heathrow Terminal 5

• Failure of the automated baggage-handling system: belts jammed and bags were not processed, causing delays and lost luggage.
• Understaffing and inexperienced staff who could not clear baggage or work the check-in, and ticket-sellers who did not know fares.
• Poor implementation despite heavy planning: the system did not match real operating conditions and design capacity (12,000 bags per hour) could not be delivered.
• Facility defects such as broken escalators, faulty hand dryers and a non-functioning Underground gate.
• Flight cancellations, flights leaving with empty holds, and annoyed passengers, which damaged reputation and margins.
• Weak control and contingency planning, and poor coordination between British Airways and BAA.

(b) Best-fitting theory The systems theory (together with the contingency view) fits best. An airport terminal is a system of interdependent subsystems: baggage, staffing, check-in, transport links and facilities. A failure in one (baggage) disrupted the whole system. Tests were done under controlled conditions, but the real, uncertain environment differed, so the "one best way" was not enough and managers needed to adapt to the situation, which is the contingency approach. The case also reflects weakness in controlling and in training and coordination of people (human relations view).

(c) Immediate corrective actions

• Temporarily revert to manual baggage handling and add emergency staff to clear the backlog.
• Repair and stabilize the belt system and fix the faulty facilities.
• Check in and rebook passengers, arrange compensation and communicate clearly with them.
• Retrain staff, especially on the new equipment and fares information, and assign clear responsibilities.
• Reduce flights and passenger load for a few days until operations stabilize.
• Coordinate closely with BAA and authorities, and gradually raise capacity.

(d) Most important type of control Concurrent (real-time) control is the most important in this immediate situation, because problems arose during live operations and must be detected and corrected as they occur, through supervision, monitoring of baggage flow and quick adjustment. Pre-control (testing, training, staffing, staged opening) was needed and was partly done but proved insufficient, and it should have been more realistic, with full staff familiarization and a phased launch. Post-control is useful afterwards to learn lessons, but it cannot solve the crisis at hand. An effective approach combines all three, with emphasis now on concurrent control and in future on stronger pre-control.

Managers are mainly of these types:

• By level: top-level (strategic) managers, middle-level managers, and first-line (supervisory) managers.
• By area: functional managers (finance, marketing, production, HR), general managers, line managers and staff managers.

The assumptions of scientific management are:

• There is one best way (method) of doing each job, which can be found by scientific study.
• Workers are motivated mainly by money (economic rewards), and wages should be linked to output.
• Workers prefer to be directed and have to be trained and supervised, with planning separated from doing.
• Mutual interest and cooperation exist between management and workers, so higher productivity benefits both.

The essence of Friedman's doctrine is that "the social responsibility of business is to increase its profits" within the rules of law and ethical custom. Managers are agents of the shareholders, so using company funds for social causes is spending the owners' money, and social problems should be left to government and individuals.

The sources of authority are:

1. Formal (classical) source: the legal right of the position, delegated downward from owners.
2. Acceptance: authority exists only when subordinates accept the order (Barnard).
3. Competence: the expertise and knowledge of the person.
4. Situation: the demands of the situation (Follett), together with personal qualities such as charisma.

Ways of managing a cross-cultural team:

• Learn and respect each member's culture, values, language and customs through cultural awareness training.
• Communicate clearly in simple language and confirm understanding, avoiding slang.
• Set common goals, shared rules and clear roles and expectations.
• Build trust and relationships through team-building and open dialogue.
• Use diversity as a strength by valuing different ideas, and avoid stereotyping.
• Be flexible in leadership and conflict handling, and use technology wisely for scattered members.

The parties in the communication process are the sender (communicator), who encodes the message, and the receiver, who decodes it and gives feedback. Together with the message, medium or channel, and noise, these make up the process.

Existing management and business practices in Nepalese organizations include:

• Family ownership and a dominant role of owner-managers, with centralized decision-making.
• Many small and informal enterprises with limited professional management.
• Personal relations, nepotism and political influence in recruitment and dealings.
• Traditional practices with limited use of planning, modern HR systems and technology, though banks, telecom and some firms are modernizing.
• Heavy reliance on trade, remittance-driven demand and imports, and growing but still limited CSR and corporate governance.

The components of the socio-cultural environment of business are:

• Population size, age structure and distribution.
• Culture, values, beliefs and customs.
• Religion, language and ethnicity.
• Education and literacy level.
• Lifestyle, attitudes, social classes and family structure.
• Consumer tastes, ethics and social institutions.

Line managers are managers who have direct authority over the main activities that produce the organization's goods or services, such as production or sales managers. They command subordinates, are directly responsible for achieving operational results, and make decisions in the chain of command, unlike staff managers who only advise and support.

Skills essential for a successful manager (Robert Katz)

1. Technical skill: knowledge and proficiency in a specific field, most important for first-line managers.
2. Human (interpersonal) skill: ability to work with, lead, motivate and communicate with people, important at all levels.
3. Conceptual skill: ability to see the organization as a whole, analyse complex situations and think strategically, most important for top managers.
4. Design / decision-making skill: ability to solve problems and devise workable solutions.
5. Other skills: communication, political, time management, and, increasingly, digital and ethical skills.

The relative importance of these skills changes with the manager's level: technical at lower, conceptual at top, human at all levels.

Contingency philosophy

The contingency (situational) approach says there is no one best way to manage in all circumstances. The best method depends on, or is contingent on, the situation, such as the organization's size, technology, environment, people and task. Managers must diagnose the situation and choose the techniques that fit it, following the idea "if X, then Y". Writers such as Fiedler (leadership), Woodward (technology) and Lawrence and Lorsch contributed to it.

Key points:

• Rejects universal principles of the classical school.
• Treats the organization as an open system interacting with its environment.
• Emphasizes flexibility, analysis of the situation and matching of management style with it.
• Suggests managers combine ideas of other theories as appropriate.

Limitations

• It lacks a unified, complete theory; it offers many situational variables but no clear guidelines.
• It is complex and hard to apply because the number of possible variables is huge.
• Managers need high skill and experience to diagnose situations correctly.
• It gives little help in predicting which approach will succeed.
• It can be vague, and its findings are often limited to specific, empirical cases.
• It can ignore that some principles do hold in many situations.

Business managers make many kinds of decisions, which can be classified as follows.

1. Programmed and non-programmed decisions

• Programmed: routine, repetitive decisions made by fixed rules and procedures, such as reordering stock or paying salaries.
• Non-programmed: unique, unstructured decisions needing judgment and creativity, such as entering a new market.

2. Strategic, tactical and operational decisions

• Strategic: long-term decisions by top management about direction and resources (mergers, new products).
• Tactical: medium-term decisions by middle managers to implement strategy (departmental budgets).
• Operational: day-to-day decisions by lower managers (work schedules).

3. Individual and group decisions: made by one manager or by a committee or team.

4. Organizational and personal decisions: taken in the official capacity of a manager, or in the manager's own personal interest.

5. Basic and routine decisions: basic decisions involve heavy investment and are hard to reverse, while routine decisions are everyday ones.

6. Policy and operating decisions: policy decisions set rules and goals, operating decisions carry them out.

7. Decisions by condition: under certainty, risk and uncertainty.

Geographical organization structure is a form of departmentalization in which activities are grouped by area or territory, such as region, province or country. Each geographic unit is headed by a manager responsible for all functions (production, marketing, finance) in that area, and reports to the head office.

Organizations preferring this structure

• Large organizations with widely dispersed operations, such as banks with provincial branches, retail chains, insurance and distribution companies.
• Multinational companies operating in different countries (Asia, Europe, America) with different cultures, laws and customer tastes.
• Government bodies and service firms (for example telecom or courier companies) that must serve local customers quickly.

Advantages: it gives local responsiveness, better knowledge of regional markets, quicker decisions, and good training for managers. Disadvantages: duplication of resources, difficulty in central control and coordination, and possible conflict between regions.

Communication barriers prevent a message from being sent, received or understood correctly. The main types are:

1. Physical (environmental) barriers: noise, distance, poor equipment, bad lighting or faulty technology.
2. Semantic (language) barriers: difficult words, jargon, ambiguity, differing meanings and translation problems.
3. Psychological (personal) barriers: attitudes, prejudice, emotions, lack of attention, fear, and mistrust between sender and receiver.
4. Organizational barriers: long chains of command, rigid hierarchy, unclear authority, and poor information flow or filtering.
5. Cultural barriers: differences in values, customs, gestures and norms among people.
6. Perceptual barriers: people interpret the same message differently because of their background and experience.
7. Technological barriers: information overload, system failure, or lack of access to modern media.
8. Status and timing barriers: differences of position that discourage openness, and messages sent at the wrong time.

These can be overcome through clear language, feedback, active listening, proper channels and training.

A merger combines two companies into one. It creates uncertainty, so managers should follow these strategies:

1. Clear planning and vision: Define strategic reasons, goals and the integration plan, and choose a compatible partner after due diligence.
2. Early and honest communication: Tell employees, customers and shareholders about the plan, timing and effects, to reduce rumours and anxiety.
3. Cultural integration: Assess and blend differences in culture, values and management style, creating a shared identity.
4. Retaining key talent: Offer incentives, role clarity and job security to keep valuable employees.
5. Structural and system integration: Decide the new structure, reporting lines, HR policies, pay systems and IT systems quickly and fairly.
6. Involve people: Use joint teams and participation to build commitment and reduce resistance.
7. Training and support: Give counselling, training and support for new roles, including handling redundancies with care.
8. Monitor and control: Set milestones, track progress and take corrective action to realize the expected synergy.

The Hawthorne studies (1924-1932) were conducted by Elton Mayo and colleagues at the Western Electric Company's Hawthorne plant near Chicago. They began as illumination experiments to test the effect of lighting on productivity, and continued as the relay assembly test room, interviewing programme and bank wiring observation room experiments.

Findings

1. Illumination study: Productivity rose in both the test group and the control group regardless of lighting changes, showing that factors other than physical conditions mattered.
2. Relay assembly test room: Output rose even when rest periods and working conditions were later removed; the special attention, participation and sense of importance of workers (the "Hawthorne effect") explained it.
3. Interview programme: Workers' attitudes, feelings and personal problems strongly influenced their behaviour and morale, and the chance to talk freely reduced tension.
4. Bank wiring observation room: Informal groups develop their own norms, limit output and apply social pressure on members to conform, regardless of the incentive plan.

Major suggestions

• Workers are social beings, not only economic ones; social needs, recognition and belonging motivate them as much as money.
• Informal groups exist within formal organizations, and managers should understand and use them.
• Good human relations, supervision and sympathetic leadership raise morale and productivity.
• Employee participation in decisions and open two-way communication improve cooperation.
• Managers should give attention and recognition and treat workers as individuals.
• Counselling and listening to grievances help satisfaction.
• Group norms and group cohesion influence performance, so managers need social skills.

Evaluation

The studies launched the human relations movement and led to later work on motivation, leadership and organizational behaviour. They were criticized for weak research methods, small samples, ignoring economic factors and over-emphasizing harmony, but their influence on management thought remains great.

Controlling is the process of setting standards, measuring actual performance, comparing, and correcting deviations to ensure goals are met. The statement is valid for Nepalese businesses: with tough competition, limited resources, weak governance and cost pressures, firms need control to avoid waste, ensure quality and compliance, protect assets, improve efficiency and deliver results. Control keeps plans on track and gives early warning of problems, which raises employee accountability and overall performance.

Techniques of control

Traditional techniques

1. Budgetary control: Plans in financial terms (sales, production, cash budgets) are compared with actual results; variance analysis shows deviations. Flexible and zero-based budgets are variants.
2. Financial statement and ratio analysis: Liquidity, profitability, turnover and leverage ratios are used to assess financial health.
3. Break-even analysis: Finds the sales level where cost equals revenue and helps control costs and pricing.
4. Standard costing and variance analysis: Actual costs are compared with standard costs.
5. Audit: Internal and external audits verify records and compliance.
6. Personal observation and reports: Direct supervision and written or statistical reports.

Modern techniques 7. Management by objectives (MBO): Performance is controlled against jointly set targets. 8. PERT and CPM: Network techniques that control project time and cost. 9. Management information system (MIS): Provides timely information for control. 10. Balanced scorecard, Total Quality Management (TQM), Six Sigma and ISO: Measure and control financial, customer, process and learning performance and quality. 11. Return on investment (ROI) control: Evaluates profitability relative to investment.

Selecting the right mix of techniques, with the control system adapted to the organization, helps Nepalese firms improve performance.

Nepalese businesses operate in a changing environment that brings several emerging issues and challenges.

1. Political instability and policy inconsistency: Frequent changes in government and policy discourage long-term investment and planning.
2. Weak infrastructure: Inadequate roads, energy supply, transport and logistics raise costs and reduce competitiveness.
3. Globalization and competition: After WTO membership and open borders, local firms face cheap imports and strong foreign competitors, especially from India and China.
4. Technological backwardness: Slow adoption of digital technology, e-commerce, automation and cyber-security capability.
5. Shortage of skilled manpower and brain drain: Many youths migrate, creating a skill gap and dependence on remittance.
6. Lack of capital and financing: High interest rates, collateral requirements and limited venture capital, especially for small and medium enterprises.
7. Corruption, bureaucracy and weak governance: Red tape, licensing delay, syndicate and unfair practices increase costs.
8. Labour relations problems: Strikes (bandhs), union politics and low productivity.
9. Trade deficit and dependence on imports: Weak industrial base and limited export diversification, with landlocked trade difficulties.
10. Ethical, social and environmental responsibility: Rising demand for CSR, quality standards, environmental protection and consumer rights.
11. Natural disasters and external shocks: Earthquakes, floods, pandemics and global economic shocks.
12. Family-run management: Limited professionalism and succession planning.

To address these, businesses need professional management, innovation, skill development, good governance and cooperation with the government for a supportive policy environment.

Michael E. Porter's five forces model analyses the competitive environment of an industry through five forces: rivalry among competitors, bargaining power of suppliers, bargaining power of buyers, threat of new entrants and threat of substitutes. The three asked are discussed below.

1. Competitors (rivalry among existing firms)

Rivalry is intense when there are many equal-sized firms, slow industry growth, high fixed costs, low product differentiation, high exit barriers and low switching costs. Intense rivalry leads to price wars, heavy advertising and low profits. A firm should analyse competitors' strengths, strategies and market share, and respond through differentiation, cost leadership, quality and service.

2. Suppliers (bargaining power of suppliers)

Suppliers are strong when they are few and concentrated, their inputs are unique or costly to switch, there are no substitutes, they can integrate forward, and the buyer is not an important customer. Strong suppliers raise prices or reduce quality, squeezing the firm's profit. The firm can respond by having multiple suppliers, long-term contracts, backward integration and standardizing inputs.

3. Buyers (bargaining power of buyers)

Buyers are strong when they are few or purchase in large volume, products are standard and undifferentiated, switching costs are low, they are price sensitive, they are well informed, and they can integrate backward. Powerful buyers force down prices, demand higher quality and play competitors against one another. A firm can respond by differentiating products, building loyalty, offering quality service and diversifying its customer base.

Conclusion

The stronger these three forces, the lower the industry's profitability. Using the analysis, a manager can choose a strategy (cost leadership, differentiation or focus) that defends the firm's position against them.

(a) Main problems of the case

• Lack of respect and poor handling of discipline: the HR manager warned Mohan harshly even though he had informed his supervisor and was a former best employee, which insulted him.
• Violation of unity of command and unclear authority: Krishna had no authority over Paridhi, who refused his order; the work was done only when her supervisor ordered.
• Poor communication and coordination: no consultation with supervisors on promotion and transfer, leading to dissatisfaction and complaints.
• Centralized HR decisions, ignoring participation, and conflict between line and staff (HR) authority.
• Rising absenteeism and the risk of turnover, which shows declining morale.
• Rigid hierarchy that makes cross-unit work slow.

(b) Was Mohan right to resign? Mohan's feeling of insult is understandable. He was a good performer, and he informed his supervisor before leaving early, so the HR manager's warning without hearing him or following the proper procedure was disrespectful. But resigning immediately was an emotional and hasty decision. He did leave 45 minutes early without HR's prior consent, so some warning was justified. A better step would have been to discuss the matter with the HR manager or top management, explain the supervisor's permission and seek clarification of the rules. Therefore, I think the resignation was not entirely right, though the HR manager also mishandled the case, and the company should have used a polite, corrective approach.

(c) Structure followed and a better structure The company follows a functional, hierarchical (line and staff) structure, with departments such as production, packaging and HR, a strict chain of command and centralized HR decisions (and the reluctance to cross units shows rigidity).

A better option is a matrix or cross-functional (team-based) structure that keeps functional departments but forms project or product teams across them. It would allow flexible sharing of staff (as in Paridhi's case), better communication, participation of supervisors in decisions, and faster decisions. Along with it, the company should decentralize authority, clarify who can give which orders, and consult supervisors in promotions and transfers.

(d) Is team-based work more useful? Yes. Team-based work is useful in such a situation of hierarchy conflict because:

• Members from different units work together on common goals, reducing the problem of "not under my chain of command".
• Authority rests on the task and expertise, not only on position, so work such as packaging can be shared flexibly.
• Participation and open communication increase involvement, morale and reduce complaints (supervisors can be part of promotion and transfer decisions).
• Shared responsibility improves cooperation and reduces absenteeism and turnover.
• Faster problem-solving and decision-making than in a rigid hierarchy.

However, teams need clear goals, defined roles, training, supportive leadership and fair rewards, or they may create new conflicts. With these conditions, team-based work will be more useful than strict hierarchy.

Line managers are managers who have direct authority over and responsibility for the main operations of the organisation. They directly supervise subordinates engaged in producing and selling goods or services (for example production, marketing and sales managers), and they take decisions that contribute directly to achieving the organisation's objectives. They are in the chain of command, unlike staff managers who only advise and support.

Derivative planning refers to the secondary plans developed to support and implement the main (master) plan. These plans are derived from the primary plan and are needed for its execution. For example, when a company plans to expand sales, derivative plans cover recruiting salespeople, buying materials and arranging finance.

Two contributions of the Hawthorne studies (Elton Mayo, Western Electric, 1924-32):

1. Importance of social and human factors: Productivity depends not only on pay and physical conditions but also on workers' feelings, recognition and sense of belonging.
2. Informal groups and participation: Informal work groups set their own norms and strongly influence output. Attention, consultation and participation in decisions raise morale and productivity, which led to the human relations movement.

Four features of Friedman's doctrine of social responsibility (the classical or shareholder view):

1. The only social responsibility of business is to increase its profits for the owners, within the rules of the game.
2. Managers are agents of the shareholders and should not spend the owners' money on social causes of their own choosing.
3. Business must operate within the law and ethical custom, with open and free competition and without deception or fraud.
4. Social problems are best solved by individuals, government and market forces. Social spending by managers amounts to taxing shareholders without authority.

Four techniques to improve the effectiveness of decision making:

1. Define the problem and set clear objectives before choosing among alternatives.
2. Collect and analyse reliable information, using tools such as decision trees, SWOT and cost-benefit analysis.
3. Involve people through group techniques such as brainstorming, the Delphi technique and nominal group technique, to generate more alternatives.
4. Evaluate alternatives against criteria and follow up by monitoring results and learning from feedback.

Two advantages of decentralization of authority:

1. Faster decisions: Decisions are taken close to where problems arise, so top managers are relieved of routine work and can focus on strategy.
2. Motivation and managerial development: Lower-level managers gain responsibility, initiative and experience, which prepares future leaders and raises morale.

• PEST: Political, Economic, Social and Technological (environmental analysis)
• ISO: International Organization for Standardization
• TQM: Total Quality Management
• QWL: Quality of Work Life

Team conflict is a disagreement or clash among team members that arises when their goals, ideas, values, interests or work styles are incompatible, or when they compete for limited resources or roles. It can be task-related or relationship-related. Properly managed, it can improve creativity and decisions. Left unmanaged, it lowers cohesion and performance.

Four problems of agriculture sector business in Nepal:

1. Subsistence, fragmented and small landholdings, so there are few economies of scale and little mechanisation.
2. Heavy dependence on monsoon rainfall because irrigation facilities are inadequate.
3. Shortage of timely credit, quality seeds, fertilizer and other inputs, along with weak extension services.
4. Poor roads, storage and marketing channels, which cause post-harvest losses, low farm-gate prices and competition from cheaper imports. Migration of the young workforce also leaves a labour shortage.

Henry Mintzberg grouped managerial work into ten roles under three categories.

1. Interpersonal roles (arise from formal authority and status)

• Figurehead: performs ceremonial and symbolic duties such as receiving guests and signing documents.
• Leader: hires, trains, motivates and directs subordinates.
• Liaison: builds contacts and networks outside the unit to gather help and information.

2. Informational roles

• Monitor: scans the environment and collects information.
• Disseminator: passes information to subordinates and the organization.
• Spokesperson: gives information to outsiders such as the media, government and customers.

3. Decisional roles

• Entrepreneur: initiates change and improvement projects.
• Disturbance handler: deals with crises and unexpected problems.
• Resource allocator: decides who gets money, time, people and equipment.
• Negotiator: bargains with unions, suppliers and others for the organization.

Together these roles show that a manager's job is varied, fast-paced and people-centred.

Unethical behaviour in business has several roots.

1. Individual factors: Weak personal values, greed, low moral development and a lack of ethical training lead people to rationalise wrongdoing.
2. Organizational pressure: Unrealistic targets, profit-at-any-cost goals, weak controls and rewards for results regardless of means push employees to cut corners.
3. Corporate culture and leadership: If top managers set a bad example or tolerate misconduct, unethical conduct becomes the norm.
4. Competitive pressure: Fear of losing market share or survival pressure leads to bribery, adulteration, tax evasion and false advertising.
5. Social and legal environment: Corruption, weak law enforcement, lenient penalties and low consumer awareness make unethical acts easy and low-risk.
6. Conflicting interests and ethical dilemmas: Pressure from owners, customers and employees creates conflicts that people resolve badly without clear guidelines.

Planning is deciding in advance what to do, how, when and who will do it. The process has these steps:

1. Being aware of opportunities: Scan the environment and the organization's strengths and weaknesses.
2. Establishing objectives: Set clear, measurable goals for the organization and each unit.
3. Developing premises: Make assumptions about the future conditions, such as forecasts and policies, under which plans will operate.
4. Identifying alternatives: Search for different ways of reaching the objectives.
5. Evaluating alternatives: Compare them on cost, benefit, risk and feasibility.
6. Selecting the best alternative: Choose the course of action that best meets the objectives.
7. Formulating derivative plans: Prepare supporting plans, such as budgets, schedules and procedures, in each department.
8. Implementation, follow-up and control: Execute the plan, monitor results against objectives and revise it when needed.

Organizational culture is the shared values, beliefs and norms that shape how people behave in an organization. It matters for business success in these ways:

1. Gives identity and direction: Shared values tell employees what the organization stands for and align their effort with its goals.
2. Guides behaviour: It acts as an informal control that sets norms for ethics, service and quality, reducing the need for close supervision.
3. Motivates and retains employees: A positive culture raises commitment, satisfaction and loyalty and lowers turnover.
4. Improves coordination and teamwork: Common understanding makes communication and decisions faster and smoother.
5. Supports strategy and adaptability: A culture that values innovation and learning helps the firm change and compete.
6. Builds reputation: A strong, ethical culture attracts talent, customers and investors, giving a lasting competitive advantage.

Communication barriers are obstacles that distort or block the meaning of a message between sender and receiver. The common ones are:

1. Physical or environmental barriers: Noise, distance, poor equipment and interruptions disturb the message.
2. Semantic or language barriers: Technical jargon, ambiguous words and differences in language or meaning cause misunderstanding.
3. Psychological barriers: Emotions, prejudice, stress, inattention and lack of trust affect how a message is sent and received. Selective perception and filtering are examples.
4. Organizational barriers: Too many levels, rigid hierarchy, unclear authority and poor channels delay or distort messages.
5. Personal barriers: Poor listening, lack of interest, fear of the superior and differences in status or experience.
6. Cultural barriers: Differences in customs, values, gestures and attitudes lead to misinterpretation.
7. Information overload: Too much information prevents proper processing.

These can be reduced by using clear language, active listening, feedback, suitable channels and open communication.

A team is a small group of people with complementary skills, a common purpose and shared accountability. Organizations form teams for these reasons:

1. Complex tasks need diverse skills: Combining different knowledge and expertise solves problems that one person cannot.
2. Better decisions and creativity: Pooled ideas and discussion generate more alternatives and better solutions.
3. Higher productivity and efficiency: Shared work, mutual support and synergy produce more than individuals working separately.
4. Motivation and job satisfaction: Belonging, participation and recognition raise morale and commitment.
5. Flexibility and speed: Teams respond quickly to change and can be formed for specific projects.
6. Employee development and less supervision: Members learn from each other, and self-managed teams reduce the burden on managers.
7. Better coordination: Cross-functional teams break departmental barriers and improve communication.

The service sector (tourism, banking, telecom, health, education, transport) faces challenges such as shortage of skilled manpower, weak infrastructure, power problems, political instability, limited capital and technology, and low quality standards. They can be reduced as follows:

1. Human resource development: Provide training in hospitality, IT and management, and link education with industry needs.
2. Infrastructure improvement: Ensure reliable roads, airports, electricity, internet and safe transport.
3. Policy and regulatory support: Give a stable, simple and consistent legal framework, easier licensing, tax incentives, and reduced bureaucracy and corruption.
4. Access to finance: Offer affordable credit, venture capital and support for small firms and start-ups.
5. Technology adoption: Use digital payment, e-commerce and automation to cut costs and widen reach.
6. Quality and standards: Introduce service standards and certification, and respond to customer feedback.
7. Promotion and market access: Brand Nepal abroad, strengthen public-private partnerships, and ensure political stability and security.

Contingency theory. The statement reflects the central idea of contingency (situational) theory: there is no single best way to manage. The right approach depends on the situation, so managers should apply "if-then" thinking, that is, if the situation is X, use method Y. Classical, behavioural and quantitative theories each work in some situations but not all.

Key assumptions

• Organizations and environments differ, so universal principles do not exist.
• Effectiveness depends on the fit between management practice and situational variables.
• Managers must diagnose the situation before acting.

Contingency variables

• Organization size and technology
• Environmental uncertainty (stable or dynamic)
• Individual differences and employee needs
• Task structure, culture and strategy

Applications

• Leadership: Fiedler's model and the situational approach choose a task or people orientation by the situation.
• Organization design: Burns and Stalker, and Lawrence and Lorsch, found that mechanistic (rigid) structures suit stable environments and organic (flexible) structures suit uncertain ones.
• Motivation and control: Use different incentives and different levels of supervision for different people and tasks.
• Decision making: Participative decisions when quality and acceptance are vital, and autocratic ones in crises.
• Nepalese example: A bank may use tight rules and centralisation for compliance, while a software firm uses flexible teams.

Critical evaluation

Strengths:

• Realistic and flexible.
• Integrates earlier schools instead of rejecting them.
• Encourages diagnosis and adaptation.

Limitations:

• It lacks a single unified framework, and the list of contingency factors can be endless.
• It is hard to test and to apply, and managers need high skill and information to read situations correctly.
• It can lead to inconsistency, with no clear guiding principles.
• Critics say it is descriptive more than prescriptive.

Conclusion. The statement is largely valid because rapid change and diverse conditions demand adaptability. Managers should be eclectic and use theory as a toolkit, choosing and combining practices to fit the situation, while keeping some core principles.

Michael Porter's Five Forces model analyses the structure and attractiveness of an industry. The collective strength of the forces determines long-run profitability. Strong forces reduce profit, and weak forces favour profit.

1. Threat of new entrants

• Depends on entry barriers: economies of scale, capital requirement, brand loyalty, access to distribution, government policy and switching costs.
• High barriers protect existing firms.
• Application: before starting, the entrepreneur checks how easily others can enter, for example a new noodle or bank branch.

2. Bargaining power of suppliers

• Strong when there are few suppliers, unique inputs or high switching costs, or when suppliers can integrate forward.
• They can raise prices or reduce quality.
• Application: assess dependence on imported inputs or a single vendor.

3. Bargaining power of buyers

• Strong when buyers are few or large, products are standard, switching costs are low and price sensitivity is high.
• They force prices down and demand more service.

4. Threat of substitutes

• Products from other industries that meet the same need, such as tea versus coffee, or video calls versus travel.
• Close, cheaper substitutes limit the price and profit potential.

5. Rivalry among existing competitors

• Intense when there are many equal-sized firms, slow industry growth, high fixed cost, low differentiation and high exit barriers.
• It leads to price wars and heavy advertising.

Using the model

1. Define the industry and its players.
2. Assess each force as high, medium or low.
3. Judge overall attractiveness: if most forces are strong, profit is low.
4. Choose a strategy: cost leadership, differentiation or focus, or decide not to enter.
5. Monitor changes over time.

Limitations: It is a static analysis, assumes clear industry boundaries, and ignores complementors and the government's role. It should be combined with PEST and SWOT.

Nepalese business has grown but faces structural and operational problems.

1. Political instability and policy inconsistency: Frequent change of governments and policies discourages long-term investment and planning.

2. Infrastructure weakness: Poor roads, power cuts in the past, inadequate transport and weak ICT raise costs and cut productivity. The country is landlocked and depends on India and third-country transit.

3. Shortage of capital and costly credit: Limited access for small enterprises, high interest rates and collateral-based lending, and thin capital markets.

4. Weak industrial base and trade deficit: Industry is small and import dependent, with exports of few products, so trade is persistently in deficit.

5. Labour problems: Strikes, bandhs and trade union politics, shortage of skilled workers and migration of the youth to foreign employment.

6. Corruption and bureaucracy: Delay in licences, registration and approvals, red tape, and a weak legal system for contract enforcement.

7. Technology and quality gaps: Low adoption of modern technology, weak research and low productivity.

8. Informal economy and unfair competition: Undervaluation, smuggling and tax evasion distort competition.

9. Small, family-based and weakly managed enterprises: Poor professional management, accounting and governance.

10. Natural and external shocks: Earthquakes, floods, Covid-19, and dependence on remittance and foreign markets.

Critical examination. Many problems are linked to political and administrative weaknesses rather than lack of resources. Positive developments exist: new economic reforms, growth in hydropower, tourism, IT and banking, and a young population. Solutions include policy stability, infrastructure investment, simplified regulation, access to finance, skill development, promotion of exports and stronger enforcement against corruption and informal trade.

(a) Major problem areas and causes of conflict

Major problem areas in ABC Pvt. Ltd.

1. Poor organization structure: There are no departmental managers. One salaried manager, Mr. Thapa, controls purchasing, receiving, storing, accounts payable, payroll, cost accounting, dispatching, filing, secretarial work and production. This is an overloaded, over-centralised design with an unclear span of control.
2. Unclear authority and responsibility: Five office assistants handle sales, advertising, credit and receivables but have "no fixed responsibilities". There is no division of work, no job descriptions and no accountability.
3. Weak finance and accounting: Finance is left to a junior part-time employee, a risk to control and reporting, and accounts are delayed.
4. Poor coordination and information system: The General Manager must contact several sources for information, and wastes time. Important reports are delayed.
5. Poor customer service: Complaints about late delivery, wrong delivery and payment problems show weak operations and quality.
6. Under-utilised resources: Idle equipment points to poor planning and scheduling.
7. Human resource problems: Rising employee turnover, dissatisfaction, lack of consultation, and no direct reporting system.
8. Weak top management role: The General Manager is involved in operations and is reacting late to problems. Also, the firm depends on imported raw materials and foreign designers, which is a risk to supply and cost.

Probable causes of conflict between Mr. Thapa and the employees

1. Role overload and ambiguity: Mr. Thapa has too many tasks, while employees have no fixed duties, and this causes friction and blame.
2. Autocratic style: He does not consult employees, so they feel ignored and undervalued.
3. No formal reporting line and poor communication: Without a direct reporting system, employees cannot raise their grievances.
4. Low pay and motivation, and lack of recognition, with no clear growth path.
5. Personality and trust issues: He alleges gossip and intimidation, while employees allege lack of fairness. Both sides blame each other.
6. Resource and authority struggles: Employees with no defined authority compete for tasks and credit.
7. Management failure to settle disputes: The General Manager did not act sooner.

(b) Decision-making process in ABC and its problems

Process traced. Decision making in ABC is centralised in Mr. Thapa. Operating decisions (purchasing, receiving, storing, payments, payroll, costing, dispatching) are all taken by him. The sequence is:

1. A problem arises in a function (for example, an order or a purchase).
2. Mr. Thapa recognises it by himself, with little data from the junior staff.
3. He chooses an action himself, without consulting those affected.
4. It is implemented by the office assistants without clear responsibilities.
5. There is little follow-up or feedback, and the General Manager comes in only when the problems become serious.

Problems diagnosed

1. Over-centralisation and bottleneck: One person decides everything, so decisions are slow, causing delayed delivery and reports.
2. No participation: Employees are not consulted, so decisions lack information and acceptance.
3. Poor information: There is no system for gathering and sharing information, so decisions are made on incomplete data.
4. Unclear responsibility for implementation, which results in wrong deliveries and payment errors.
5. Lack of specialisation: Technical decisions in finance, marketing and production are made by a non-specialist.
6. Lack of control and feedback: Errors are not corrected, and top management is unaware of problems.
7. Conflict of interest and risk: One person handles purchasing, receiving, accounts payable and payroll, with no separation of duties, which invites errors and fraud.
8. Reactive rather than planned decisions.

(c) SWOT analysis

Strengths

• 12 years of experience, with a steady expansion across Nepal and into India.
• Annual turnover growth of 20%.
• Sound initial capital (Rs 16 million) and a recognised brand.
• Continued operation through Covid-19, showing resilience.
• Skilled foreign designers, with a wide distribution network.

Weaknesses

• No departmental managers; overloaded Mr. Thapa; unclear roles.
• Poor finance and accounting and weak information system.
• Late and wrong deliveries, customer complaints, idle equipment.
• Increasing turnover, low morale and conflict.
• Dependence on imported materials and foreign designers.

Opportunities

• Growing domestic demand for footwear, an expanding urban market and e-commerce.
• Scope to produce raw materials locally, and to use government incentives for import substitution.
• Expansion in India and other markets, and use of digital marketing and ERP software.
• Ability to train and recruit professionals.

Threats

• Cheaper imports from India and China and strong competition.
• Exchange rate and import-policy changes, supply disruption, tariffs.
• Loss of customers and reputation due to poor service.
• Loss of skilled employees to competitors, and economic or pandemic shocks.

(d) New organizational structure

A functional (departmental) structure under the General Manager is proposed, with qualified managers and defined duties:

                      Board / Owners
                            |
                     General Manager
                            |
     -----------------------------------------------------
     |            |             |            |            |
Production   Marketing &    Finance &     Purchasing &   Human Resource
 Manager     Sales Manager  Accounts Mgr  Logistics Mgr  & Admin Manager
     |            |             |            |            |
 Design,      Sales,         Accounts     Purchasing,   Recruitment,
 Quality,     Advertising,   payable,     Store,        Payroll,
 Production   Credit,        receivable,  Dispatch      Office,
 staff        Customer care  Cost acctg                  Filing/Secretarial

How it solves the problems

1. Specialised managers share Mr. Thapa's load, creating clear authority and responsibility.
2. A full-time qualified finance manager improves the control, reporting and receivables.
3. Logistics and dispatch are placed under one head, which cuts delays and wrong deliveries; a customer care unit handles complaints.
4. Defined reporting lines, job descriptions, and a management information system give the General Manager timely information.
5. Departmental meetings, participation and grievance procedures reduce conflict, and fair pay and training reduce turnover.
6. Separation of duties (purchasing, receiving, payables, payroll) strengthens internal control.