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MODULE - 1

Principles of Management

Business Environment

4
Notes

PRINCIPLES OF MANAGEMENT

4
...
Once you have opted your career in
insurance sector and select any form of organization to do the
insurance business, as discussed in the previous chapter and
to run any organization one should have the knowledge of
principles of management
...

Before discussing the principles of management it is to explain
that all industrial or business activities can be classified as
follows:
1
...

3
...

5
...


52

Technical activities consisting of production or
manufacture
Commercial activities consisting of buying, selling and
exchange
Financial activities concerning search for optimum use of
capital
Security activities concerning protection of property and
persons
Accounting activities concerning with maintenance of
accounts including statistics
Managerial activities consisting of planning, organizing,
commanding, co-ordaining and controlling

DIPLOMA IN INSURANCE SERVICES

Principles of Management

MODULE - 1
Business Environment

Although industrial or business organizations differ from one
another in nature, size or complexities of operation yet all
these six activities are common in all enterprises
...
e managerial activities
...

4
...
2 MANAGERIAL ACTIVITIES /PRINCIPLES OF
MANAGEMENT
The management activities are known as principles of
management which are as follows:
Forecasting and Planning,
Organizing,
Commanding,
Co-ordaining and
Controlling
A)

Forecasting and Planning

Planning means looking ahead or to foresee
...
To plan
means to foresee and provide means for future
...


The identification of organizational goals
...
The goal is to insure maximum number
of person or the property so that the risk can be spread
on number of persons
...


The line of action to be followed
...
The action will
be to create a Marketing Department for a company
...


The various stages through which the action would
pass: To sell the insurance product only marketing

DIPLOMA IN INSURANCE SERVICES

53

MODULE - 1

Principles of Management

Business Environment

department at one place i
...

4
...

Weather it should be through Agents or Corporate Agent
or Broker
...


B)

Organizing

Notes

To organize means building up the dual structure,
material and human of the organization
...

An insurance company may not require the raw material
but it requires other material i
...
tool (computers), capital
and personnel
...

A single competent and energetic guiding authority:
There should be a single person to be overall in-charge of
the organization who will report to the Board of directors
...
Irrespective of the size of
the organization
...
It saves the cost
because the efficient people understand the working of
the organization and take the decisions quickly
...
If duties are not defined then the
employees will be confused what to do or not to do
...
Moreover there will be many employees
in the department the target should be given to the Head
of the Deptt and then he will assign the targets to his
juniors at different locations
...
The employees should be held
responsible for not doing the things
...
The team should take
initiative to meet the number of persons to get the
insurance business
...

Minimum paper work: In the computer era the paper
work can be reduced and the employees of the
organization should maximum use the computers to save
paper work
...

Reward & efficiency: The good performers should be
awarded cash or non cash award which boost the moral
and efficiency of the employees
...

Clear and precise decision making: Any decision taken
by any employee should not be ambiguous i
...

Proper control
Disincentives for faults and error: for any fault of any
employee or non performer should be penalized otherwise
it will affect the working of the performers
...
The organization interest should
be protected
...
The managers must posses the
requisites personal qualities and knowledge to command
effectively
...
e leadership
conduct periodic assessment or audit of performance
be well versed in agreement binding the business and its
employees
have lively and constant touch with subordinates
aim at making unity, energy imitative and loyalty prevail
among personnel
D)

Co-ordinating

It means the process developed by a manger to secure an
orderly pattern of group effort among his personnel through
unity of action to pursue the common goals
...

E)

Controlling

The controlling means to ensure that everything is done in
accordance with the established rules and instruction given
to the workmen
...
The effective control must be
i)

prompt,

ii)

followed with sanctions and

iii)

include measure to prevent recurrence of variances a or
error

INTEXT QUESTIONS 4
...

2
...
3 ADVANTAGE OF PRINCIPLES OF MANAGEMENT:
i)

ii)

To increase Management efficiency: The principles of
management have been developed from experiences of
various professional people
...


Notes

To develop the Science of Management: The principles
of management make use of scientific methods for
observation
...
In absence of principles of management it
would be not have been possible to develop the organized
body of knowledge by management practitioners, thinker
and philosophers
...
In the absence of principles
the training of mangers depends upon trial and error
methods
...

iv) To co-ordinate material and human resources: The
principles of management help to coordinate the material
and human resources in order to achieve the desired goals
or common objectives
...
The principles
of management make optimum utilization of natural
resources possible
...
These have
provided new ideas imagination and visions to the
organization
...

4
...
Managers are expected to deal with a
number of problems in their day to day working
...


Notes

A principle means a fundamental truth on the basis of
reasoning a primary element of general law
...
Some principles have
been developed by experts in management
...
These are general guidelines and they
cannot be mechanically applied
...
To control the
individuals the forecasting and planning, Organizing,
Commanding, Co-ordaining and Controlling is must as an
principles of management
...
5 TERMINAL QUESTIONS
1
...

3
...

Discuss the principles of management
...
6 OBJECTIVE TYPE QUESTIONS
1
...


Choose the correct option
Statement A: Accounting activities concerning with
maintenance of accounts including statistics
...

a
...
Only B is true
Neither of two

3
...


58

c
...


The effective control must be prompt
...


The effective control must be followed with sanctions
...


The effective control must include measure to prevent
recurrence of variances or error
...


All of the above

4
...
(resources/manpower)

5
...
7 ANSWERS TO INTEXT QUESTIONS
4
...


Technical activities, Commercial activities, Financial
activities, Security activities, Accounting activities,
Managerial activities consisting of planning, organizing,
commanding, co-ordaining and controlling
...


Planning means looking ahead or to foresee
...
To plan means to foresee and provide means for future
...
8 ANSWERS TO OBJECTIVE TYPE QUESTIONS
1
...


c

3
...


resources

5

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