REINFORCEMENT THEORIES

Reinforcement theory is broadly based on learning theory and the works of B.F.Skinner.

The foundation of this approach is on three fundamental factors. Firstly, it is believed that an individual is basically passive and merely mediates the relationship between the forces acting on him and their output. Secondly, reinforcement also rejects the explanation that behavior is based on an individual’s needs, drives, or goals because they believe that such aspects are unobservable and hard to measure. The focus of attention is on behavior itself, which can be observed and measured. Finally, reinforcement theorists state that a relatively permanent change in behavior of an individual result from reinforced behavior or experience. By giving a proper reinforcement, the likely hood that desired behavior will be exhibited can be increased and the likelihood that the undesired behaviors will be exhibited can be reduced or both.

TYPES OF REINFORCEMENT

In operant conditioning, the consequences of behavior (rewards or punishment) are made to occur contingent on the individual’s response or failure to respond. There are three basic components of operant conditioning: i) stimulus, ii) response or performance and iii) consequences or contingencies of reinforcement or rewards. The consequences or types of reinforcement determine the likelihood that a given behavior or response, will be performed in the future. Thus, to change the behavior of an individual, the consequences or reinforcement of the behavior must be changed.

There are four types of reinforcement available to manage or modify an individual’s behavior.

1. Positive Reinforcement

2. Punishment

3. Avoidance Learning

4. Extinction

1) Positive Reinforcement:

The application of this type of reinforcement to a given response or behavior increases the likelihood that the particular behavior by the individual will be repeated. For example, an engineer is given the task of designing a new piece of equipment (stimulus). The engineer exerts a high level of effort and completes the project in time (response). The supervisor reviews the work and not only praises the engineer for his or her work, but recommends, for example, a pay increase for the excellent work (positive reinforcement). Negative reinforcement increases the frequency and strength of a desired behavior by making it contingent upon the avoidance of undesirable consequences for the employees. In order to avoid the heavy fine imposed for not wearing the helmet, the riders of two wheelers are likely to wear helmet continuously even though such an act is not so pleasant and voluntary. In order to avoid the firing of supervisor for late coming, the employee will ensure to report to office on time.

Just to avoid the unpleasantness in the future, the person will try to exhibit the desired work behavior. Thus the negative reinforcement implies the mere anticipation of noxious stimuli from the environment by the employees will reinforce the desired behaviors.

2) Punishment:

The application of punishment is used to decrease the likelihood that the undesirable behavior or response by the individual will be repeated. Just as positive reinforcement strengthens a particular behavior, punishment weakens it. For example hourly workers in a plastics plant are given one hour for lunch (stimulus). When a particular work continually takes an hour and thirty minutes for lunch (response), the supervisor will call the particular worker in his or her office and impose an half-a-day salary cut for their prolonged absent from work (punishment). The use of this punishment will hopefully change this worker’s response back to acceptable behavior. The difference between punishment and negative reinforcement is that in the former case, noxious consequences is applied to decrease the frequency or strength of an undesired behavior, where as in the latter, a noxious consequences is withheld when a desired behavior is exhibited.

3) Avoidance:

Just as with positive reinforcement, this type of reinforcement is a method used by managers to strengthen desired behavior. When a particular reinforcement can prevent the occurrence of an undesired stimulus, it is termed avoidance learning. As the same example cited above, in order to avoid reprimand and criticism, the worker makes a special effort to take only an hour for lunch. With the avoidance learning, the individual works hard to avoid the undesired consequences of the stimulus.

4) Extinction:

Extinction is the withholding of positive reinforcement for a previously acceptable response. With continued non-reinforcement over time, the response or behavior will eventually disappear or be eliminated. Extinction involves three steps: i) identifying the behavior that needs to eliminated ii) identifying the reinforcers which encourage the behavior that is desired to be eliminated and iii) stopping the reinforcers. Behavior that is desired to be eliminated in an organizational setting, a company may offer their salespersons a bonus for every order from a new customer. This results in increased effort on the part of the salespersons to cultivate new sales outlets. After a period of time, the company evaluates this bonus system to be too costly to maintain, and there fore eliminates it. The sales force not seeing any further reward for extra effort in developing new sales, reduces their effort to normal levels. The company, by removing the reinforcement, caused an extinction of the behavior on the part of their sales persons. An undesirable behavior can thus be effectively extinguished by withholding the reinforcers.

Shaping Behavior

Shaping behavior is a process of changing an undesirable behavior to a desirable behavior by following a successive approximation of desirable targeted behavior with proper reinforcement. For example, the manager is interested to increase one of the customer service assistants’ performances from 5 cases to 30 cases per day by properly following the reinforcement techniques. The managers can reinforce the new employee every time he makes incremental progress. For instance, the first time the customer service assistant process 10 cases, the manager can reward her through a word of praise with some cash incentive. When the customer service assistant started processing 15 cases, he would be reinforced further with double the incentive, and the reinforcement will continue every time a new target is achieved which is closer to the ultimate goal. The target set for attending 30 cases per day will be reached and the desired behavior will be shaped. If management rewarded the individual only when he or she showed desirable responses, there might be considerable improvement in their performance. The managers can shape behaviouir by systematically reinforcing each successive step that moves the individual closer to the desired response.

Methods of Shaping Behavior:

There are four ways in which shaping of desirable behavior can be achieved: They are Positive Reinforcement, Negative reinforcement, punishment and extinction. The objective of each of the four reinforcement types is to modify an individual’s behavior so that it will benefit the organization. Reinforcement will either increase the strength of desired behavior or decrease the strength of undesired behavior depending on the organization’s needs and the individual’s current behavior.

The impact of reinforcement on organizational behavior can be summarized as follows:

1. Some type of reinforcement is necessary to reproduce a change in behavior.

2. Some types or categories of rewards are more effective for use in organization than are others.

3. The speed with which learning takes place and how lasting its effects will be determined by the timing of the reinforcement.

Schedules of Reinforcement:

Reinforcement works effective when they follow some schedules or pattern. The two main types of reinforcement schedules are continuous or partial (intermittent)

1) Continuous Reinforcement:

This schedule reinforces the desired behavior each and every time it is demonstrated. Continuous reinforcement helps to direct behaviors toward desired goals quickly. However, it is more expensive to administer, especially if monetary rewards are used as reinforcement. Behaviors reinforced through a continuous reinforcement schedule are also likely to weaken very rapidly once the reinforcements are stopped.

2) Intermittent or Partial Reinforcement:

In this type of reinforcement not every instance of the desirable behavior is reinforced, but reinforcement is given often enough to make the behavior worth repeating. It is like a gambling house – poker machine in which people will continue to play even when they know the chances of winning is one in ten or hundred times. Intermittent reinforcement can be based on either a time frame or behavior response pattern. Intermittent schedules of reinforcement tend to be slow in establishing the desired behaviors. But once established, the behaviors also tend to be sustained after the reinforcements are stopped. There are four types of intermittent reinforcement schedule based on the intermittent intervals and intermittent behavioral responses.

Fixed Internal Schedule

Fixed interval schedule refers to the interval of time when behaviors will be rewarded. It could be hourly, weekly, daily, monthly and so on. For example, organizations reinforce desired behaviors in employees by paying their salaries on a monthly basis. Contractors pay daily wages to employees and other staff members by reinforcement their behaviors of doing a good day’s work for a good day’s pay. These are reinforcements based on a fixed interval schedule.

Variable Interval Schedule:

A variable interval schedule rewards desired behaviors at random intervals of time. Instead of praising every day, a manager praises his employees occasionally, once in a ten days or fortnightly without a fixed time frame. An example of this schedule of reinforcement is a manager patting a good employee whenever he takes unscheduled visits to the shop floor. This kind of reinforcement is easy to administer and the desired behaviors are also sustained over time.

Fixed Ratio Schedule:

A fixed ratio schedule is followed when reinforcement are given every nth time (at a fixed ratio) a desired behavior occurs. An example of this will be suggestion scheme department giving a certificate of commendation” after every fifth suggestion accepted by the department from an employee.

Variable Ratio Schedule:

A variable ratio reinforcement schedule is followed when behaviors are rewarded randomly in terms of the number of times they occur. For example, some times employees are required to stay back at office to complete the required work. In such cases, a manager may reinforce an employee who is staying back to complete his job the first time the person stays late, and not reinforce the same behavior for the next four or five times, but reinforce it once again in the sixth time he stays back and again in fifteenth time he stays back and so on.

Schedules of Reinforcement for Monetary Rewards:

Schedules of Reinforcement Examples of Research

Fixed Interval Weekly or monthly paycheck

Fixed Ratio Piece-rate pay system based on number of units produced or sales commission

Variable Interval Praise, recognition, or promotion awarded at variable time periods

Variable Ratio Monitory bonuses for excellent performance awarded in small sums at various time periods.

Behavior Modification

An approach to motivation in organization that uses operant conditioning as its foundation is called behavior modification. The approach recommended by proponents of behavior modification is that of positive reinforcement. It is reported that positive reinforcers are more effective than negative reinforcers in achievinglasting changes in behavior. Behavior - modification programs in organizations generally follow at least five stages of development:

Stages I: Identifying Critical Behaviors: In this step, the managers has to identify the critical behaviors that make a significant impact on the employee’s job performance. These are those 5 to 10 percent of behaviors that may account for up to 70 or 80 per cent of each employee’s performance. This m ay be a difficult step for companies that use non-job related factors to measure performance (eg. Cooperativeness, friendliness, and other subjective measure).

Stage II: Developing a Baseline Data: This step requires the manager to develop some baseline performance data. This is obtained by determining the number of times the identified behavior is occurring under present condition. In this stage, specific goals for each employee are established. Lowering the absenteeism by 10 per cent is a typical example. Goals may concern such aspects as productivity improvement, decreased absenteeism and so on

Stage III: Identifying Behavioral Consequences: This step is to perform a functional analysis to identify the behavioral contingencies or consequences of performance. The employee keeps a record of his or her daily work. This acts as a self-feedback mechanism

Stage IV: Developing and implementing an intervention strategy: The manager reviews the employee’s performance record and then rewards the positive aspects of the performance, as determined by the goals set in Stage Two and recorded in Stage Three. Reinforcing with recognition, compliments or praise strengthens the desired behavior; withholding of such reinforcement should help make the employee aware of certain deficiencies in his or performance.

Stage V: Evaluating Performance Improvement: Finally, auditing of the effectiveness of this program is assessed OB Modification has been used by a number of organizations to improve employee productivity and to reduce errors, absenteeism, tardiness and accident rates and to improve friendliness towards customers.

Implications of Reinforcement Theory:

The reinforcement of the relationship between behavior and rewards is very important for maintaining motivated behavior on the part of the individual. Employees react positively when they perceive that rewards are contingent on good performance. When individuals are rewarded continually for their good performance, the employees tend to decrease their performance and motivation.

The schedules of reinforcement are found to be very effective in sustaining motivated behavior and make them high productive in their work life. The implications of these results have direct application to the reward system used by organizations. It would be a good idea for manager to reinforce an employee on a continuous basis in the initial stages and after a while, the mangers must switch over to other types of schedules such as fixed interval or fixed ratio, and subsequently the implementation of variable schedules such as variable interval and variable ratio will be of much help to sustain the learned behavior firmly.

For the manager, the most important factor in the application of operant conditioning is that employees should be rewarded contingent on their performance, not for the factors that are nonperformance based. Managers must learn how to design and implement effective reinforcement programs that will enable employees to be productive and satisfied with their work.

LEARNING THEORIES AND ITS APPLICATION

INTRODUCTION

Most people have been close to formal learning situations for a significant part of their lives. They are very curious to know about its dynamics and seek to clarify the following questions. To what extent can we attribute a person’s behavior to learning? Will people learn things in spite of their environment? What is the difference between learning a behavior and acquiring it naturally? Can a skill be acquired or must an individual be born with such a talent as part their personality. These kinds of question demand that managers have a thorough understanding of what learning is and in what ways learning influences behavior.

LEARNING PROCESS

Theories of Learning: Learning is part of every one’s life. In our life, all complex behavior is learned. Learning is defined as any relatively permanent change in behavior that occurs as a result of experience. Whenever any change occurs learning is taken place in the individual. If an individual behaves, reacts, responds as a result of experience which is different from others, a person has encountered some new learning experience in his life. This definition consists of the following four key elements:

i) Change process: Learning involves some change in oneself in terms of observable actions explicitly shown to others or change in ones attitude or thought process occur with oneself implicitly. Change may be good or bad or positive or negative from an organization point of view. If a person is happened to experience some negative incidents, that person will hold prejudices or bias or to restrict their out put. On the contrary, if a person is encountering some good incident, that person is likely to hold positive attitude.

ii) Permanent change: Due to whatever exposure a person encounters, the impact what it generates may be long lasting and permanent. Hence, the change must be of relatively permanent. If change occurs due to fatigue or alcohol consumption or temporary adaptation, it may be vanished once the goal is achieved.

iii) Setting behavioral actions: Explicit changes occurring in behavior is the main goal of learning process. A change in an individual’s thought process or attitudes without any changes in any explicit behavior will not be considered as learning process.

iv) Need for meaningful experiences: Some form of experiences is necessary for learning. Experience may be acquired directly through observation or practice. If experience results in a relatively permanent change in behavior, one can confidently say that learning has taken place.Theories of Learning: There are three types of learning theories. These theories are classical conditioning, operant conditioning and social learning.

Classical Conditioning Theory:

Russian physiologist Ivan Pavlov developed classical conditioning theory. When he was doing a research on the chemical properties of saliva of dog, he noticed accidentally that the dog started salivating the moment hearing the sound of a door of cupboard clinging. Based on his observation, he wanted to do some experiment whether the dog can be conditioned to respond to any neutral stimuli. He used a simple surgical procedure to operate the salivary glands of a dog to measure accurately the amount of saliva.

Pavlov’s Experiment: Pavlov conducted his experiment in three stages.

Stage I: When Pavlov presented the dog with a piece of meat, the dog exhibited a noticeable increase in salivation. The meat is unconditional stimulus and salivation is unconditional response.

Stage II: In this stage, the dog was not given a peace of meat but only exposed to a sound of ringing bell; the dog did not salivate to the mere sound of a ringing bell.

Stage III: Pavlov decided to link both the presentation of meat and the ringing of a bell one after the other with an interval of 5 minutes. After repeatedly hearing the bell before getting the meat, the dog began to salivate as soon the bell rang. There is an association or link between meat and ringing a bell. After repeating the association between meat and ringing a bell, the dog started salivating merely at the sound of the bell, even if no food was offered. The dog is now conditioned to respond to a sound of a bell and started salivating. This is called classical conditioning process.

Thus, classical condition is defined as the formation of S-R link (Stimulus-Response) or habit between a conditioned stimulus and a conditioned response through the repeated paring of conditioned stimulus with an unconditioned stimulus.

In this experiment, the meat is unconditioned stimulus, and the expected response that is, salivating to the meat is called as unconditioned response. The sound of a bell is a neutral stimulus which does not have any property to elicit salivation, is called as conditioned stimulus. Although it was originally neutral, if the bell was paired with meat (unconditioned stimulus) it acquired the same property as meat eliciting the salivation.

The sound of a bell produced salivation when presented alone. This is called conditioned response, that is, now the dog is conditioned to respond to the sound of a bell.

Learning conditioned response involves building up an association between a conditioned stimulus and unconditioned stimulus. When the stimuli, one is natural and the other one neutral are paired, the neutral one becomes a conditioned stimulus and hence takes on the properties of the unconditioned stimulus. Closely associated with classical conditioning as a vehicle for learning new behaviors are the phenomenon of extinction, spontaneous recovery, stimulus generalization and stimulus discrimination.

Extinction

Once a dog has learned to salivate to a bell, does this reflex continue to occur if the bell is sounded for many trails without the meat (unconditioned stimulus). Pavlov found that without meat, the bell elicits less and less salivation on each trail and eventually stopped salivating once for all. This phenomenon is called as extinction.

Spontaneous Recovery

But they also found that extinction does not return the animal fully to the unconditioned state. The mere passage of time following extinction can partially renew the conditioned reflex, a phenomenon is known as spontaneous recovery. And a single pairing of the conditioned stimulus with the unconditioned stimulus can renew the conditioned reflex, which can be abolished again only by another series of extinction trails. On the basis of such findings, Pavlov concluded that the conditioned reflex is not truly lost during the extinction, but is somehow inhibited, and that it can be disinhibited by such means as the passage of time or the recurrence of the unconditioned stimulus.

Stimulus Generalization

Learning research has demonstrated that individuals can respond to two separate stimuli in the same way on the basis of their similarities. Once the dog is conditioned to salivate to sound of a bell, the dog is also likely to respond to the sound of a buzzer sound which similar to the sound of a bell. In work life, for example, coffee taster must learn to respond appropriately to various flavor and aromas in deciding whether to accept or reject samples of coffee beans. Once they have learned what an ideal tastes and aroma should be, they must judge and compare samples to this standard.

After conditioning, stimuli that resemble the conditioned stimulus will elicit the conditioned response even though they themselves are never paired with the unconditioned stimulus. This phenomenon is called generalization. The magnitude or likelihood of a response to the new stimulus is correlated with its degree of similarity to the original conditioned stimulus. Thus a dog conditioned to salivate to a 100-hertz tone also salivated to tones of other frequencies. But the farther the tone was in frequency from the original conditioned stimulus, the less the dog would salivate to it.

For example, the acceptable or permissible level of standard is up to 4 degree variation, the taster will check to what extent the samples of coffee ordered is matching to this permissible within the 4 degree standard. On the basis of this similarity, the taster responds in a similar fashion to all samples and accepts those which are matching to that standard. If a person is learned to drive a car, and apply the same principles of driving to drive other mode of vehicles such as truck, van etc.

Stimulus Discrimination

Individuals can respond differently in the presence of two separate stimuli on the basis of differences in their characteristics. In the salivation experiment, the dog is conditioned to salivate to the sound of bell and not to the sound of any other sound. In due course of time, the dog is able to discriminate the sounds which are relatively different from the ideal bell sound. The dog, on the basis of stimulus dissimilarity, responds differently to the sounds of different tones by salivating only to the sound of a bell and not to any other mode of sound such as buzzer, metronome, musical note etc. The dog has shown stimulus discrimination.

In another experiment, dog is conditioned to salivate to the sight of Black Square and not to any other colored square. After a series of trails in which presentation of gray square were never followed by food and the presentation of the Black Square were always followed by food, the dog stopped salivating to the gray square and continued to salivate to the black one. The researchers continued this procedure with even-darker shades of gray, until the dog is conditioned to discriminate a Black Square from the gray shades. In traffic control, the drivers are learned to respond to different colors of signal and maintain the order in the traffic regulation.

Stimulus generalization and discrimination are highly important as facilitator of learning through classical conditioning. Because of our ability to recognize similarities, individuals are able to transfer what we already know to new situations through the process of stimulus association and generalization. Classical conditioning is a major avenue of learning among individuals in work organizations. For example, trainer in organization take great care to make sure that conditions in the classroom or training facility are as similar as possible to actual work conditions in order to assure that what is learned can be transferred to the job.

Application of Classical Conditioning Principles at Work

Whenever President or Vice-President of Corporate Office visits factory site the employees in the shop floor will more attentive at work and look more prim, proper and active in their work life. It is quite natural that top management personnel visit (Unconditioned Stimulus) evoking or eliciting a desired response- being prim and proper at work from the employees (Unconditioned Response). The routine cleaning of windows or floor of the administrative office will be neutral stimulus never evoking any response from the employees. If the visit of the top management personnel is associated with such cleaning process, eventually the employees would turn on their best output and look prim and active the moment windows and floor are being cleaned up. The employees had learned to associate the cleaning of the windows with a visit from the head office. The cleaning process (conditioned stimulus) evoked attentive and active work behavior (conditioned response). Similarly, Christmas Carols songs bring pleasant memories of childhood as these songs are being associated with the festive Christmas Spirit. Classical conditioning is passive. It is elicited in response to a specific, identifiable event.

Operant Conditioning

Operant conditioned principle is proposed by B.F. Skinner, an American Psychologist. It is a type of conditioning in which desired voluntary behavior leads to a reward or prevent a punishment. Operant conditioning principle emphasizes strongly that the behavior of an individual is a function of its consequences. If the consequences are pleasant, the behavior associated with such consequences will be repeated again and again. If the consequences are unpleasant, the behavior will be in extinct. The rationale behind this theory is that people learn to behave in order to get something they want or to avoid something they don’t want. Operant condition is learned process. The tendency to repeat such behaviouir is influenced by the reinforcement or lack of reinforcement brought about by the consequences of the behavior. The proper reinforcement strengthens a behavior and increases the likelihood that it will be repeated.

Skinner’s Experiment: Skinner developed an apparatus to conduct a series of learning experiment using rats. He named that apparatus as Skinner’s Box which has certain features such as a lever, bowl, light, water container etc. A highly deprived rat is placed in the box. Once a rat nudges or touches or hits the lever attached in the corner of the box, a piece of food pellet is dropped in the bowl. By trail and error, the rat learns that hitting the lever is followed by getting a food pellet in the bowl. Skinner coined the term operant response to any behavioral act such as pressing or hitting or nudging the lever that has some effect on the environment. Thus in a typical experiment with a skinner box, hitting or pressing the lever is an operant response, and the increased rate of lever hitting or pressing that occurs when the response is followed by a pellet of food exemplifies operant conditioning.

Application of Operant Conditioning in Work Life

If a sales person who hits the assigned target of sales quota will be reinforced with a suitable attractive reward, the chances of hitting further sales target in future will be exemplified. Skinner argued that creating pleasant consequences (giving attractive rewards) to follow specific forms of behavior (hitting sales target) would increase the frequency of that behavior. People will most likely engage in desired behaviors if they are positively reinforced for doing so.

Rewards are most effective if they immediately follow the desired response. In addition, behavior that is not rewarded is less likely to be repeated. A commissioned sales person wanting to earn a sizeable income finds that doing so is contingent on generating high sales in his territory.

Social Learning Theory

People learn through both observation and direct experience, which is called as social learning theory. Individual learn by observing what happens to other people and just by being told about something, as well as by direct experiences. By observing people around us, mostly from parents, teachers, peers, films and television performers, bosses, we learn new behavior pattern.

Albert Bandura, who has most vigorously studied observational learning in humans, has emphasized that people observe others to learn not just specific motor skills (such as driving a car and performing surgery) but also more general modes or styles of behaving. Bandura demonstrated both of these functions of observational learning – acquiring specific actions and learning general styles of behavior – in experiments with children.

Bandura proposed that people actively observe the behavior of other people to gain knowledge about the kinds of things that people do, and use that knowledge in situations where it is useful.

Social learning theory gives much importance to perceptual process. People respond to how they perceive and defy consequences, not to the objective consequence themselves. The influence of models is key to the social learning process. The following four processes are vital to determine the influence that a model will have on an individual.

i) Attention Process: People learn from a model only when they recognize and pay attention to its critical features. People tend to be most influenced by models that are attractive, repeatedly available similar to us in our estimation.

ii) Retention Process: A model’s influence will depend on how well the individual remembers the model’s action after the model is no longer readily available.

iii) Motor Reproduction Process: After a person has seen a new behavior by observing the model, the watching must be converted to doing. This process then demonstrates that the individual can perform the modeled activities.

iv) Reinforcement Process: Individual will be motivated to exhibit they modeled behavior if positive incentives or rewards are provided. Behavior that is positively reinforced will be given more attention, learned better and performed more often.

UGC NET DECEMBER 2012 PAPER-II MANAGEMENT

1. The term Opportunity Cost refers to

(A) Variable Cost                                            (B) Short-run cost

(C) The cost forgone in favour of production of another product

(D) Cost related to an optimum level of production

2. If two commodities are complementary, then a rise in the price of one commodity will induce

(A) A rise in the price of the other commodity

(B) An upward shift of demand curve

(C) No shift in demand for the other commodity

(D) A backward shift in demand for the other commodity

3. What is the characteristic of a purely competitive market ?

(A) Large number of buyers and sellers          (B) A few sellers

(C) A few buyers                                            (D) Abnormal profit

4. Willingness to pay minus actual payment is called

(A) Consumer’s surplus                      (B) Producer’s surplus

(C) Utility cost                                    (D) Supplier’s surplus

5. Match List – I with List – II and select the correct answer using the codes given below the lists

List – I                                                            List – II

a. Cost Function                                  1. Kinky Demand Curve

b. Supply Function                              2. Isoquants

c. Production Function                       3. Engineering Method

d. Oligopoly                                        4. Factor Prices

Codes :           a          b          c          d

(A)       3          4          2          1

(B)       4          3          1          2

(C)       3          2          1          4

(D)       1          2          3          4

6. When analysing your business and its environment, it is useful to carefully inspect

(A) Threats                                          (B) Opportunities

(C) Strengths and weaknesses                        (D) All of the above

7. Which of the following is an example of an external threat ?

(A) Decreased competition                 (B) New Trade Regulations

(C) Global Sales Potential                   (D) Economies of Scale

8. Expectancy Theory of Motivation was propounded by

(A) Porter and Lawler                         (B) McGregor

(C) Vroom                                           (D) J. Stacy Adams

9. Which one of the following is not a step in planning ?

(A) Establishing objectives                 (B) Developing premises

(C) Determining alternative courses   (D) Identifying needs of employees

10. Planning is looking ahead and control is

(A) Scanning environment                  (B) Looking back

(C) Setting targets                               (D) Defining objectives

11. Human Resource Management (HRM) is a part of the broad Human Resource Development (HRD) System, as this focus to

(A) Selection, Induction, Training and Development

(B) Operational and Organisational Options

(C) (A) and (B) above

(D) None of the above

12. Performance Appraisal is a double edged tool to

(A) Create space for the employee to organisationally survive.

(B) Offering challenges for promotion.

(C) Accompanying the course of Demotion.

(D) All of the above.

13. Wage determination is mostly done through tools which are

(A) Objective                                      (B) Subjective

(C) Both of (A) & (B)                         (D) None of these

14. Job Evaluation criterion comes from

(A) Job manual                                    (B) Job description

(C) Job specification                           (D) Job duration

15. Exit Policy primarily emphasises in the broad sense, for policy makers as

(A) Removing employees                   (B) Down sizing

(C) Retiring people and Rehabilitating them

(D) Bringing new blood to the Corporate

16. The goal of financial management is to

(A) Maximise the wealth of Preference Shareholders

(B) Maximise the wealth of Debentureholders

(C) Maximise the wealth of Equity shareholders

(D) All of the above

17. The Internal Rate of Return (IRR) is determined where

(A) the Net Present Value is positive             (B) the Net Present Value is negative

(C) the Net Present Value is zero                   (D) None of the above

18. The Tax shield would result in

i. increase in tax liability                                 ii. increase in EPS

iii. decrease in EPS                                         iv. decrease in tax liability

Codes :

(A) (ii) and (iv)            (B) (i) and (iii)             (C) (i) and (iv)             (D) (iii) and (iv)

19. Which of the following is a main method of issue of stocks ?

(A) Vendor placing                             (B) Public issue through Prospectus

(C) Private placements                        (D) None of the above

20. The Capital Asset Pricing Model (CAPM) establishes the relationship between

(A) Risk and EPS                                           (B) Risk and value of the firm

(C) Risk and the required rate of return         (D) None of the above

21. ‘Marketing is a human activity directed at satisfying needs and wants through Exchange process’; is the statement of

(A) Cundiff ad Still                            (B) Kenneth Andrews

(C) Philip Kotler                                 (D) Kishwar S. Kan

22. Promotion mix includes

(A) Advertising, publicity, personal selling and sales promotion

(B) Physical attributes, brand, package and product life cycle

(C) Brand name, product benefits, delivery and credit

(D) Transportation, material handling, packaging and customer service

23. Which of the following is not the stage of product life cycle ?

(A) Introduction                                 (B) Growth

(C) Market segmentation                    (D) Decline

24. Which is the basic form of Innovation ?

(A) Introduction of novel production process

(B) Improvement and development of existing process

(C) Improvement and development of existing firm

(D) All of the above

25. The scientific system of collecting and analysis of data pertaining to market is known as

(A) Production Research                    (B) Advertising Research

(C) Marketing Research                      (D) None of the above

26. Which one of the following is not the function of Production Management ?

(A) Production, Planning and Control            (B) Procurement of Raw Materials

(C) Market Intelligence and Survey               (D) Plant Location and Layout

27. Time study refers to

(A) Developing a standard time to do a particular task

(B) Improving work methods

(C) Value analysis

(D) Value engineering

28. Acceptance Quality level is

(A) Maximum number of defectives that the consumers will accept

(B) Fraction defective(s) that the consumer considers acceptable

(C) Fraction defective(s) that the producer considers acceptable

(D) Maximum number of defectives that the producer will allow

29. In a transportation problem involving 10 origins and 5 destinations, the number of constraints representing origin capacity and destination requirements is equal to

(A) 50             (B) 49              (C) 15              (D) 14

30. The critical path of a network is

(A) for which earliest start time and latest start time are same

(B) the shortest time path through a network

(C) for which earliest finish time and latest finish time are same

(D) the longest time path through a network

31. If a person buys one ticket of a State lottery, then the probability that he wins a price is 0.11. If a person buys one ticket each month for five months, what is the probability that he will win least one price?

(A) 0.55           (B) 0.50           (C) 0.44           (D) 0.56

32. The standard error of the mean of a random sample of size two or more.

(A) Always exceeds the population standard deviation.

(B) Either exceeds or equals the population standard deviation.

(C) Is always lower than the population standard deviation

(D) Is always equal to the population standard deviation.

33. A store manager is trying to explore the relationship between percentage fat content (Y) and price (X) of various dairy products. He finds that the coefficient of determination is 0.4624 and the estimated regression line is Y = 0.5 – 0.02 X. The coefficient of correlation would be

(A) 0.68           (B) – 0.68        (C) – 0.02        (D) 0.4624

34. Which of the following statement on testing of hypothesis is always true ?

(A) When the null hypothesis is rejected at 5%, it is always rejected at 1% level of significance.

(B) When the null hypothesis is rejected at 1%, it is also rejected at 5% level of significance.

(C) When the null hypothesis is not rejected at 1%, it is rejected at 5% level of significance.

(D) No definite assertion can be made.

35. Which of the following devices would be considered a typical sequential access medium ?

(A) Magnetic Hard Disk                     (B) Magnetic Floppy Disk

(C) Magnetic Tape                              (D) CD ROM

36. What describes the market, product and technological areas of business ?

(A) BCG Matrix                                 (B) GE Nine Cell Matrix

(C) 7’s framework                               (D) Company’s Mission

37. Name the factors taken into consideration in Internal Analysis

(A) Firm Resources                             (B) Objective, plans and policies of the firm

(C) The type of business involved      (D) All of the above

38. Diversification is to a new business area that has no obvious connection with any of the company’s existing areas refer to

(A) Forward integration                      (B) Backward integration

(C) Conglomerate diversification       (D) Concentric diversification

39. Which business unit generates substantial cash surplus due to low industry growth rate and high profit share ?

(A) Dog                                               (B) Cash cow

(C) Question mark                              (D) Star

40. Who plays an important role in the success of products and services and in increasing the marketing share of the firm in business ?

(A) Functional level Managers            (B) Corporate level Managers

(C) Business level Managers               (D) All of the above

41. Entrepreneurship as a theory of business was propounded by

(A) Douglas McGregor                       (B) Thomas A. Coleman

(C) Joseph A. Schumpeter                  (D) Adam Smith

42. Policies related to Revival of Sick Units are framed by

(A) IIFT          (B) CSIR         (C) SEBI         (D) MSME

43. The book ‘Innovation and Entrepreneurship’ is written by

(A) Harold Koontz                             (B) Blake and Mouton

(C) Peter F. Drucker                           (D) None of the above

44. State Financial Corporation Act encourages in

(A) Establishing Industrial Estates     (B) Establishing small and medium size industries

(C) Establishing Agricultural Farms   (D) All of the above

45. Name the Author of Equity Theory of Motivation.

(A) Blake & Mouton                           (B) Strube & Garcia

(C) Stancy Adams                              (D) Albert Bandura

46. Anything dealing with Ethics in Business is

(A) good, bad or both, to the business gains

(B) not related to religion

(C) not to focus obligation

(D) killing all types of Unfair Trade Practices

47. Ethics provide

(A) Consumer Autonomy                   (B) CSR

(C) Justice                                           (D) All of the above

48. Company seeking ethical standard must purport to

(A) Good Employee Relation             (B) Better Production Portfolio

(C) Economy of Scale                         (D) Public Disclosure and Publishing

49. Which of the following is not the act of Corporate Governance ?

(A) Protecting the interest of shareholders

(B) Protecting the interest of employees

(C) Fudging of Accounts

(D) Paying Taxes to the Government

50. Corporate Social Responsibility (CSR) is looked as the organized network of making long economic and social relationship of the corporate with the society. But a business of which type, as mentioned below, cannot afford for it, at the first instance ?

(A) Large Business                             (B) Medium Business

(C) Small Business                              (D) A Business Start-up

ANSWER KEY PAPER - II 2012 - DEC

1	C		11	C		21	C		31	C		41	C
2	D		12	D		22	A		32	C		42	X
3	A		13	C		23	C		33	B		43	C
4	A		14	C		24	D		34	B		44	B
5	A		15	C		25	C		35	C		45	C
6	D		16	C		26	C		36	D		46	A
7	B		17	C		27	A		37	D		47	D
8	C		18	A		28	B		38	C		48	D
9	D		19	B		29	C		39	B		49	C
10	B		20	C		30	D		40	D		50	D