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Case Problems · Q15

Q.In a mid-sized company, the production department increases output significantly to meet what it believes is rising demand, while at the same time the finance department, unaware of this decision, tightens the budget and delays payments to raw material suppliers, and the marketing department runs no corresponding promotional campaign to sell the increased output. As a result, finished stock piles up unsold while cash flow problems mount. Based on this situation, answer:

(a) Which management function is clearly lacking between the three departments, and
(b) explain, in your own words, why this function is called the 'essence of management.'
Maharashtra MsbshseTextbookSubjectiveImportance★★★★★
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  1. Identifying the function: In this case, three departments — production (increasing output), finance (tightening budgets and delaying supplier payments), and marketing (running no matching promotional campaign) — are each making decisions independently, with no apparent communication or synchronisation between them. The result (unsold stock piling up, cash flow strain) is a direct consequence of the absence of coordination — the management function responsible for integrating and synchronising the activities of different departments so they work toward a single common objective, rather than at cross purposes. Had coordination been present, production's decision to raise output would have been checked against finance's budget capacity and marketing's ability to actually sell the extra stock, before the increase was carried out — avoiding the pile-up and cash strain the company now faces.
  2. Why coordination is called the 'essence of management': Coordination is not treated as a separate, seventh activity performed at its own distinct point in time, the way, say, staffing or controlling might be. Instead, it is achieved through the proper performance of the other five functions together. When a company plans, it should coordinate the objectives of different departments into one integrated plan (in this case, production's output plan should have been coordinated with marketing's sales capacity and finance's budget). When it organizes, it coordinates the division of work and reporting lines between departments. When it directs, it coordinates the day-to-day efforts of people across related tasks. When it controls, it coordinates the corrective action taken by one department with the knock-on effects on others. In other words, coordination is less a sixth function standing beside the othe …

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