Managment Practice in Bangladesh

Introduction
Theory and Practice of Management
Practically everyone has some concept of the meaning of the word “Management” and practically everyone is conscious, to some extent that Management requires abilities distinct from those needed to do the work that is being managed. Thus man my be a first class engineer but unable to manage an engineering company successfully, and superior workman may unable a unsuccessful foreman.
However, this is nothing new but common knowledge that a manager need not be specialist because he need not do the work himself rather he must layout the work for others, decide which part of the total job each of the groups or individuals under him should do, induce them to put fourth their best efforts and check on their progress. Thus the frequent quoted definition is “Management is getting things done through the people”.
This definition pinpoints the actual job of the manager. He has to be a leader. He has to take an enterprise to its desired goal with the co-operation of people under him and co-ordination of the resources he is entrusted with. Knowledge of the work will help him here, but he will need something more. Even when he knows exactly how he would go about the job if he were to do it all himself, he may be unable to explain to others how it should be done or to decide on the best sequence when several people are to handle parts of it.
Management is a vocational action oriented activity in which success is measured by results in profitable enterprises. Management training that provides only the theoretical background and knowledge of tools without practice in the work environment is like training physicians without access to patients or professional engineers without access to plant & machinery. Good managers are not produce in the classroom and time is required to enable that would be professional manager to develop appropriate, diagnostic, skills, and those of implementation in the work situation. To develop mangers therefore, there is a need for a combination of the theoretical and intellectually demanding knowledge of tools used by management subject. But this has to be combined with a period of practice and development of skills under guidance in a work situation.
The feature that distinguishes the problem faced by the theoretician from that faced by the practitioner in any area of learning is that the practitioner operates against a several time constraint. In others words he need to do something, he has to act. This means that in all cases-his decision which is made in the present time will be implemented in the context of a future environment which is it full of problematical uncertainties which are a further major limitation on his knowledge. The practice of management is based on a completely objective and quantified evaluation of each variable in any situation.
In spite of what the text books may say there are no precise mathematical solutions to the problems faced by the managers. The practice of management has this characteristic in common with all other vocational professions. There is a need then for the development of the ability to make subjective judgment, a skill that is developed during the period of pupilage and in experiencing not only the nature of the variables but the problems of human behavior. The trainee manager needs to handle the raw materials of big problem situation to understand it and to understand his own limitations just as much as any other practicing professional does.

ii) Evolution of Management Practices in Bangladesh

The history of management practice is as old as human civilization. Some principles of Management were put in action and were felt necessary by the ancient people, whether in business, agriculture, war, construction projects and other works where co-operative Endeavour was required. Gradually management methods have improved significantly. Significant developments have been made gradually up-to date in various management fields.
But although the management history can be traced back into antiquities, not enough information is available as to when it received systematic application in Bangladesh which is an important part of the Indian subcontinent. By this, however, we can not say that our past was dark in this regard. Rather as an economic unit our tradition goes back to the very old days recorded history which of course signifies the presence of some sort of indigenous management practices even at that time.
A book called “The Principles of the Erythrian Sea” mentions the ocean trade of the gang tic Bengal in the 1st century A. D. With Cyclone and South India, exporting Malabarthan, Spaikenard. Pearls &b fine textiles. In the accounts of strobe there is mention of similar external trade through the gang tic route in about 400 B.C.
There were metal industries for swords, arrows, etc. Also there two wood works , earthen Pottery, ivory & boat building industries. Due to her alluvial soil, plenty of rainfall and regular flood in the plain delta, agriculture was the major occupation of the people for the last two thousand years. Thus Bangladesh was an ideal place for the traditional economic system. Natural conditions however favored agriculture, transportation by boat and textile manufactured.
From this historical information of ancient India, it may easily be concluded that management in some form or other was being practiced in our country even two thousand years back. But unfortunately very little or no effort was made in the past by the historians & economists of the sub-continent to collect & assimilate information as to how the various economic activities such as agriculture, trade, industry etc, used to be managed at that time, specially during the period of Hindu Rule in Indian sub-continent.

However systematic management practices may be traced during Muslim Rule in India. Muslim period actually began from 1206 A. D. with Emperor Kutubuddin Ibak and continued until the establishment of British rule through out the whole India. During Muslim period overseas trade got a boost with the neighboring countries. Moreover trade through land route was on the increase. Agriculture within the country was still one of the main occupation of the people. Manufacturing started breaking through. A famous manufacture of Bengal at that time was sugar. Marcopolo in the 13th century and Barbasn in the 16th century mentioned sugar from cane as an item of manufacture and export of Bengal to Cylon, Arabia and Persia. Salt was manufactured from sea water. During the period of Alauddin Khilge trade was much developed.

During the Moghul period manufacturing especially cotton manufacturing was gaining momentum. The Muslin of Dhaka was topping the list of fabrics. For its marvelous finishing it gained wide popularity in the European market. The Moghul period also earn market by the development of architecture in the sub-continent. Emperor Shahjahan was a pioneer in this regard. To accomplish the task of building “Tajmahal”; numerous highly skilled personnel’s including designers, carpenters, technicians, labors etc had to work together under the leadership of some one selected from among themselves. The accomplishment of such a monumental task bears a clear testimony to the fact that management functions such as planning, organizing, directing, coordinating, motivating and controlling were applied in a very sophisticated way which could only turn the dream of Shahjahan into the reality of “Tajmahal”. Since the death of Moghul Emperor Aurangzib in 1707 A.D. till the espy Mutiny in 1857, foreign traders , specially British merchants so heavily that finally they turned the “scale of the merchant” into the “Authority of the King”. The British merchants gained rapid control over the trade & commerce of this area and after the fall of Nawab Sirajuddowla at Palashi in 1757, they became the Masters of the soil, this gave them ultimate control over trade, commerce and industry of this area which continued until the end of British rule in India.

In the entire period of British history, trade & commerce in this area was in the hand of Non-Bengalis, mainly the British merchants and Banias. They did not try to establish any industry, rather they destroyed some traditional handicrafts of the region. They used to take away the raw materials from this soil, developed their home industries & virtually turned this area into a land of exploitation.
Although the Bengalis Non-Muslim class had some capital during the British period, they voided the hazard of business and invested the money to buy land become landlords. At the same time Muslim population of Bengal considered petty trade and small business as dishonorable. Since they had no capital and previous experience, big business remained beyond their reach. They remained attached to farm land and increased pressure on the same.
Thus historically the Bengalis and mainly Bengali Muslim were quite away from ownership and management of trade and commerce. Business as a whole used to be dominated by British merchants and ultimately, on their gradual disappearance by non-Bengali business communities, such as ‘Memons’, Khajas’, ‘Bohras’ and ‘Ispahanies’. They were mostly busy in the business of Jute, Tea, Tea estates, Real estates & Jute Industry.
The Memons were doing business even before 1947 in this region. The Khjas & Bohras migrated here from India after 1947. The people of these communities were mostly business minded and they knew well how to make a good profit in business. By virtue of their long experience in business and its management they could easily establish their influence on industry and commerce. They also enjoyed fully the advantages arising out of the non-patronization from the side of the government.

These communities were bestowed with two important qualities, such as business ability and strong desire to earn money. They used to get many advantages out of their belonging to community. They helped each other in business and got mutual trust and confidence in each other. Each community got their own code of conduct. They were industries, frugal, prudent and above all got a strong commitment to help each other in business.
These communities used to take as managers, technicians, accountants and partners from members of their own families. They could not rely on outside people and naturally they were reluctant to employ people in managerial and other key positions from outside their own communities . They took employee obedience to be the most important factor and hence they looked upon unknown and untried people with suspicion.

The people of these communities thought that the business enterprises should have two broad objectives such as earning of maximum profit and provision of employment for the family members & relatives of the owners. Thus the people of this soil found it difficult and in some cases impossible to get managerial & executive position in enterprises controlled by these communities during both British & Pakistani period.

On liberation of Bangladesh, however most of the non-Bengali businessmen left the country abandoning the enterprises under their control. Nationalization order of 1972 has brought these enterprises under government ownership & control. The management practice of these enterprises are far from satisfactory. Management is mostly in the hands of inexperienced and inefficient people who fail in most cases to use modern management techniques, methods & labor handlings devices. Thus admittedly, we lag far behind the industrially advanced countries in matters of managing our business enterprises even a conservative estimate will indirect that it will take us at least half a century to reach the stage that has already been achieved by countries like U.K., U.S.A., Canada & Japan.
iii) Hindrance of sound Management Practices in Bangladesh

That management is an essential resource in economic development has been well reorganized by the countries, both capitalist and socialist, of the world. Whether it relates to the whole economy or to a particular enterprise, efficiency & effectiveness has to be ensured. Again the enterprise may be either profit oriented or philanthropic, private or public, but the basic requirements for suitable management remains the same. Efficient management of the scarce resources can ensure a better standard of living for the masses while inefficiencies retard it to great extent. In fact b, in the present day context of our economy nothing can perhaps be more urgent than the creation of a sound & efficient management for our industries, banks & insurance, trade & transport, so on and so forth. Whatever scarce resources are available are to be well managed. But unfortunately, with the notable exception to a few enterprises , the management at all levels is inexperienced & ineffective. The causes are numerous. The major ones are discussed here;

Lack of competent manpower is the number one problem. This limiting factor is considered by some authorities to be a more serious obstacle to the efficient functioning of business enterprises then the lack of capital. It is believed that the problem of paucity of capital is being solved through the establishment of specialized financial institutions at the national & international level. But no such elaborate institutional facilitates manpower.
It is because of this consideration, it has been suggested that increase in capital investment to be effective must be accompanied by concomitant increases in managerial, supervisory & other organizational manpower. It is reported that shiny and modern equipment id imported but placed in the old organizational context, and the results are often disappointing. It is very often mentioned that the industrialists are more concerned with financial and physical planning and appropriate use of manpower.

Experts have identified factors underlying low productivity of Bangladeshi industries as being untrained labor and poor management. According to John Ruskin two bounden duties before the industrial leaders are: Production of goods and Men. But in our country the last one has not yet received proper recognition. This is why there is a dearth of efficient managers, supervisors & workers. It can be concluded from the most significant reports on management competence in Bangladesh written by national and international observation in the period since 1971, that a substantial number of persons carrying out management role in Bangladesh are untrained in any formal since and while this is only one of number of causes contributing to the poor performance of the economy, it is a major cause. For example, figures supplied by the industrial corporation in 1974 indicate that in the nationalized corporations alone, there are some 10000 persons currently requiring some formal management training.

The workers are mostly untrained. They are mostly drawn from rural area and had hardly been exposed to any industrial environment before they were required into the factories. However a bit of training could make them efficient but unfortunately there is neither any facility of pre-recruitment training nor there is any organized & systematic effort to train them after recruitment. Thus it is evaded that lack of training facilities for the workers is serious problem and this accounts for one of the most important impediment to sound management practice in our country.

Inefficiencies are also rampant in middle & top level management of our industrial & commercial enterprises. This is clearly manifested by the serious shortage of skilled & efficient executive in different fields, such as production managers, marketing specialists, personnel experts. Cost and Chartered Accountants, Financial analysis, General mangers etc.
This dearth of skilled manpower in various fields of our management structure has largely been created by the large-scale migration of non-Bengali who were holding administrative & technical key posts in our industrial enterprises. The vacant thus created was soon filled up by unusual promotion of junior staff and also by employing some new faces although their experience and caliber simply allow them to remain unemployed in a competitive job market. This factor accounts for the maximum of inefficiencies, losses, malpractices and in some cases complete collapse of organized management practices.

In spite of this vacancy in skilled and efficient manpower resources in our country we have to our little surprise and regret experienced a large scale export of skilled and semi-skilled manpower each year. These people feel encouraged to leave the country mainly because of two factors namely
i) The gross inconsistence of their pay as compared to the ever rising cost of living index within the country.
ii) The prospect of earning some proverbial amount by working abroad.

Traditionally we know that large number of people have gone to the U.K. but in recent times, after liberation, people have set their eyes on the middle East. The figure from the manpower and Employment Exchange Bureau reveal that in 1975 about 766 persons left for the countries of the middle East . Of them 27 were of the general labor kind. All the others had some skill of one kind or another. During the first half of 1976, another 2896 departures took place. But by now Libya, Nigeria are in the list. The professions of these people were not recorded; but presumably they were bout the same as that of 1975. In the period thereafter up to mid February 1977, presumably another 7114 people left. This little data does give us an indication that experts are taking place of our country which vitally effects our industrial and commercial concerns.

Lack of sufficient number of efficient manpower at all levels make it necessary that a single executive in many cases has to perform numerous functions. This concentrates management function in the hands of the top executive. As a result the top level executives find little time to devote in departmental functions. They have to look into the details of the day to day works and find little time to train-up lower level executives.

Division of work in the lower levels of management is also not properly carried out. As for example, the marketing executive has to do a lot of administrative and productions functions. Line & staff functions are also not clearly distributed. This hampers efficiency of management to a great extent.

Absence of two way communication & authoritarian attitude of our managers also give rise to in numerable troubles in industrial relations. There is also lack understanding & co-operation among the workers and managers. The managerial class hardly fell any incentive to discharge the responsibilities entrusted with under the present conditions. They often complain about the levels of their pay as compared to their requirements. However, the workers are the worst hit in the present inflationary economic condition of the economy. They often reeled against managerial authority to get rid of ill-fed, ill-clad and ill-housed conditions. The usual consequences of such a situation are low employee-morale, high labor turn over, absenteeism, tardiness and so on.

Moreover , there has been a rising tide of expectations on the part of the workers & managers. They are found less dedicated for the cause of the enterprise than that of their own. There has been a wholesale nationalization but a dedicated workforce is lacking. In recent times, he wisdom of this wholesale nationalization has been questioned and efforts are being made to induct profit oriented private enterprises. Foreign capital and foreign technology are also being encouraged. It means there will be urgent need to synthesize the claims of capital and labor on sound basis. This can be done only by professionally oriented and psychologically developed management talents. But however, we have now neither the socialist competition or ‘Stakhanovism’ of the USSR nor the ‘taylorism’ or scientific management of the U.S.A. As a result, appropriate management values such s sense of duty, sense of responsibility and sense of accountability are lacking. Those in charge of managing industrial units do not have the feeling that they are the trustees. Business leaders are yet to believe that the economy of Bangladesh belongs to the citizens of Bangladesh. Management is reluctant to integrate the supervisory people is authoritarian and the response of the supervisors is granter authoritarianism towards the workers, which leads to labor unrest and frequent allow downs. Many supervisors treat their workers disdain, overlooking their human dignity. Authoritarian supervision the industrial labor force. The managers are also unwilling to define and delegate authority and responsibility. Junior managers & supervisors, who had attended training courses and wish to take action based on their knowledge find themselves without authority to do so and hence become discouraged. Top level management does not appear to believe in consultative direction. Our general managers or managing directors are act to feel that they can give orders to whom they like. The remain ignorant about wishes and ideas of lower level people. This makes decisions improper and executions difficult. By management they mean getting things done; they are reluctant to recognize that management is more than the art of getting things done. They undermine the authority of subordinates and naturally are not open to thoughts and ideas from their subordinates. This makes for concentration of power and abuse of the same at the top.

Lack of promotional facilities for workers poses another problem. Workers work at the same machine for 15 to 20 years with no offer of chance. A particular alert worker may be made a sub-supervisor or sarder as he called but beyond this advance is usually blocked.
Nepotism & favoritism are often practiced in each of selection, promotion, training & transfer. Tadbir is an usual feature. This often puts less efficient candidates above more qualified, more experience and more efficient ones. In this way thousands of people have entered different public enterprises , who instead of doing some good are responsible for many disservices & maladjustments.

Marketing management is mostly neglected. Our manufacturers appear to believe that whatever goods they produce will be sold in the market. The concept of market research has so far been unrecognized and consequently decision relating to price, channels of distribution, advertisement etc, are based mostly on guesses rather than on a scientific analysis of facts. Co-operation & co-ordination of marketing department with other departments like production & finance is lacking which results in the production of many unwanted & unnecessary products while many wanted & necessary products remain dear in the market.

There are the shortages of imported raw materials and spares. Required number of workers to carry on necessary and timely repairs of machine is also lacking . frequent power failure, inefficient handling and serving servicing cause these machines to remain unworkable through out the greater part of the year. Systematically layout production & product planning, routing, & scheduling etc, are seldom practiced. Modern management techniques like time motion & methods study, incentive plan of wage payment, attitude survey of employees, job analysis, job evaluation & merit rating, operations research, management audit, linear programming etc, are almost unknown. Labor saving devices are hardly used. Management control is also inefficient & ineffective. Code of ethics for our mangers & also an institution to regulate the pay and service conditions of managers are yet to emerge which hinders professionalization of management in our country.

Thus management in general and industrial management in particular in our country is bur rounded by formidable array of hindrance. In many enterprises absolute technology; old efficient equipment often inadequately maintained; low labor productivity; poor plant utilization; poor and variable quality of finished goods, are major contributing factors to high cost and consequent low or negative profitability. Worker & subordinate managers
are poorly motivated, there is often a lack of accountability and delegation the managerial processes. If we add to these problems; those of inadequate finance aggregated by continuing loss situations we have a conspiracy of problems, that would tax the skills of the most experiences managers in any country. In these circumstances we need to reassess the adequacy of management training in Bangladesh and its role in developing successful practices skills in decision making, organizing, planning, control, and human relations for example. It is probably in this respect that management in Bangladesh is inadequate more than any other.

iv) Different Levels of Management in Bangladesh or
Who is manager in a business firm of Bangladesh?

In the U.S.A. all the employees in between the president of the company and the foreman are recognized as managers. Managers in that country are divided into three categories;
a) Top management
b) Middle management
c) Front-line management

According to Harbinson and Maier the following categories of people, engaged in industrial enterprises are to recognized as managers;
1) Promoters, top-level administrators & directors who are company owners, partners or salaried professionals;
2) Junior executives, others members of administrative and management group;
3) Staff specialists, such as Scientists, Engineers, Lawyers, Personnel director etc.
4) First-line supervisors.

Like many developing countries, the foremen are not recognized as part of
management in Bangladesh. It appears from the survey of Mr. Weatherford that the foremen employed in industries in this country do not feel themselves as part of management team. The number of top management positions is very low. Directors are supreme among top-level executives. The other top-level executives are general managers, Mill managers & secretaries.

Mill managers are generally entrusted with the internal management of the factory. He is assisted by a few departmental heads who may again be assisted by section or branch heads. In the lowest-level or the first-line management are the foremen & supervisors. The foremen & supervisors are helped by group of sub-supervisors in getting works done through the workers. They are locally known as line-sardars. They are equivalent of ‘Lead-hands’ of America. They are paid wages on weekly basis. Neither they think themselves as part of management nor they are recognized as such by the management. In the eye of management they are top-status-crew.

The different levels of management in our industrial enterprises may be shown diagrammatically as under:


Chief Executive
TOP LEVEL MANAGEMENT (G.M, M/ Directors)

Senior Executive (D. G.M, A.G. M. etc)

MIDDLE LEVEL Departmental/ Divisional head
MANAGEMENT (production/ marketing/ personnel manager etc)
Superintendents

LOWER supervisors
LEVEL
MANAGE- First-line supervisors
MENT (line sardars, foremen etc)






ORGANISATIONL PYRAMID
Chapter—2
Management of various Forms of Business organizations in Bangladesh
i) Evolution in the form of business ownership:
Historically business enterprises in earlier days areas out of the family, the small herds or packs of a few dozen individuals- the savage ancestors of humanity. The family or the clan constituted the earliest from of business undertaking in the sense that it was organized and it aimed at securing the necessaries of life rather than any surplus available for others. Such type of business enterprises could well be carried & managed by a single man. Family members were being used as helps of the head of the family who used to be owner and manager of the affairs. However, the family was not well suited for business, in the sense of profit making; and with the increasing importance of the competitive life, the more capable people organized their own business outside family.
With the gradual increase in the size and complexities of business situation specially after the Industrial Revolution in the Great Britain, there were the necessity of greater scope which only larger group of people with requisite money to invest and the capacities to organize, can afford. Thus the family which was the earliest form of business unit was felt less suited to the keen economic struggles inevitable for business life. The entrepreneurs reorganized the fact and started their activities beyond the holds of family life and started taking help from others who possessed some of the qualities which they lacked.
At this stage like-minded people started forming sponsorship by combining their organizing ability, managing capability and also money to accomplish desired goals. By doing so the they could perhaps overcome much of the troubles that they individually failed to do. They could combine their money, energy & capability for more complex & risky enterprises. However, partnership soon started facing some serious limitations. The need of personal relation between the partners and the need of confidence in each other limited it to a few individuals. Moreover, the employment of a capital beyond the means of a few partners, raised some other problems. As a mark of solution to these problems modern large-scale enterprises are mostly being organized & managed by the creation of incorporated bodies like joint-stock companies both private & public, co-operatives, corporations & the like. Economic advantages of such incorporated bodies among others are huge finance, limited liability and perpetual existence. Through the device of the corporate activity, the number of investors can be increased to the desired extent. The ownership being widely defused, the function of management has largely been taken up by the people who can handle the resources—(men, materials, methods of markets) put under their control efficiently and effectively. This has given rise to a revolution known as “Management Revolution” which necessity implies the separation of ownership function from control.
In Bangladesh we have inherited business mostly from non-Bengalis business communities like Bohras, Khojas, Chinioits & Ispahanies. They were doing family type of business. They did not take up partners or managers from outside & hence the people of this soil got little scope of owing on managing business. However, the situation has taken a turn & by now we have got some Bengali-entrepreneurs to take lead in various industrial and commercial undertakings.
ii) One Man Business

One man business or sole- proprietorship business is the simplest and also the oldest form of business organization. In such an organization the ownership lies with a single man. He does not have any body as partner & thus he alone bears all the risks, gets all the profits and takes all the decisions. He himself supplies the necessary capital either from his own pocket or by borrowing from others. Since it is a kind of property owned by a single man incase of insolvency not only the assets of his business is attached but his other belongings and assets (outside business) are taken to meet up the creditors, if necessary. Than his liability in business is unlimited & necessitates him to keep close touch with the affairs of the business. His family members and also outsiders may help him in running the day to day affairs but seldom prefer anyone to manage it on his behalf. As a result the function of management in ‘one-man’ business in most cases interlinked & interiorly with its ownership.

This type of business goes well so long the owner does not become unable to manage the same due to its expansion. Usually very small type of retail trading institutions one found to operate efficiently under the sole proprietors. In our country pan-bidi shops, grocery & stationary shops, medicine shops, restaurants & hotels etc are found mostly to function under sole proprietors. Their engagement in construction works and small scale manufacturing functions like bidi-making, soap & furniture making etc are also very much common. Some specialized type of business involving less capital and risk like clearing & forwarding, indenting etc are also being performed by some people having knowledge & experience in the line concerned.

However, modern business concerns tend to increase in size sooner or later. This increase in size is, of course, backed by the trader’s capacity to invest, economic prosperity of the country, general growth of the business and above all his ability to manage it efficiently and effectively. Increase in size of the business brings with it an over increasing number of problems of which the problem of management perhaps becomes the hardest of all. Obviously, the modern system of management is assisted a lot by the most update mechanical means and devices, even that it is some what impossible for the ‘One’ man to carry on the management efficiently.
He has to seek the help of other persons e.g. manager, secretaries, advisors, consultants and so on. Thus the ‘One’ man ceases to be ‘One’ – he is rather one among many though perhaps he is the most important one and he bears the important function of coordinating the activities of the others employed by him.

Considering the complexity and intricacy of the modern business management, it is oblivious that ‘One man’ can hardly keep the business in running condition. So one man is not big enough to manage tremendous volume of management tasks in a big business. Rather the size of his business will remain restricted within the limit of his personal supervision and control.

iii) Management of One Man Business in Bangladesh

In ‘One man’ business administration, management & organization functions are interlinked and intertwined. The man who prepares the plan also performs the task of its execution. He is also responsible to himself for bringing together of the various resources necessary for the purpose. He sets the objectives of the business himself and device ways and means for implementation of the same. He gives plans and see whether things are done accordingly.

In such business the owner being the manager in most causes try to put his maximum to earn as much profit as he can. He can not usually rely on outside people & hence depends on his own experience and traditional methods of managing the business. While competitive business situation requires that people with sufficient knowledge & experience can only manage business successfully, the most of the owner-manager are illiterate in our country. Out of one hundred businessmen recently interviewed by the authors in Chittagong City, only five were found with degree from University while the rest 95% were found having little or no formal education to their credit. However, they were all reportedly managing their respective business establishments themselves.

The resources of one-man being limited, he can hardly employee the services of specialized personnel, even if he likes. Also the services of management consultants are beyond his reach. He can hardly afford the costly services rendered by a very few management consultants who are available only in Dhaka, Chittagong & Rajshahi. Modern management techniques are therefore , mostly unknown to one-man business in our country which results in improper, division of labor(if any), overlapping of management functions, inefficient use of resources, dissatisfaction among the employees, non fulfillment of the objectives and the like.

The owner being profit-oriented is usually devoid of a sense of social responsibility. His main purpose of business is to sell low quality goods and services at high prices. The salesman and other staff are also instructed to do the needful in this direction. One reason for such behavior of most of our businessman may be that they have come up from very small beginnings & know have to make money only. Out of one hundred businessmen interviewed only a very few could mention some definite social service to their credit.

The system of accounting is also defective and faulty. The method of record-keeping is so devised that taxes can be avoided easily. For this purpose they treat their accounts to be very much confidential.

The owner of such business always recognizes the value of consultative direction. He is apt to pass order but is usually reluctant to consult, whatever small number of employees he has. He is naturally authoritarian in attitude and likes to think that the employs are his servants & hence can hire and fire them at his will. As a result, educated young people feel discouraged to work under such a businessman, even if the remuneration is to high. In fact there being no legal bindings to regulate the practice of management in such type of business, the owner- manager is at liberty to manage it in any way he likes. He is seldom management conscious but it is only due to his sincerity, hard work & ingenuity for the purpose of being rich that he remains in business even in the face of complex business situation of the present day.

However, the management of ‘one-man’ business is quite easy, simple & smooth in character. As the owner is also the manager in most cases, he need not discuss anybody in taking decisions. He can take major decisions on the spot. If a chance comes to sign a favorable document or make a timely purchase or sale, he does not have to wait to get others consent. He is master of the business. There is none to question why? This promotes initiative and self reliance, which are very much needed for success in business. Moreover it is the only form of organization where the motive for business is the strongest since all the profits belong to the ‘one-man’ himself. He is encouraged to take the greatest personal interest in his business and put forth his best efforts.

Since the size of the business is usually small the proprietor can keep also personal touch with the employees as well as customers. This has the effect of forecasting morale and stimulating sales. He can also adopt himself to changes in the business situation with comparative case. He can adjust quickly with changing needs of the market. Hr can also keep secrecy of business with himself. He need not allow any-body to know the key to his success which gives him certain advantage in the face of competition. Finally there being the apprehension of unlimited liability in the mind of the owner-manager, he tries to remain ever vigilant to face any sort of hardship that may stand on his way.
For these reasons perhaps individual ownerships are still the most numerous of all forms of enterprise any where under the free enterprise system of economy. In Bangladesh there are several thousands of them in existence to-day.

iv) Partnership Business

a) Introduction:
Partnership has been defined in the partnership Acr,1932, as “ The relation which subsists between persons carrying on business in common with a view to profit”. It may also be defined as “The relation which subsists between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”.
Thus partnership is the contractual relationship that exists between two or more persons who want to share the profits of a business carried on by all or any of them on behalf of all them. This form of business organization has gradually arisen out of the need for more capital, better management, including more specialization and mutual co-operation.
The persons who join together as partners can naturally bring in more capital than what could have been provided by a single man and the fact that the business of partnership can be carried on by all the partners jointly, leaves on scope of specialization. Persons of exceptional managerial & financial ability can also be taken in which is beyond the provision of one man business. Management of partnership business is thus most likely to be more efficient than that of one-man business & so long the partners are in good relationship they can do make better in business that would have been possible by any one of them individually in sole-trader-ship business.

b) Characteristics of Partnership Business:

The chief characteristics of partnership as a form of business organization need a short description before we go to examine the general pattern of management of partnership business in our country:

1) Agreement: This is the first & foremost requirement of partnership. The persons
who want to form partnership must enter into an agreement first which may oral, express or implied. But the usual practice is to put it in writing & when this written agreement is registered it is called ‘the Partnership Deed’.
Thus the relation between partner is of a contractual character, as distinct from the
natural relation arising out of love and affection as joint family business.
The partnership Act itself says that “ the relation of partnership arises from contract and not from status”. A and B may be sharing the gains of a joint(business) properly but they will not called partners unless the enter into an agreement for the same.

2) Sharing of profit: The object of partnership is to carryon business with a view to
earn profit. So an agreement between persons for a social or character able causes is not partnership. Partners while agreeing to share the profit of business, also undertake to share its losses, if there by any.

3) Common Management: The partnership business may be managed either by all the
partners together or by any one of them acting for all. However, it may not always be possible for all the partners to take part in the management. But they have the right to do so. Thus when it is managed by any one of them, he does it on behalf of others. He is an agent for and accountable to all of them.

4) Number of Partners: Partnership Act of 1932 is silent as to the maximum number
of partners in a partnership firm. However, there is an upper limit on the number of partners in a partnership imposed by the company’s Act. It states the partnership of more than ten persons in case of banking business and more then twenty in other cases. However, the banking business being fully nationalized, the scope of partnership in this field is at present absent in our country.

5) Liability of Partners: Business by its nature is a risky venture. It is formed with a
view to earn profit but the end result may be loss instead. Unfortunately as the partnership has no separate legal entiity(like joint stock company) as distinct from partners themselves, the liability of partnership has to be borne by the partners jointly and severally. This means that any one partner can at time be called upon to pay all debts of the firm himself. This exposes not only the capital contributed by him but also his personal assets at home. Since management rests in the hands of all the faults, maladjustments or misdeeds of any one of them may bring disaster to the rest, however honest & efficient the latter might be.

6) Stability: A partnership is nothing but a relationship, it existence, continuity or
stability depends on the sweet will or the activities of the partners themselves. However flourishing its business may be, it comes to an end abruptly on the death, retirement or insolvency of one single partner. Even the business of a single partner can be bring about dissolution of a partnership. So it is even more unstable than the sole-proprietorship
(one-man business) form of business organization.





c) Articles of Partnership or Partnership Deed :

Articles of Partnership or Partnership deed as may be defined as an agreement of partnership which is written and registered. Embodiment of partnership agreement in such a document is not however, necessary but in order to avoid misunderstanding and future trouble among the partners it is however, desirable to have a deed of partnership which usually contains the following—

1) Name of the firm & nature of Business.
2) The name and description of the Partners.
3) The commencement and duration of partnership.
4) Division of profits & losses.
5) The amount of capital contributed by each partners.
6) The amount that can be withdrawn by partners.
7) Rate of interest, if any, allowed on capital contributed.
8) Allocation of managerial responsibility among the partners.
9) Salary, if any, payable to the partners for management.
10) Loans and advances by partners and interest payable on them.
11) Admission of new partner and expulsion of existing one.
12) Maintenance of accounts and audit.
13) The basis of evaluation of goodwill on the death or retirement of a partner or the introduction of a new partner.
14) Settlement i case of dissolution of partnership.
15) Arbitration in matters of dispute among partners.
16) Rate of interest, if any, on drawing by the partners.

The term of a partnership agreement as given here are not however, exhaustive, numerous other provisions may also be incorporated in a partnership deed, which show the intention of the partners about the matters contained in it at the time the partnership was entered into, but its provisions may be changed at any time by mutual agreement between the partners or as provided for the partnership agreement itself.









d) Rights & Obligations of partners:

In case the partnership Agreement is silent over a particular issue, the provision of partnership Act shall have to be consulted. The important rights & obligations of partners under Act are as follows:

Rights:

1) All the partners are entitled to share equally in the profits earned by the firm.
2) The partners are entitled to interest at the rate of six percent(6%) per annum on any amount advanced by them over and above the capital contributed. But such interest is payable only out of profits.
3) Every partners has a right to take part in the conduct of the business of the firm, although no remuneration is payable to him on that account.
4) No person can be introduced nor can any existing partner he expelled, without the consent of all existing partners.
5) A partner is entitled to be indemnified by the firm for any payments made by him or any loss incurred by him in the ordinary and proper conduct of its business, or about anything necessarily does for the preservation of the business or property of the firm.
6) Every partner has a right of access to and inspect and copy, any of the books & documents of the firm.
7) Every partner has a right to express his opinion in all matters affecting the partnership.

Obligations:

1) All the partners are liable to bear losses of the firm, if any in equal proportions among themselves.
2) The partners must render to one another true accounts and full information of all things pertaining to the firm.
3) No partner should make any profit for himself at the expense of the firm by way of commission on purchase or sales of the firm or otherwise.
4) Any personal profit earned by a partner by the use of the property or business of the firm or of the firm name, must be accounted by him and paid to the firm.
5) Every partner is bound to indemnity the firm for any loss caused to it by his willful neglect in the conduct of business of the firm.
6) Finally, the business of the firm must be conducted to the maximum advantage of all the partners.


e) Drawbacks of Unregistered Firm:

The registration of partnership is not compulsory in our country but an unregistered
partnership firm & its members suffer from certain disabilities under the laws—

1) An unregistered firm cannot enforce its claim against the third party in civil courts.
2) A partner of an unregistered firm cannot can not enforce in any court of law his rights arising out of into the partnership either against the firm or against the partners.
3) While a third party has the right to sue an unregistered firm or any partner there-of. Non-registration, however, does not affects the right of a partner to sue for dissolutions of the firm, for the accounts of the dissolved firm or for realization of the property of firm under dissolution.

f) Management of Partnership Business in Bangladesh

In the definition of partnership we have already come to know that the function of management of a partnership firm can be performed by all the partner together or by any one partner acting for all. Thus all the partners need not necessarily be active in management. One who looks after the management of the affairs is known as active or managing partner while those who do not attach themselves with the management of the firm are known as sleeping or dement partners. It is because all the partners are not equally competent to shoulder the responsibility & handle the techniques of modern business that one of them is selected as managing partner who is bound to hold the responsibilities of management and can successfully discharge the functions entrusted with.

The managing partner is generally assisted by salaried staff in running the day to day routine affairs of the business but in times of important decisions involving non-routine affairs the other partners are being usually consulted. He remains responsible to other partners for the proper discharge of his duties & can also bind all the partners by his activities. Such a partner is usually entitled to a salary or commission in consideration of the services he renders.
In one-man business the important decisions are to be taken by the “one-man” himself but incase of partnership the managing partners can take the help of other partners and as a result the quality of management is expected to improved. The partners co-operatively can do something better in partnership than can be done by a single man business.


New partners with needed ability & experience can be taken with the consent of all other partners. This gives an scope of infusing new blood in partnership management. Moreover, the partner who is efficient and experienced is usually entrusted with the task of management and thus the managing partner, because of his managerial rather than financial ability, is the most important of all the partners.

The managing partner may be take the help of a managing Committee, composed of some of the remaining partners, if the number of partners is big. This helps in proper division of work among partners and also among the employees under them. A partner having the experience in a particular operations may be assigned with that operation whereby the management gets the benefits of specialization.

However, separation of ownership from management is not widely marked. Only a negligible percentage of the partnership firms in our country are found having salaried managers. Thus in most cases the partners themselves manage the business with the help of a few salaried employees like salesman, accountant, clerk, peon etc. Most of the partnership firms in our country are short lived and have a very small number of partners; most of them whom are either family members or close friends. Many of the firms are found unregistered and they usually devise a policy of avoiding taxes by way of showing distribution of profits among fictitious partners. System of accounts keeping is also defective which allows a wide scope of avoiding taxes. This tendency of avoiding taxes has rather become an usual practice of management by our businessmen for which they can seldom believe in salaried managers.

The maximum number of partnership firms are found engaged either in trading, construction & service operations. Only a few firms are found doing some part of small scale manufacturing process. The following tables shows the types of operations being performed by partnership firms studied by authors in the port city of Chittagong—

1) Trading operations ---- ------- --------- 32%
2) Service ------------ ------------- -------- 40%
3) Construction ----------- ----- --------- 20%
4) Manufacturing ---- ------ -------- ------ 8%
Total ----------- 100%






v) Joint Stock Company or Company Management in Bangladesh

a) Introduction:

The Indian Companies Act of 1913 and its amen dents of 1936 as has been adopted in Bangladesh, view shareholders as the ultimate source of authority in company management. The act also recognize that shareholders being widely scattered, can not exercise the power of actual management. Thus the introduction of Joint Stock of form of organization has brought with a type of revolution known as “Management Revolution” which necessarily implies the separation of ownership from management function.

The ownership being widely diffused, a shareholder individually has little personal influence, but the shareholders collectively can exercise much power including that of the appointment of directors, from among themselves, for the purpose of management of the affairs of the company. The shareholders, therefore remain passive in the management of their own company excepting that only occasionally they are found to express their views on general policy of the company at the general meetings.

The board of directors of a company can exercise all such powers and do all such acts as the company is authorized to do except those which are resumed for the company in general meeting by the act of the Companies Memorandum of Association. It is the Board which, which subject to the remote control of that amorphous organ the general body, is responsible for the management of the Company’s business, for its growth and in general for carrying out the objectives and aspirations of the company as enshrined in the memorandum and Articles of Association. This concept is implicit in the whole scheme of the companies act, but is not spelt out clearly anywhere. The act does not, however, contemplate that the board will necessarily manage the day to day affairs of the company. In the scheme of the Act there can be direct management by the board with the help of salaried executives. Alternatively, and indeed in the great majority of large companies, the Board manages only indirectly, the direct charge of management being given to any one from amongst the following categories of managerial personnel who are recognized and defined in the act:
i) Managing Directors
ii) Directors and
iii) Managing Agents.





b) Patterns of Company Management in Bangladesh :

Thus it appears that in accordance with the company’s Act there may be as many as three patterns of Company Management viz.
i) Managing Directorial patterns
ii) Managerial pattern and
iii) Managing Agency pattern.

i) Managing Directorial patterns:
This refers to the management of a company by a managing Director, who by virtue of an agreement with the company or of a resolution passed by the company in general meeting, or by virtue of its memorandum or Articles of Association is entrusted with substantial power of management, and includes a director occupying the position of a managing director, by whatever name called, provided that the power to do administrative acts of a routine nature when so authorized by the board shall not be deemed to be included within substantial powers of management. The managing Directors, when appointed as such shall exercise his powers subject to the superintendence, control and direction of the board of directors. He is the most important functionary in a company wherever there is one. He is the chief executive head, and although the law does not give him any specific power as such, he is usually clothed with very wide powers by the Articles, or by resolutions of general meetings or board meetings. This type of Management is very common in most of the companies of our country.






Fig- Organizational structure showing the Management of Companies by managing
Directors.


ii) Managerial patterns:

This refers to the management of companies by a manager(known as general manager)
being defined by the companies Act as an individual who, subject to the superintendence, control and direction of the board of directors, has the management of the whole or substantially the whole of the affairs of a company and includes a directors , or any other person occupying the position of a manager by whatever name called, and whether under a contract of service or not. Such a manager, however has to be distinguished from so many executives in companies who also share the same nomenclature but are not managers as defined in the act. A manager may or not be a member of the board. Where he is virtually in the position of a managing director and should more appropriately be so designated, although at times he is also given other designation such as director-manager. But for the fact that he is not necessarily a director the powers given to a manager under the act seem wider in scope than those given even to the managing director. This form of management has not however become very popular in our country but found specially adopted in the Tea Estates of Sylhet.










Fig- Organizational structure showing the Management of Companies managing by
Managers.





 Difference between Managing Directors & Manager:

a) A managing director must necessarily be a director first. He is one of the members of the board, but A manager may or may not be a director.
b) A managing director is usually the owner of a large number of shares of the company while A manager is usually an employee of the company.
c) A managing director may be appointed either by shareholders or board of directors or even by virtue of its Memorandum or Articles while A manager may be appointed either under a contract of service or not.
d) A managing director usually receives a fixed percentage of net profit as remuneration while A manager usually receives a monthly salary.
However, the functions of a manager are more or less or the same as those of a managing director, because like him, the manager has to look after the management of the affairs of the company under the supervision of the board of Director.

iii) Managing Agency patterns:

A very large number of companies in our country before the birth of Bangladesh
used to be managed by managing Agents. The companies act 1913 defined managing Agents as “ A person, firm or company entitled to the management of the whole affairs of a company by virtue of an agreement with the company, and under the control and
direction of the directors except to the extent, if any , otherwise provided for the in the agreement and includes any person, firm or company occupying such position by whatever name called”. Erstwhile EPIDC acted as the most important managing agents which sponsored a large number of enterprises in collaboration with private industrialists. They were entrusted with the management of same of the big industries. Other managing Agents were Adamjee & Co. , Dawood & Co. and Ispahani & Co. etc.







Fig- Organizational structure showing the Management of Companies by managing
Agency.
Among the three patterns of company management shown above, only the earlier two are still in practice. The last one i.e. Managing Agency pattern existed up till the liberation of Bangladesh. In India also managing agency has been dissolved in 1976 but in Bangladesh no such Act has yet been passed to dissolve it, but in practice the nationalization of the major part of our industry and Commerce has put an end to the existence & functioning of management agents in free in Bangladesh.

However, a fourth category of Management pattern that is now being reorganized by the Indian companies Act of 1956, i.e. Management by secretaries and treasurers, does not exist in Bangladesh in its true sense of the term. The Act of 1956 provides that if authorized by its Articles, a company may engage a firm or a body of corporate to act as its secretaries and treasurers, who will, under the guidance of Board of Directors, be in charge of the daily administration of the business of the company.

It should however, be noted that the definitions in the act of the patterns of management seem to have made their working very similar at times. There were cases where both managing agents and managing director were appointed in the same Company simultaneously. Also the co-existence of a managing director and a manager was not uncommon.

c) Board of Directors:

The companies Act of 1913 with its amendments of 1936 as has been adopted in
Bangladesh made it compulsory that every company shall have at least three directors in sec 83 A (I). But this section shall not apply to a private company if it is not a subsidering
Company of a company in sec 83 A(II). However a private company must have at least two directors. The directors must in all matters of importance, act as a committee known as a Board.

Although the supreme executive and legislative authority in the control of a company and its affairs primarily resides in general body of the members, the board of Directors in actual practice, exercise all powers in relation to matters of general business policy and over-all supervision of management. Under law, two, directors are entrusted with agency powers ends are charged with trusteeship responsibilities, so that they occupy a pivotal position in the direction & control of a company’ affairs.
The Board of directors thus remain at the top of Company management. In acts as the top policy making body of the company and its directions become binding on the managers and all other employees of the company. In this sense the board acts as the “boss” of the management people.
In most Cases, however, a few directors become so influential that they retain maximum control on the affairs of the company, generally the factors behind such influence of such directors are social influence, possession of special skills, ownership of a large number of shares or political popularity.
Such an influential director usually becomes the chief executive of the company, being known either as president or managing director, He can easily influence the most of the members of the Board to approve his views. He can also influence the appointment of new directors & thus try to get his own men on the Board. These directors then naturally remain obedient to him reciprocating this help in the Board meetings.
These directors are, in theory the shareholders appointees. In fact a contested election for a board of directors in an extreme rarity; and in practice, the directors choose themselves, or are co-opted. Thus (xxxx) puts it “ The fact is that the shareholders elect the directors but they do not choose them”.
The shareholders merely confirm as though by rubber stamp the election of the directors. Again; once appointed, they seldom go out. For, although the law provides for retirement by rotation of two-thirds of the whole member of directors at a time, it permits the retiring directors to offer themselves for re-election. The retiring directors are invariable re-elected, and the control continues to be in the hands of the same persons. Here is thus a sharp difference between the theory and the practice of Company management in our country. In theory, the management of joint stock Company is democratic, but in practice it is nothing of the sort; for the main body of shareholders are far too seal trade, too shifting and too little acquainted with the working of the business in which their holding lie to make any effective use of their normal voting power. Hence while the ownership of a company has become concentrated. There is therefore, what Marshall calls, “democratization of the ownership as distinguished from the control of business”. Thus it can be said that Company management is democratic only in theory but in practice it is a close oblige in most cases, where the monetary support of the public in wanted, but not their direction.







d) Responsibilities of the Board directors:
The first and foremost responsibilities of the Board is to carry out the usual corporate activities, which can only legally be done by directors, e.g. , to declare dividends, allocation of sums to reserves and the management of reserve funds, to execute plans for development or re-organization.
The second prime responsibility of the Board is to ensure to the maximum extent possible the protection of the funds entrusted to their care. The Board must also work for the adequate return on the capital invested in the concern.
Thirdly the Board must act in a manner that ensure the perpetuation of the company and the continuity & unity of purpose. Any investment made in a company is made on permanent basis, particularly where it is a government company on a public corporation, where life must be perpetuated.
Another responsibility of the Board of Directors is to provide adequate management. The Board is also expected to effect a responsible harmonization of the diverse interests of management, workers, customers & government. The Board must keep the organization together as an organ and within the frame work of certain relationship which concern with the honesty of the management.
Although much of the day-to-day work is carried on by the management team, the Board bears the ultimate responsibility for the politics developed by the management. The result of this responsibility is that the Board of directors, as a group, is responsible for assuring that the management do, in the aggregate and as an organization, carry out the various obligations which either they directly assume or the community holds them responsible for.
The Board of directors which is unable to see that its manager or managing Director does not do them must bear the guilty. It is the Board’s business to staff the Company with men who will do it. It has to make sure that its policy gets carried out.
However, it must be remembered in this regard that it is the cumulative result of those day-to-day decision, and not each individual decision, for which the Board must assume responsibility.







e) Functions of the Board of Directors:
Since the Boards responsibilities can be effectuated only in terms of specific function, it is appropriate here to mention them. Functions of Board of Director are usually embodied in the Articles. However the first ever functions of the Board is to ensure an adequate organization and the development of forth coming executives so that the organization continues to be effective. The Board also reserves unto itself the responsibility as well as authority for selecting the chief executive officer and that is considered as one of the most important jobs of the Board in a joint stock enterprise.
The Board looks over the formations of objectives which has been developed by management. Perhaps it goes a step further and sees to it that management developed objectives & strategy of business, and reviews or evaluates and approves a very valuable function indeed. It draws out from management those criteria, those managing sticks and tools by which the Board can evaluate the effectiveness and efficiency of that management.
It has also the critical responsibility of observation & comparison and evaluation of departments and affiliates a variety of parts of the organization.
Finally, the Board, with a view to ensuring the continuity of the business, the growth of management succession, the proper delegation of responsibility and authority, will be ever ready to break up the grip of the chief executive who might be trying to centralize authority in his own hands.

f) Who can become a Director?
The Board should, at any cost, be constituted with men of ability; the best man for the job should be the objective. Competence and ability to administer the company efficiently should be the criterion. Men of goodwill, capable of getting alone with collogues possessing a sense of justice, adequately tempered with sympathy should be entrusted with the help of affairs. Members of Board should possess rare gifts and usual combination of verifying qualities.
However, the company act does not mention the qualities required of a director. It only tells that any person who is not unsound, discharged, discolvent and who takes up the minimum number of qualification shares as laid down in the articles of association of the company, can become a director.

The act expressly prohibits the following persons to be appointed as directors of the company;
1. Persons of unsound mind;
2. An undischarged insolvent ;
3. Persons who have applied to be adjudicated as insolvent and whose applications are still pending;
4. Persons convicted of any offence involving moral turpitude by a court of law and sentenced to imprisonment for not less than six months.
5. Persons who have been disqualified by an order of a Court in Bangladesh.
6. A body corporate i.e., a firm or company can not become a director.

In small private limited companies of our country the directors are selected from the family members of owner-groups, Family control and management is pre-determined in such companies and the directors naturally belong to a particular family.
In large companies, however, management is largely separated from ownership. Managerial revolution is taking place and the people with experience, expertise, character and capability are selected as board members so that they can help the development & advancement of the company. This is why lawyers, bankers, president of other companies, Successful industrialists and business leaders & some efficient top executives from within the enterprise are appointed as directors of large companies. Sometimes civil servants and senior military officers are taken as members of such boards. Some companies, for a simple window dressing offer directorship to renowned personalities of the society. This attracts efficient people to accept directorship of the company which in turn improves the efficiency and effectiveness of the board. Sometimes political leaders are also offered directorship as a way to win the support of the masses.
In our country there is the death of people with required experience, efficiency & willingness to take up responsibility of directorship & hence a director is often found to act as director of so many companies at a time & as a result these companies become interlocked.








g) Types of board of directors:
Directors may be classified as functional, inside or outside, full or part time. A functional director is a member of operational management and does more than attend a Board’s meeting once in three months. He works in between those Board meetings. A non-functional director would ordinarily sit on the Board’s meeting every time it is held, involving no operating, responsibilities; but in order to discharge its responsibilities properly a Board of Directors has to know a great deal of what is going an in the business. To that end the directors should be close to the management. They ought to have constant touch with the management so that they can appraise the ability and the sincerity of the management. Even a non-functional director, therefore, must spend enough time at his job as a director and not be content with attending the Board Meetings only.
An inside director is one who has come up through the company and has been identified with its management. An outside director is a person who has been unconnected with the business and has not operating familiarity with it.
Director may also be part time or full-time, depending on whether they devote the whole of their attention to their director’s job only some portion of their time.
An inside part-time director doubles as a member of the management, in some capacity, such as manager in charge of sales or production. Most of his time is devoted to his operating job, but in addition he assumes the responsibilities and functions of director. An outside part-time director is an individual whose principal efforts are devoted to matters not related to the company of which he is appointed a director. He attend Board’s meetings without having any other connection with the company.
An inside full-time director is a person who has spent years in the service of the company, having occupied responsible operating positions, and has been made a director. But, in contract to inside part-time director, he has been released from all appointing responsibilities. The outside full-time director comes from outside the company, has no close familiarity with the company’s sphere of activity. His experience elsewhere is his qualification for appointment as a director. He will now spend the whole of his time in overseeing the general health and welfare of the business, exercising authority a part of the Board.




h) Committees of Boards:
Many of ‘Board’ functions are performed through different committees. Some committees are permanent & work as attending committees whereas some committees are formed only to handle a particular problem & they end up with the problem being solved. The following committees of Board of Directors are generally formed in practice: -
1. Executive Committee: - This committee may be empowered by the Board to perform, on its behalf all functions arising in the period falling in between the two Board meetings. Fixing up of the highest ceiling of expenditures for capital equipment, investing company’s funds in special cases, important contracts or sales, employing officers in vacancy and such other acts may be permitted to be performed by this committee. The company officers who become members of the Board are usually made members of this committee. The company secretary generally acts as the secretary of the committee and he places the minutes of the meetings of this committee before the Board.

2. Finance Committee: - Such a committee is found in many of our companies. This committee is empowered to frame the financial budget of the company. In this regard they take help from company executives. Financial sanction for carrying out planned activities of different departments and also capital sanctions are among the important functions of finance committee.

3. Audit Committee: - This committee faces the questions and queries of outside auditors of the company. Finding out the most suitable principles of accounting works & providing solutions to problems relating to auditing procedures are the most important functions of this committee. This committee places the audit report along with its own components before the Board of Directors.

4. Bonus and Salary Committee: - This committee is generally formed to frame plans relating to the payment of Bonus and Salary to the employees. This committee may also be empowered to frame pay structures and carry on investigation relating to the formulation of plans of retirement of the officers of the company.

5. Other Committee: - Research and Development Committees, Auction Committees, sales committees etc, may be formed to face particular problems and help the organization in solving the problems.




i) Evolution of Managing Agency as a pattern of company Management
The early history of Joint-stock enterprises in our country is the history of managing agency houses in British India. The great majority of the public companies of today which survive from the pre-1973 days (most of whom are now under public ownership and control) their origin to the managing agency. By supplying initial risk capital when such capital was scarce by drawing public subscription on the strength of the immense prestige that many of these houses enjoyed, by providing managerial talent which was equally scarce, by taking advantages of new markets at home and abroad, and indeed by encouraging the development of those markets by absorbing financial losses in most of these enterprises during their long periods of infancy and finally by arranging finance from time to time during these periods, managing agents got a very high standard of entrepreneurial skill and performance.
In fact managing agency as a system come here as a result of gradual evolution, end was developed by the enterprise and ability of individual men who come out as representatives of some trading Companies. Such as East India Company’s and British merchants, and by 1850, with the introduction of the joint-stock form, the managing agents found it convenient to use this form for the units they were promoting.
Originally managing agency hoses had been set up by British Gentlemen in the civil and military service who, finding their habit better adopted to commercial pursuits, obtained permission to resign their situation and engaged in agency and commercial business. They had, of course, a great many friends and acquaintances in their respective services who lodged with them their accumulation. In the course of time, by carrying on successful commerce, many become possessors of large capital, and returned to England, leaving a greater part of it in India; but the persons who succeeded generally came in without capital of their own. But however, they had been receiving many year in deposit from others and with that were doing banking business. This money was also invested by them in business ventures in the normal course.
Nearly all these agency houses were organized as partnerships. A good many of them consisted only of members of a family, but gradually most of the agency houses were transformed into limited liability concerns and shares were issued, a portion of which the holders could sell at their discretion.
Practically a few agency firms served as the nucleus of control. They floated, financed and managed a large number of companies. Where the managed company had a Board of Directors, the managing agent appointed most of them from amongst its own personnel. Before 1913 most of the companies in existence did not have any Board, but only the managing agents. By virtue of agency agreement with the companies they assumed long tenure of management, usually extending to 20 or 30 years.

This quasi-permanency of a managing agents position undoubtedly encouraged him to treat the shareholders as own entities. These despite the undoubted entrepreneurial and promotional achievements of managing agents and their management ability, they were also responsible for many of the malpractices and abuses which have haunted corporate management since the origin of joint-stock form of organization. Hence a very large body of shareholders and general public locked upon managing agents with suspicion, and even agitated form reform. There were violent editorial attacks by newspapers. As one such editorial declared “ no class of capitalists in the world over invented such an extravagant system as the present plan of agency. Another lamented ‘Management is infested with such abuses as dealing in its own shares and influencing their price, a disease which the shareholders ought to cure by proper provisions in the articles of the company.
The features of Companies Act-1913 however, realized the abuses of the system and, thus in the Act an attempt was made not only to provide a statutory basis to the institution of the Board of Directors, but also to establish its supremacy as the instrument of top management and control in companies. The Act of 1913 also made it compulsory for a company to have directors as an awareness of the necessity to regulate the activities of the managing agents.
Close on the heels of the Act of 1913 came the First world war which stimulated industrialization and also the floatation of new companies. There was demand for production of things (------) imported. The government also changed its policies of stores purchase and encouraged local production. This gave a spurt to the growth of corporate business and number of companies rose up, on the legislative side a landmark was the extensive revision of the Companies Act 1936, which broke altogether new ground by bringing the institution of managing agencies for the first time within the preview of Indian Act.
This period was also marked by Indian businessmen adopting en-mass the system of the managing agency originally evolved by British businessman, founding their own agencies, and also increasingly becoming partners in the control of companies stated by the British –a tendency which prevalent from 1920 onwards and became dominant after 1947. Thus, during this period (1913-1947) there was the emergence of a large number of Indian businessmen in agency business who took over the affairs of corporate management mostly from British agency houses. The ‘Parsees’ with their non-Indian origin who had taken the initial leading role were followed by ‘Gujraties’ upper-Indian business classes and the ‘Marwarises’ the latter becoming, more and more prominent until they assumed the position of the leading business community in the country. But unfortunately ‘Bengalis’ lagged much behind.

These Indian managing agents played a more important role than that played by the ordinary Board of Directors, Thus Cotton, Tea, Jute, and indeed most other industries were developed by them, Indeed, until recently there was no choice for industry except to depend on managing agents who could provide finance either from their own resources or by acting as guarantee for bank loans. The managing agency system at the same time may be viewed as an evidence of both vertical and horizontal forms of expansion and combination both aiming at “some reduction of cost and some elimination of competition with a view to increasing profits. Many such agents performed the function of administrative integration who had several departments on the basis of industry and secondly on the basis of sections within an industry. Thus a particular managing agent, for example, had a tea, a jute, and a coal department and so on. This integrated system of management also enabled smaller companies to obtain services of first-class people as also to have economy in supervisory staff and administrative control. Moreover, in one way or another they represented the quintessence of the industrial ability and experience than available in the country. Hence, in so far as the managing agent’s stronghold over substantial sectors of joint-stock enterprises was done to the dearth of able managers, the disposal of shareholding and general apathy of shareholders, it was really (-------) if control could be eliminated overnight just by its legislative abolition & replacement by boards of directors. Thus even when the law required the management of a joint-stock company to be in the hands of a board of directors the managing agents nominated themselves and also found a few friends to serve of the board and so conformed of law.
However, due to the harmful activities of some managing agents and the deplorable failure of some managed industrial concerns in the twenties and thirties agitation against then had become very vocal and hence it was imperative on the part of the government to prescribe by legislation in the necessary limits on their functions, power and privileges.
The following word the major changes brought about in the pattern of corporate management by the Company Act amendments of 1936.
1. A limit of 20 years was placed on all appointments of managing agents, whether new or existing while on the one hand, shareholders were given an opportunity of considering every 20 years how the managing agents had fared, and of doing away with them if they were not satisfied, the managing agent’s were also assumed of a fair time limit of 20 years of show by the result of their management how their continuance was valuable for the companies.

2. The Act provided for the necessity of approval of the company in a general meeting for the validity of the appointment and removal of managing agent and of any validation of a managing agent’s contract of management.


3. The Act also introduced another important principle by providing that the managing agent could get no remuneration other than in the shape of a percentage of the net profits with provision for minimum remuneration in case of absence or inadequacy of profit, and that any other remuneration had to be sanctioned by the shareholders.
4. It prohibited the evil practice of the managed company giving loans to or guaranteeing the loans of managing agents and that of the inter-investment of funds by managing agents in the companies under the same management.
5. It absolutely prohibited the practice of managing agents issuing debentures for a managed company and allowed them the right to invest the funds of the company only with the approval of the directors.
6. It also prohibited the carrying on if any competitive business of his own account by a managing agent.
7. Finally, it limited the number of directors to be nominated by the managing agents to one-third of the total number of directors, and thus made it impossible for managing agents to pack up the board of directors with their own nominees.

Thus the amendments of 1936 aimed much at securing independent board o directors capable of discharging the responsibilities for the benefit of shareholders at large.
The amendments of 1936 could not, however, have their impact properly felt. Before they were given a complete trial the second world war came. Even after the war the regulatory provisions of the amended Act could not be operated in their full vigor, thanks to the post war conditions of uncertainties, and the absence of proper enforcement. Thus, the vast majority of boards of directors still remained packed and influenced by managing agents.
Until the liberation of Bangladesh, the managing agency system continued to dominate management in the large corporate sector. During the period between 1947 and 1970 Pakistani entrepreneurs like Adamjee, Ispahani, Dawood, were the most important managing agents. Erstwhile EPIDC also acted mainly as managing agents. Also an extremely gorgeous public patronage was available to private initiative in setting up of industrial enterprises by way of financing and guidance from the Erstwhile EPIDC, NIT,PICTC, IDBP etc. Also, in view of shyness of private capital, the government established enterprises in different sectors with a view to transferring them to the private sector once profitability was assumed. An example of such disinvestment was the Chondraghona Paper Mills.



j) Services rendered by managing agents: -
The services rendered by managing agents in pre-liberation days may be summed up in the following paragraphs: -
1. The great promotional and entrepreneurial role of the managing agents had immense potentialities for the countries for future program of industrial development which was count to suffer without them.
2. The preponderance of the managing agency in major industries like Cotton, Jute, Iron, Steel, Sugar, and Paper etc. made their role in the expansion, modernization rationalization, and diversification of the existing units evaluate and the abolition of this system was sure to hit hard-future industrial development.
3. The managing agents had played a valuable role in export promotion and foreign exchange earnings especially in the established industries like tea, Jute and these were bound to suffer in the absence of this institution.
4. The managing agents played a vital role in mobilizing industrial capital apart form the substantial holdings, managing agents in many instance had in the managed companies, they provided substantial loan assistance to the latter, offered personal guarantees for loans and further more, by lending their representation and goodwill helped the latter to attract investment from the general public.
5. As a managerial entity, it possessed vast managerial, technical, and financial strength and hence the system could ensure firm, stable, continuous management, and in its absence the companies could be exposed to unscrupulous financing and raiders seeking to grab control, and this could also adversely affect the companies.
6. The cost of management was also cheaper in the managing agency than in other forms, contrary to popular impression.
7. The system offered many advantages of group management under which managing agents rendered comprehensive services to the companies under their control. They had various departments in the central organization dealing with common requirements of the managed companies. In such matters as shares issue, dividend declaration, market survey, taxation, personnel, administration, labor welfare, export servicing and promotion etc. They could employ top management persons of the requisite (-----) and experience and also engage the services of outside experts like Chartered Accountants, tax advisors, lawyers & (------). Managed companies of small size could hardly afford to employ such people or to utilize their services. The managed companies naturally gained a lot. Also there were economics of large scale in a variety of fields like purchase, sales and marketing, common, head offices and branch offices, common staff, common board room, common reception room, common facilities relating to banking, insurance, shipping etc.
8. Finally the business administration being in the hands of a few people the system offered great possibilities of co-operation between administrators and it also tended to lessen or in some cases eliminate competitive between the units under the same management.

k) Criticism of managing agents: -
The main lines of criticism including the traditional ones can be summarized thus: -
1. The managing agency was essentially a relic of the old colonial system, had outlined its utility and was no longer serving any useful purpose. Other forms of management could perhaps reform the entrepreneurial, managing and finance functions better.
2. It helped and accentuated the concentration of economic power in the field of a few large business.
3. It gave rise to many well-known malpractices of corporate management.
4. It stood in the way of the development of professional management in the country.
5. It was superfluous in the case of companies under the management of managing agents who were not managing any other company. In these cases the much-talked of advantages of group management were irrelevant.
6. It was a costly form of management.

l) Conclusion: -
The evolution of large corporate management in our country illustrates that thanks to the rise of managing agency system, there was , from the very beginning, a dichotomy between corporate ownership and management control. Thus, in one sense what has came about in Western Countries only in recent years-the emergence of the management-controlled or minority-controlled company became a common phenomenon in our country as early as the second half of the 19th century.
However, the company law attempted to establish, or in theory re-establish, the control of shareholders over management. But the move was overtaken by the general movement towards disposal of shareholding and the emergence of professional management.
In most companies of our country today-top management is in the hands of professional managers. They hold these positions in a company hierarchy not because of their ownership, nor because of their family, or community background, but because of their education and attainments and above all, their managerial ability and skill. Their management ability and skill, is becoming an accepted feature in a significant position of large companies in our country.
This movement towards professionalization of top management structure of large companies is bound to greater momentum. This trend has been aided particularly by the emergence of a large public sector in so far as recruitment is to be made in public undertaking not on the basis of family, but on the technical and professional competence of the candidates.
However, future developments will depend to a great extent on making the functioning of the Board of Directors effective. To-day, in the formal company hierarchy, the board is the policy making and executive body. But there is still a long way to go before this become a fact in the great majority of our public limited companies. In most cases board of directors do really manage the operations of the companies concerned and are just dummies which rubber-a stamp resolutions dictated by either a dominant chief executive or a powerful in side managerial group, by prominent shareholders. Hence board is varied by many as a necessary which exists because the law says it should.
Perhaps the main reason for the present stately of affairs has been a general lack of understanding of a board’s responsibility for management of a company. The exact functional position that the board occupies in the management structure has been clearly defined beyond such general observations as “Managing the business” or acting as trustees for the money and of the company.
Very often directors look upon themselves as just nominees of the controlling group, or of the chief executive, and forget their true role as the company’s top executives. Company officials all too often treat the board as a group of advisor, or a body whose only utility lies in public or shareholder relations. In other words the general impression is that a board is an ornamental body to be put up with. These attitudes have to be changed before our corporate board can rise to the position which law has assigned to them. Once these attitudes change other steps to make boards effective will automatically follow.
As Harold Koontz observed; “The main essential is that those who control the company must want to have such a board. Even though it may take time, particularly if a board has fallen into solvent irresponsible or ineffectual ways, it can be done. And in a surprising number of instance, the change over has come more rapidly than had been thought possible. Ordinarily, there is talent on even an effectual board. If challenged by doing what a board should, this talent will often rise rather quickly to the opportunities for contribution thus provided. In addition, when it is understood what a board should do and how it should do it, it becomes clear what kind of directors are needed as board vacancies occur”.
One thing which our Company Law can usefully do is to offer some legislative guidance in concrete terms about the major functions to discharged by a board in a company. They can be broadly analyzed as follows:
a. To provide the basic corporate objectives and broad policies within the framework of the company’s charter;
b. To appoint or elect the corporate officials;
c. To approve important financial matters, including balance-sheets or investments or major expenditures;
d. To distribute earnings
e. To delegate special powers to corporate officials;
f. To hold regular elections to the board to fill interim or casual vacancies;
g. To supervise and control the activities of executive officers and to check on the result;
h. To formulate and approve long range corporate planning;
i. To keep shareholders informed of the company’s affairs and its progress by providing them with annual and interim reports and by holding shareholders meetings as prescribed by law; and
j. To maintain the company’s Memorandum and Articles of Association and to initiate action for their revision whenever necessary.


vi) CO-OPERATIVE SOCIETIES IN BANGLADESH
Co-operative form of organization, most commonly known as co-operative society, is a voluntary association of individuals for the common purpose of running some economic activities for their mutual benefit and for safequaring their interests against the competition and exploitation of middlemen, large scale producers and distributors. As such the main lines of business in which the co-operatives usually remain engaged
(-------) : supply of agricultural credit in rural areas, collective buying of raw materials and consumable goods, collective marketing and selling of agricultural and industrial produce, transport, warehousing, irrigation, cottage & small-scale industries, etc.

In fact, co-operatives provide a scope of organized and collective effort by a group of isolated individuals of small means for the promotion of their economic welfare through self-help and mutual adjustments. Individuals organize themselves into co-operatives not with the motive of making a profit from its business operations but for the purpose of supplying their own requirements in the form of goods and services. Thus, service and net profit is the main motive which guides a co-operative society in its promotion, operation and development.
In a co-operative society people come together on equal terms, however low or high they may be. It affords scope, to all who join it, for the development of an unselfish spirit which brings in something more than an economic advantage. The membership of a co-operative is voluntary and unrestricted. Any one who subscribes to the common objective and capital can become a member.

The capital of a Co-operative society of any kind is divided into a number of shares of equal value and a member can purchase any number of shares subject to a limitation as may be given as to check concentration of ownership in a few hands. The liability of members may be either limited or unlimited. If the liability is limited, the word 'Ltd.' should be used after its name. A Co-operative society may also be registered or unregistered. A registered society enjoys certain privileges which are usually divide to the unregistered societies. A registered society is recognized as a legal entity separate from its members and is exempted from the payment of income-tax stamp-duty and registration fees.
In spite of all its advantages Co-operative movement gained popularity & acceptance by the people of this sub-continent only in the latter part of the last century and ultimately the Co-operative credit societies Act of 1904 was passed.
The Co-operative societies now operating in our country are of various types and sizes. They may be broadly classified as producers, consumers and credit societies. In each class there are many societies benefitting the people of small means both in rural and urban areas of Bangladesh.

vii) Management of Co-operative societies in Bangladesh.
A 'Limited' Co-operative society in our country is considered as a legal entity just like a corporations or a 'Ltd.' Liability Company. The membership is scattered mostly among poor and illiterate section of the people who are usually ignorant about the principles and practices of management. Thus there is separation of ownership from management which provides scope for specialized managed by efficient people.
However, a Co-operative society being a democratic organization, all members enjoy equal rights of management. Each member has only one vote irrespective of the capital contribution which brings about equal voice of all members in the management and administration of the co-operative business. Every member has a right to take part in the management but in actual practice a 'Managing committee' is elected by the members to carry on the day-to-day management and administration. Usually the influential members are elected in the 'Managing committee' while the most efficient & influential one is likely to be selected as the president of the Committee.
The Managing committee, however, remains responsible, as least theoretically, for discharge of various managerial functions to the general body of member and has to execute the policy enunciated by the members at the annual general meeting. Thus the general members of a Co-operative society remain passive in the day-to-day management, who occasionally meet the meetings and pass resolutions on important matters.
The managing committee is usually/empowered to do all such acts as the society is required to do in fulfilling its objectives. If(the managing committee) may be assisted by salaried employees who have experience in the working of a co-operative. Such employees are taken only when the business expands to unmanageable size. They are salaried employees and naturally do not have any voice in its management. They have to carry out the functions as entrusted to them by the Managing Committee.
Like the management of any type of organization, the management of co-operative also involve functions like planning, organizing, motivating, directing & controlling the efforts & resource of the co-operatives. These functions are to be performed efficiently and effectively which become possible only when resources are available in appropriate time, trained personnel are employed & motivated and also corrective actions are taken when needed.
Unfortunately, the type of personnel’s needed are not always available which retards specialization by way of proper division of work in a co-operative organization. Modern management practices are seldom used. Contesting election hardly take place & only the influential people are placed in the managing committee. The meetings of managing committees are not held regularly in most cases. Audit of accounts is also very much irregular. An absence of co-operative spirit is widely marked among the co-operators who also lack proper initiative & drive in making the organization, of co-operative society a success. These and many other factors taken together account for the failure of most of the co-operative societies of our country during their infancy.
However, the following steps, among others, may be taken to improve the management of co-operatives in our country –
(1) Membership of the co-operatives should be restricted to those who have the required spirit and enthusiasm only. More should be allowed to be members with political and other motive that many be harmful for the attainment of co-operative objectives;
(2) Training facilities should be extended to the members of 'managing committee' and also to those who may be employed to look after the day-to-day affairs such as managers, secretaries, accountants etc. ;
(3) Selected local people may be trained in managerial skills so that they become able to take up future management of co-operatives at case. For this purpose the training of union council members and chairman at Rural Academy may be of much help;
(4) Administrative leadership should be furnished by the government, where necessary. Co-operative officers in Thana or Union council levels may prove useful in this regard , and
(5) Measures should be taken so that the elections to and meetings of the managing committee are hold regularly.
CHAPTER – 3
PUBLIC CORPORATIONS AND
SECTOR CORPORATIONS
Introduction :

Before we go into the details of the management of public corporations and sector corporation in our country. We would like to draw a distinction between these two types of corporations and now operating in our country.

The sector corporations have been entrusted with ownership and control over productive units and hence they are oriented towards production and directly productive investments, while the traditional public corporations in our country have been mostly either service oriented, such as Bangladesh Shipping Corporation (B.S.C.), Bangladesh Road Transport Corporation (BRTC) etc. promotional in nature, such as, Investment Corporation of Bangladesh (I.C.B), House Building Finance Corporation etc. Again, while these traditional public corporations are executive in nature, sector corporations are controlling in nature.

Theoretically, public corporations are usually statutory bodies and are supposed to be autonomous from day to day control of the government whereas, sector corporations in our country are subject to direct bureaucratize control of the government which is proverbially rigid and ponderous. Thus the traditional public corporations are at least theoretically autonomous, but the sector corporations in our country are treated as government bodies. Operationally, however, the public corporations in our country like the sector corporations, are responsible to the government through respective administrative departments.

PUBLIC CORPORATIONS
a) Initials
Public corporations may be viewed as a social institution organizing human efforts to a common end of ensuring maximum social justice to the people. Such public corporations are usually statutory bodies, with defined powers and functions, and financially independent, having a clear-cut jurisdiction over a specified area on a particular type of industrial or commercial activity. They are supposed to be autonomous from day to day control of the government but however, responsible to the government through respective administrative departments.
It is administered by a board of directors appointed by the public authority to which it is answerable. Its capital structure and financial operations are similar to those of a public company, but shareholders, where there are any, (in most cases capital is provided by Government in our country) have no equity interest, are deprived of voting rights and powers of appointment of the board of directors.
The leading characteristics of the public corporations may be summed up as follows :-
1. The public corporation is the combination of public ownership, public
accountability and business management for public ends. It is in a word, wholly owned by the state. It has no shareholders in the ordinary sense of the term.
2. It is created by a special statute defining the public purpose, its powers, duties
and immunities and prescribing the form of management and its relationship to establish departments and ministries.
3. As a body corporate, it is a separate entity for legal purpose and can sue and be
sued, enter into contracts, and (qequire) and own property in its own name.
4. Except for appropriations to provide capital or to cover losses, a public
corporations is usually independently financed, so that its finance are divorced from national budget.
5. It is generally exempted from most regulatory and prohibitory statutes applicable
to expenditure of public funds.
6. It is in a large measure, free from parliamentary inquiry into the internal
management of the concern as distinct from its policy. It is, however, subject to ministerial control.
7. It is not expected to make profit although it, must work efficiently, and show
good result in the form of supplies which must not to be the result of exploitation. The surplus may be ploughed back to business, or utilized to reduce prices and for increasing wages.
8. In majority of cases, the personnel does not form part of the civil service, and are
recruited and remunerated under terms and conditions which the corporation itself determines by its regulations.
Thus from the theoretical point of view, it has been conceived that for the efficient working of the public corporations they should inter alia,
(a) have independent governing board;
(b) be autonomous in their functions;
(c) be free from prober vial red tape of the government;
(d) remain independent of routine control of the department of finance;
(e) be free from political direction, and
(f) have self continued finance.
It must, however, be noted that the term 'public corporation' is a name given to a type of administrative agency and does not imply that all such corporations exhibit uniform characteristics described above, the nature of every public corporation is determined in each particular case by the legislature, which endows it with characteristics appropriate to the functions it is designed to perform.
Public corporations, in course of time, have come to occupy an important place in initiation, operation and management of public undertakings, where direct government control and management are not practicable. In case of social utilities, where monopoly is more or less inevitable, the creation of public corporation has found favor both with the government and the people. In many countries such economic matters as the provision of an adequate water supply, of adequate communication and adequate transportation have been considered matters for the state rather than for private enterprise.
Before 1914, the German railroads were state operated. In Britain, oven before the labor party came to power, there were collective enterprises, such as, the central electricity Board, The London passenger Transport Authority, the Port of London Authority, and British Broadcasting Corporation. Even before liberation, there were many corporations, such as Building Finance Corporations, The East Pakistan Road Transport Corporation, The Investment Corporation of Pakistan and so forth. For all these vital areas of economic activity, public opinion considered collective provision (I.e. public corporation) superior to private enterprise.
Public corporations have been established in our country as a resort to undertake and promote development projects in those sectors where private initiative has been almost absent or inadequate. Laws and regulations could not always protect public interest where formation of public corporations has served as a handy instrument to check monopolistic control by private entrepreneurs
Public corporations in our country have been given the cloak of semi-commercial organization and has the structure of share capital like joint stock companies. However, the ownership of equity of the various public corporations had been lying with the government but very recently the Investment Corporation of Bangladesh(I.C.B.) and Bangladesh Shipping Corporation have issued a percentage of its share to the public.
However, the inalienable characteristics of a public corporations, i.e., autonomy & flexibility are very much absent in our country. Autonomy and flexibility of a public corporation depends much on the measure of control exercised by the government through the constitution of its government Board & the amount of autonomy granted to it in carrying out its functions. In our public corporations the directors of the governing Board are appointed by the government and they hold office for a term or terms as determined by the government. The Board is discharging its functions is guided by such directions as the government may issue from time to time which curb the functional authority to a great extent.
In a country like ours where infrastructure facilities are conspicuously absent, the public corporations have to pioneer in new fields of industries and services, and even to initiate some basic industries although they are uneconomic in the short run and for which private initiative is lacking. Hence the corporations as representative institutions of our society must hold out the promise of adequately fulfilling the aspirations and beliefs of our people; that opportunities be equal and rewards be commensurate to abilities and affords; that each member of society however, humble, be a citizen with the status, function and dignity of a member of society and with a chance of individual fulfillment in his social life, finally, the promise that big and small, rich and poor, powerful and weak be partners of joint enterprise rather than opponents benefiting by each other loss. Further, the corporations as socialized institutions must maximize the production of cheap but useful goods and services for the people of our country.
At present we have a good number of public corporations in our country of which the following are the well-known.
a) Investment Corporation of Bangladesh
b) Bangladesh Shipping Corporation
c) Trading Corporation of Bangladesh
d) Bangladesh Road Transport Corporation
e) House Building Finance Corporation
f) Bangladesh Parjaytan Corporation
g) Shadharan Bima Corporation
h) Jiban Bima Corporation

b) The Future of The Public Corporation
It seems clear that that the public corporation are here to stay and that their activities constitute a substantial part of the country’s economy. It is like-wise clear that this comparatively recent phenomenon raises fundamental questions of social and economic policy.
There are critics who take the view that it is improper for the government to undertake commercial and financial activities of the kind traditionally reserved for private business. They argue that the government has to be engaged only in such activities that are designed to promote the general welfare and to conserve to its citizens the rights of life, liberty and the pursuit of happiness. Thus they think that the entrance of the government into commercial and industrial undertakings, backed by public credit and resources and its military and civilian personnel, for the purpose of competing with the business establishments and the opportunities of livelihood of its citizens is therefore, managerial repayment to fundamental democratic institutions and aspirations. Then the government should not deliberately engage in business in any form which competes with the hampers the private the private business of its citizens, except for reasons of economy or fiscal and military expediency.
c) Constructive Criticism of public Corporation
Unlike those who oppose, it there are economists who think that if we are to have a mixed economy i.e. one which is partially private and partially socialized, the existence of public corporation is a must. According to these economists the only justification of the existence of an enterprise whether public or private should be – whether it can provide consumers with the most satisfaction at the lowest cost. If a public corporation can do so, there cannot be any opposition to it.
They also raise the question of monopoly. Where the economists of mass production are so great that the most efficient technical production will lead to monopoly, may not the creation of a public corporation be the best form of controlling monopoly rather than the leaving of vital sectors in private hands and then the use of laws to check it ? However, they think that public ownership should extent to the following vital sectors of the economy :
a) In which no chance should be or can be taken, as for example, Defense Industries.
b) Which are essential for greater economic developments, as for example, Railways, Steel Mining etc.
c) Where private enterprise has threatened the society with monopoly and other malpractices or is otherwise, inefficient.
d) Where interest of the general public demand that the goods and services in question should be available at all times in ample measure at reasonable prices, for example, public utilities.
e) Where it is necessary to provide a yardstick for private enterprise in order to encourage higher efficiency, as for example, T.V.A. in the U.S.A.
f) Where it is necessary to deal with foreign government, as for example, trading corporation of Bangladesh.


PUBLIC SECTOR CORPORATIONS
Public Sector Corporation were established by the government in order to control, coordinate & supervise the industrial enterprises respectively placed under them. Of these industries now under sector corporations, Jute, Cotton textile & Sugar have been nationalized while all others have been taken over for management purpose under the Bangladesh Industrial Enterprises order on 26th March, 1972. Operationally, however, there has been no difference so far between the nationalized and taken over sectors, although clearly there is a legal difference in terms of status between them. For purpose of our discussion we will include both nationalized and taken over units placed under different sector corporations.

Now about 85% of the assets in the modern industrial sector is under different sector corporations comprising different kinds of industries, such as local consumption goods industries( e.g. cotton textile, sugar and allied goods etc), local market input supplying industries( e.g. fertilizer, cement, gas etc), export industries, domestic raw-materials based industries and imported raw-materials based industries etc. Originally there were 11 sector corporations covering the nationalized modern industrial sector with specific groups of industrial units placed under each:
a) Jute Industries Corporation
b) Textile Industries Corporations
c) Sugar Mills Corporations
d) Paper & Board Corporations
e) Food & Allied Corporations
f) Steel Mills Corporations
g) Mineral, Oil & Gas Corporations
h) Engineering and Shipbuilding Corporations
i) Fertilizer, Chemical, Pharmaceuticals Corporations
j) Tanneries Corporations
k) Forest Industries Corporations
The affairs of the Mineral, Oil and Gas corporation are handled by the Natural Resources Division (NRD) and the affairs of other corporations excepting Jute Industries Corporations used to be handled by Nationalized Industries Division (NID). The affairs of Jute industries corporation which has been renamed as jute mills corporation is being looked after by the Ministry of Jute. But very recently, the affairs of Textile Industries Corporation, now known as Textile Mills Corporation has been placed under a separate Ministry. While the number of other corporations under NID has been reduced to four. Under the reorganization and readjustment of the corporations. Basic and Cottage Industries Corporations has been merged into one corporation; the Bangladesh Food & Allied Industries Corporation with Sugar Mills Corporation; the Bangladesh Paper & Board corporation, Tanneries corporation & Fertilizer, Chemical & Pharmaceutical Corporation into one corporation; Bangladesh Steel Mills corporation and Bangladesh Engineering & Shipbuilding corporation into one corporation.






a) Background of Nationalization

Nationalization as a means to ensure maximum social justice and economic emancipation of the people was being much committed by the political leaders long before the independence of Bangladesh. Industrial enterprises in the erstwhile East Pakistan was mostly in the hands of Non-Bengali private capitalists who got extremely generous public patronage in setting up of industrial enterprises by way of finance and guidance from the (Earst-) while East Pakistan Industrial Development Corporation, National Investment Trust, Pakistan Industrial Credit and Investment Corporation, Industrial Development Bank of Pakistan etc. Moreover, easy profits were available to the non-Bengali private capitalist due to generous concessions in the taxes, fares etc. Under pricing of inputs and over pricing of output through the manipulation of the investments of direct control on trade and economic activity and export bonus arrangements. The result was that the private capitalists took a relaxed attitude towards effective management and productive growth. Hence the large scale industry while highly profitable to private capitalists, was grossly inefficient and of relatively small value to the society.

In those industrial enterprises not up by the non-Bengali capitalists management personnel and skilled workers were also non-Bengali mainly. Whatever Bengali industrial interest developed were mostly in small and medium industries. At the time of liberation, about 66% of fixed assets in the Jute Manufacturing Industry, about 45% of fixed assets in the Cotton textile industry and all but 6 enterprises in other sectors with assets of above taka 25 lacks were in the ownership of Non-Bengalis. On liberation of Bangladesh, however Non-Bengalis left the country abandoning their industrial ownership; These abandoned industrial enterprises together with other large scale industries were nationalized as first step to ensure equitable distribution of wealth to the masses.







b) Objectives of Nationalization

The main objectives of Nationalization may be summarized below:
a. Abolition of private ownership and establishment of state ownership.
b. Equitable distribution of wealth by nationalizing the income the income of individuals.
c. Planned growth of industries keeping in view the national aspiration and interest.
d. Attainment of optimum efficiency in production.
e. The prevention of restrictive trade practices, cartels and monopolies.
f. Utilization of surplus for social benefits.

With those long-range objectives of Nationalization, however, Annual Development plans have identified the following two objectives for nationalized industries of our country as : -
a) To reach the level of production of pre-liberation days.
b) To rehabilitate all enterprises that suffered from damages and dislocation due to liberation war.

The annual Development plans while mentioning the objectives of nationalization could not clearly show the ways of their fulfillment. However, we feel that the attainment of the objectives to a desired extent can be ensured only by taking the following steps:
a) Setting-up of an appropriate industrial development strategy;
b) Establishment of a well-designed management structure;
c) Ensuring maximum autonomy to the sector corporations with minimum interference by the Government;
d) Boosting up of production by honest and efficient work;
e) Creating organized agencies for prompt and efficient sale of the products;
f) Maintaining industrial peace by ensuring healthy labor management relationship,
g) Drawing up and executing of a socialistic program by the government with built in mechanism for equitable distribution of the products to the masses.


c) Management Structure of Nationalized Industries Sector
The system adopted for the management of nationalized industries in Bangladesh is a three-tier system; The Minister-in–Charge, Sector Corporations and Enterprise management. The system can be shown diagrammatically as under:



Fig-Management Structure of Nationalized Industries Sector
The governmental authority for managing a nationalized industry vests in the Minister-in Charge, (now taken as advisor to the President Peoples Republic of Bangladesh) who acts as the owner of the industry on behalf of the people.
The sector corporations run the industries under the supervision of the Minister-in-Charge and are responsible to him. These corporations have been created as government bodies for control, co-ordination and supervision of enterprises respectively placed under them, and to exercise such power of the government as the government may delegate. Enterprises, which are the productive industrial units, are owned by respective sector corporations and are run by enterprise management under the control of these sector corporations. Enterprise management are appointed by respective sector corporations to run the enterprises and enjoy such powers and operational freedom as are granted to them by sector corporations. It is to be mentioned that the present idea is to give maximum autonomy to the industrial enterprises that will be managed by a 5 member Board of management consisting of two representatives of workers, the chief executive appointed by the government, one nominee of the corporation and one from loan-giving agencies.
However, regarding the relationship between three-tiers of management clear-cut demarcation of responsibilities has not yet been formulated. The present arrangements are full of conflicts and confusions. There is no responsibility budgeting for which the principle of accountability cannot be implemented.

d) Problems of our Nationalized Industries
After the ascertainment of independence, Bangladesh faced with some very serious economic problems. These problems were to some extent due to the dislocation caused by Pakistani Military Janta during the war of liberation and also by a large scale migration of non-Bengali entrepreneurs including skilled and efficient management personnel’s. The problem was felt acute in case of our large scale industrial enterprises, being mostly abandoned by the non-Bengali owners. Nationalization program of the government was felt, from the very beginning to be the right step in solving these problems of dislocations. But unfortunately the current performance of the nationalized industrial enterprises clearly show that, the problems instead of being solved have, in many cases been multiplied. Highly profitable enterprises in the private sector has been turned into losing concerns under the ownership and management of the government. Here we should like to discuss the problem of our nationalized industries under two board be :
1. Administrative problems
2. General Problems


1) Administrative problems

Under the three-tier management structure the sector corporations are the central organizations because the main responsibility for running the nationalized industries devolve on them. They are the commercial units since they, as guardians of assets of the enterprises placed under their respective control, are responsible for ensuring that the overall targets and objectives of the nationalized industries are achieved. It has been proposed in the First Five year plan of Bangladesh that corporations should enjoy maximum commercial autonomy, but its operational meaning has not been spelled out. In practice, through NID and NRD , sector corporations are subject to a process of bureaucratic control which by declaration in rigid and ponderous, while, in business and productive activities, flexibility and quickness are inalienable characteristics of the decision-making process. It is also a common complain of the concerned sector corporations that the channeling of matters through NID and NRD is a lengthy process involving costly delays and bottlenecks. This is particularly serious in regard to matters involving other ministries. In deed, a sector corporation come under the purview of several universities in addition to its controlling ministry at one point or another. The ministries involved in a major way being the Ministry of planning, the Ministry of Finance, The Ministry of Commerce and the Ministry of Labor.
Again the sector corporations have been equated with regular civil government departments in the matter of recruitment by subjecting them to the same pay and service in the case of officers and staffs and rigid wage structure in the case of workers. Their operational autonomy in matters of procurement and sales also is limited. Thus, while the corporation do not have operational freedom in recruitment, procurement, sales etc, enjoyed by the private sector, they remain equated with the private sector for regulatory
(------) in regard to imports, duties, taxes, etc.
Enterprises are to function under the guidance, supervision, and control of the respective corporations, but what freedom of actions, if any, an enterprise will enjoy has not been defined. While the lack of authority is resented by enterprise management, it is also used by them as an escape clause for defaults in performance. In deed, enterprises are the productive units and, hence, the need for authority of decision making and implementation is very great at that level. Under the present arrangement, this crucial point has been missed. It is argued, however, that corporations will delegate authority to enterprises as and when right enterprises managements will be there to take the responsibility. It is further argued that currently shortage of qualified managers seriously limits that possibility.
In practice, corporations have tended to hold on to whatever authority and operational freedom have been granted to them, and very little delegation of authority to enterprises has taken place. Moreover, it is the chairman of the corporation on whom all the authority vests. Directors of corporation, under current terms & conditions of their job, are working nearly as advisers of the chairman and enjoys such authority as the chairman may delegate to them. Thus, one man has all the authority to manage the enterprises under his control and it is he, who has to decide how much of his authority he should or should not delegate to his directors and to enterprise management. In practice, very little delegation of authority even to directors has so far taken place in any corporation. Further more, rules of business for the nationalized sector are yet to emerge-even after over five years of nationalization. Hence confusions and adhoc-arrangements continue to be dominating feature.
As a result of all these, all the industries are suffering from the management and the communication problems. Inefficient and unmotivated function arises are talking advantages of the situation; and competent people do not have an effective framework to make determine efforts. The net result is that corporations are not able to provide effective guidance to enterprise nor can they effectively take the problem of enterprises and keep watch of on their performance.

2) General Problems:
A part from the problems as mentioned above, there are various other problems currently facing the nationalized industries, same of which are perhaps of seriously limiting production and productivity. The important problems may be described as follows.
a) Shortage of Managerial and technical personnel and Skilled workers:
It is known that due to shortage of managerial Personnel Corporations have followed a go-sallow approach in delegation of responsibility at the enterprise level. While our nationalized industries are being overstaffed in many cases, various key positions are being occupied by inexperienced and efficient personnel’s. On liberation the non Bengali owners, executive and also the skilled workers left the country by creating a vacuum in the field of management and operations of the management and the operations of our industrial enterprises. This vacuum is filled up hastily by employing mostly inexperienced and incompetent persons having political backings only. In selecting personnel to run the enterprises nepotism and favoritism rather than skill, virtue, qualification and ability (--------) supreme. Moreover right men were not placed on the right positions. It is not usual to find an engineering graduate to do administrative job not at all related to his to his field of study. It has been observed that most of the freedom fighters who are selected, trained and posted to various industrial units as management cadre with senior management responsibility, failed to prove their worth only because they lack required knowledge and motivation. These persons are found remain busy in fulfilling personal needs than to look after the interest of the enterprise. Thus inefficiencies and corrupt practices have become regular phenomenon with our nationalized industries.

b) Ex-owner manager
A most vital point in our industrial management is the question of sincerity of ex- owner whose mills and factories were nationalized by the Government but have been asked to work as salaried managers in their own factories under sector cooperations. As they were not given fair compensation for their mills and factories, it is doubtful to say whether all of them are rendering whole hearted co-operation to the government for the implementation of its policies and also sincerely trying to help the industrial enterprises to accomplish their economic goals. But it is true that their sincerity can go long way in boosting up the productivity of the industrial workers. Thus we have to examine carefully the extent to which the previous owners may participate in the management of nationalized industries.

c) Absence of management motivation and poor incentive structure:
The managerial class of any society is considered as ‘Elite’ of it. Their power, position and social status identify them as a high status minority in the society. But in our country existing price level, salaries and benefits do not enable them to enjoy bare subsistence living in comparison with their counterparts in the private sector and foreign enterprises. When these elites of the society are compelled to live on a mere condition in an inflationary economy then how we can expect them motivated in their jobs and acts as the motivator over people under them? Moreover absence of non-material incentives do not allow the executives of sector corporation and Industrial Enterprise to accept the challenge of responsibility with enough spirit and enthusiasm.

d) Labor unrest:
The most common phenomenon in the industrial undertakings of our country is labor unrest. Frequent labor troubles arises the price level of consumer goods due to low level of productivity and high price level again causes labor trouble. The workers generally rebel against managerial authority to get of the ‘ill-fed’, ‘ill-clad’ and ‘ill-housed’ conditions.
The consequence of labor trouble is closure of mills and factories and fall was expected that the labor unrest would be minimized because of the change in production. But ironically the rate of labor unrest is now touching pre-liberation level. As a result the problem of effective utilization of the abilities of the workers and of achieving human relations between management and the managed are far from being solved.

e) Lack of training facilities for workers and officers:
The death of skilled manpower in various fields of our industrial enterprises is due to lack of adequate training facilities available for both the workers and officers of the enterprises. The workers are mostly drawn from rural areas and hardly been exposed to any Industrial environment, before they were recruited into the mills and factories. However, a fit of training could make them efficient but unfortunately there is neither any facility of pre- recruitment training nor there is any organized and systematic effort to train them after the recruitment. Thus it cab be said that lack of training facilities for the workers is a serious problem and this accounts for one of the most important factors of low productivity in our industries. Moreover, training facilities for first line supervisors who are directly linked up with the workers are also negligible. They do not appear to have the necessary skill to guide and the supervise the workers efficiently. They often lack the technical competence to help the workers in their job related problems.

f) Lack of appropriate pricing policy:
Public sector unites produce a wide variety of products and currently, a number of authorities are involved in price fixing. In certain cases the cabinet fixes prices (e.g. fertilizer, newsprint, sugar etc.) in certain causes, the Ministry of Commerce fixes prices (e.g. motor cycle, bicycle, ceiling fan, bus chassis, cement etc.) and in certain other cases, corporation fix prices of their own (e.g. most pharmaceutical and rubber products, most machine tools and spares matches etc.). There is no national basis for price fixing and hence an anomalous situation prevails. It is necessary to remove the anomalies and rationalize the price fixing process. To be rational and purposeful, the pricing policy must be involved on the basis of a clearly defined objective or objectives to be achieved though it. Because of an ineffective distributional system, price control by our nationalized industrial has no benefitted a group of middleman at the case of consumers. Prices should, therefore, be fixed on the rational criterion of balancing demand and supply without the need for rationing. Of course the prices charged along with costing must be regularly submitted to the prices and tariff commission. The surplus will accrue to the state which the state can use in the public interest.

g) Lack of clearly defined objectives:
Objectives are basic plans which determine goals or end result of en enterprise. The success of an undertaking depends to a large extent on the clearly defined objectives. Publications of planning commission have acknowledge that the corporation are yet to spell out clearly defined objectives for their enterprises in respect of production, efficiency levels etc. in the absence of having prices targets for each enterprise which requires efficient information system, it is rather to evaluate performance and to motivate employees and workers. Lack of uniform accounting system for all enterprises also hinders the generation of basic data which feeds information systems to frame objectives.


h) Absences for criteria for performance evaluation:

There does not appear to be a clear official position on the criterion for the performance evaluation except the capacity utilization has been used in the first five year plan as the measure of efficiently of performance in the nationalized industries. There can be dispute that the nationalized industries must be made efficient in terms of productivity, if the industrialization program of the country of this is to be placed on a sound foundation and that allocation of resources must be made on the basis of social profitability if the most efficient allocation of resources is to be ensured.

From the national point of view, social profitability (i.e. the profit ability based on true scarcity values of all inputs, with transfer payments ignored) is the most relevant criterion since it measures the contribution of an investment to the society’s total benefit. The government should, therefore, be primary interested in social profitability of investments and its maximization should be the most desirable objective. If market prices reflects true scarcity values, then the private profitability (i.e. the profitability based on market or actual prices inclusive of transfer of payments) and the social profitability would be the same, but for the transfer payments.

The performances of the nationalized industries should therefore, be judged by their ability to maintain a minimum level of social profitability and improve upon it. Decisions regarding the expansion of capacity in any industry should also be based on social cost benefit calculations. Large-scale industries in Bangladesh were highly inefficient in pre-liberation days and today their social profitability is likely to be very low, may be even negative. This trend can only be reversed by improving the productivity of the nationalized industries. Hence, in addition to social profitability test, productivity tests should also be applied to evaluate the performance of the nationalized industries in Bangladesh.










i) Miscellaneous problems:
Besides the problems discussed above there are some other problems which are also responsible for low productivity and go slow tendency of our nationalized enterprises, these are;
a) Absence of labor policy,
b) Shortage of imported raw-materials and spares,
c) Frequent power failure
d) Absence of financial adequacy (i.e. internal finance, liquidity),
e) Absence of transport facilities,
f) Absence of better inventory management,
g) Want of better working conditions and housing facilities ,
h) Absence of an effective system of reward and punishment in the mills and factories
i) Absence of law order and condition
j) Lack of proper planning at both industry and enterprise levels
k) Absence of management auditing,
l) Political interference by pressure group
Finally it is to be noted that a serious policy vacuum exists in the whole nationalized program. The purpose of nationalization has not been clearly defined by the government yet. It is, therefore, felt simply as the abolition of private property in selected large scale industrials enterprises than socialistic transformation of the economy.

 Suggestion for improving the management of nationalized industries sector.

A full realization is necessary by the Government that production in nationalized sector is a fundamental government responsibility with appropriate steps taken to have all government departments understand this clearly act accordingly in their relationship with the sector.
Effective institutional structure and a sound policy framework for the nationalized industries and also the rules of business have to be formulated with due emphasis on the essential features of productive activities.
Quick decisions and appropriate adjustments in production plans and measurement and procurement sale strategies are needed to take advantages of changing market and technological conditions and guard against unfavorable changes. Management must be in a flexible position to take advantages of opportunities suddenly showing up for the (value of) drivers or productive improvement.
Maximum authority should be available to the corporations. This has also been proposed in the first five years plan of Bangladesh. But, in practice they have been granted very little freedom of operation.
Enterprise should be given necessary authority and operational freedom directly as commercial unite by the corporation. This will ensure that authority and operational freedom will devolve to the level where these are actually needed.
Corporation’s should no longer remain controlling bodies as they are at present. They should act as coordinating bodies and should also supervise the enterprises on behalf of minister in charge, who is ultimately responsible for the performance of nationalized industries, acting as the owner on behalf of the people.
The responsibilities of the minister-in-charge, Corporations and enterprises have to be defined clearly and in details. Without this the principle of accountability can not be implemented.
The status and appointment of corporation and enterprise executives should be well stated so that they can function effectively. The chief executive of corporations should have the status of department secretaries. The directors should the status of a regular joint secretary. But in the functional responsibilities of the directors shall have to be clearly defined rather than the present adhoc nature of their responsibilities.
Chief executive of enterprises should be granted appropriate status for them to function effectively. They may be helped by appropriately constitutes management boards which may includes departmental chief in the enterprise and representative from the corporations.
Corporation and enterprises should be allowed to obtain their require imports directly without any intermediary. Clearness at the lending points should take place on a priority basis. In the case of domestic raw-materials appropriate steps should be taken to maintain a smooth supply line.
Major expert industries being nationalized the relevant corporations and enterprises with the help of other appropriate government agencies, must undertake steps to capture foreign markets and also to reduce costs of production so that the need for export subsidization is eliminated or at least minimized.
There must exist a cordial relationship between workers and the management in the nationalized enterprises. They should be able to work as a team and not as adversaries as it is happening to-day.
The labor resources which are the most important productive agent must be efficiently utilized. For increasing labor productivity, a proper incentive structure is to be developed which will include tools of both material and mortal (uplift-ment.)
Management auditing system may be introduced in addition to statutory audit internal audit and commercial audit. This will help the corporation chairman to see for himself (1) how the enterprise are implementing the government and corporation policies, (2) whether timely actions are being taken and (3) whether any costly lapses are there caused by any responsible persons at any stage.
Efficiently audit system may be applied to our nationalized industries which will measure the level of productivity. Every nationalized enterprise is to be assigned its quota of production on monthly/yearly basis determined on the basis of installed capacity. The chief executive of the enterprise will be made responsible for any short falls in the production. In order that he cannot manufacture ‘explanation’ for short falls, there may be instituted and efficiency and Audit Party. Efficiency Auditor may analyze the operations of the firm and make diagnosis of the problems. A strict financial discipline should be enforced upon the corporation and the enterprise under them. While here has been condition clam upon the part of the corporation and enterprise management for liberal allocation of domestic finance, the fact (-----) that not all of the enterprises can claim productive utilization of funds. On the contrary, this has been added to the inflationary pressure in the economy.
In order to ensure efficient utilization of resources by the nationalized industries, there should be proper production and financial planning at the national & enterprises level, the enterprise plans being coordinated through the corporations. Although, at the enterprise level, the plans are to management, they must have some correspondence with the national’s plans.
Moreover adequate supply of imported raw materials and spares, guard against frequent power failure and the significant improvement in the industrial environment will definitely raise productivity of the nationalized industries.
Finally the management class has to be motivated towards the higher efficiency and effectiveness which calls for making managerial career attractive, making managerial position as highly prized as high government Administrative positions and alluring talented persons to choose it. An ‘industrial management Service’ has been created. Since and efforts have to invested in it so that it grows and develops as the ambition of a large number of able men coming out of college and Universities.