unit i principles of management
TRANSCRIPT
Management & Entrepreneurship
(Course Code:10AL51)
Department of IE & M
JSS Academy of Technical Education, Bengaluru-560060
TEXT BOOKS:
1. Principles of Management – P.C.Tripathi, P.N.Reddy – Tata McGraw Hill.
2. Dynamics of Entrepreneurial Development & Management – Vasant Desai – Himalaya Publishing House.
3. Entrepreneurship Development – Poornima.M.Charantimath – Small Business Enterprises – Pearson Education – 2006.
4. Management & Enterpreneruship -N V R Naidu, IK Internatioal, 2008
REFERENCE BOOKS:
1. Management Fundamentals – Concepts, Application, Skill Development – Robers Lusier – Thomson.
2. Entrepreneurship Development – S.S.Khanka – S.Chand & Co.
3. Management – Stephen Robbins – Pearson Education/PHI – 17 Edition, 2003.
COURSE OUTCOMES
CO# Course Outcomes
CO1 Explain the importance of management and its approaches.
CO2 Explain the roles and responsibilities of staff towards organization.
CO3 Outline the quality and characteristics of an entrepreneur.
CO4 Explain the importance of Small scale industries in economic development.
CO5 Design, plan and prepare project proposals and reports.
At the end of this course, students will be able to,
Principles of Management
CHAPTER 1: Definition ,Principles and Basics of Management
• Introduction – Meaning – nature and characteristics of Management.
• Scope and Functional areas of management.
• Management as a science, art of profession.
• Management & Administration – Roles of Management.
• Levels of Management.
• Development of Management Thought – early management approaches.
• Modern management approaches.
Course outline
Definition
Management is the process of achieving goals and
objectives effectively and efficiently through and with the
people.
Management Defined
"Management is a process of designing and maintaining
an environment in which individuals work together in
groups to effectively and efficiently accomplish selected
aims".
1
2
Management Defined Cont’d
Management is the process of achieving organizational goals and
objectives effectively and efficiently by using management functions
i.e. (Five Essential Functions)
– Planning
– Organizing
– Staffing
– Directing (Leading)
– Controlling (POSDC)
3
Management is a set of activities directed at an organization's
resources with the aim of achieving organizational goals in an
efficient and effective manner.
4
Planning
Organising
StaffingDirecting
Controlling
Management Cycle
Functions of management
Planning1Planning is the process of setting goals, and charting the best way of action for achieving the
goals.
Organizing2Organizing is the process of allocating and arranging work, authority and resources, to the
members of the organization so that they can successfully execute the plans.
Staffing3Staffing is the process of recruiting /selecting the right person for the right job at the right time in
the right place.
Leading/Directing4 Leading involves directing, influencing and motivating employees to perform essential tasks.
Controlling5Controlling is the process of devising various checks to ensure that planned performance is
actually achieved. It involves ensuring that actual activities conform to the planned activities.
These definitions when expanded have these implications:
• Management is thus a continuous effort aimed at shaping an organization and
contributing to its overall growth.
• The functions of managers include planning, organizing, staffing, leading and
controlling.
• These functions are essential to any kind of organization.
• It applies to managers at all hierarchical levels.
• The aim of managers is to increase productivity, effectiveness and efficiency.
Elements of definition
• Process - represents ongoing functions or primary activities engaged in by managers.
• Efficiency - getting the most output from the least amount of inputs.
• “doing things right”.
• concerned with means.
• Achieving the objectives in time.
• Effectiveness - completing activities so that organizational goals are attained
• “doing the right things” .
• concerned with ends.
• Achieving the objectives on time.
Efficiency and Effectiveness
Management: Science or Art?
• Science is a collection of systematic knowledge, collection of truths and
inferences after continuous study and experiments. It has fundamental
principles discovered.
• Art uses the known rules and principles and uses the skill, expertise, wisdom,
experience to achieve the desired result.
Management is both Art and Science.
Management has got scientific principles which constitute the elements of Science.
Skills and talent which are attributes of Art.
Principles of Management
Fayol’s Principles of Management
Henri Fayol (1841-1925)
He has proposed that, there are six primary functions of
management and 14 principles of management, Forecasting,
Planning, Organizing, Commanding, Coordinating, Controlling.
(FPOCCC)
• There are 14 Principles of Management described by Henri Fayol.
1. Division of Labor
• Work of all kinds must be divided & subdivided and allotted to
various persons according to their expertise in a particular area.
2. Authority & Responsibility
• Authority refers to the right of superiors to get exactness
from their sub-ordinates.
• Responsibility means obligation for the performance of the
job assigned.
Note that responsibility arises wherever authority is exercised
14 Principles of Henri Fayol
3. Unity of Command
• A sub-ordinate should receive orders and be accountable to one and only
one boss at a time.
• He should not receive instructions from more than one person
4. Unity of Direction
• People engaged in the same kind of business or same kind of activities must
have the same objectives in a single plan.
• Without unity of direction, unity of action cannot be achieved.
14 Principles of Henri Fayol
14 Principles of Henri Fayol
5. Equity
• Equity means combination of fairness, kindness & justice.
• The employees should be treated with kindness & equity if devotion is
expected of them.
6. Order
• This principle is concerned with proper & systematic arrangement of things
and people.
• Arrangement of things is called material order and placement of people is
called social order.
7. Discipline
• Discipline means sincerity, obedience, respect of authority & observance of
rules and regulations of the enterprise.
• Subordinate should respect their superiors and obey their order.
8. Initiative
• Initiative means eagerness to initiate actions without being asked to do so.
• Management should provide opportunity to its employees to suggest ideas,
experiences & new method of work.
14 Principles of Henri Fayol
14 Principles of Henri Fayol
9. Remuneration
• Remuneration to be paid to the workers should be fair, reasonable,
satisfactory & rewarding of the efforts.
• It should accord satisfaction to both employer and the employees.
• Employees should not be moved frequently from one job position to another
i.e. the period of service in a job should be fixed.
10. Stability of Tenure
14 Principles of Henri Fayol11. Scalar Chain
• Scalar chain is the chain of superiors ranging from the ultimate authority to the
lowest.
• Communications should follow this chain. However, if following the chain
creates delays, cross-communications can be allowed if agreed to by all
parties and superiors are kept informed.
12. Sub-ordination of Individual Interest to common goal
• An organization is much bigger than the individual.
• The interests of any one employee or group of employees should not take
precedence over the interests of the organization as a whole.
14 Principles of Henri Fayol
13. Espirit De’ Corps
• It refers to team spirit i.e. harmony in the work groups and mutual
understanding among the members.
Espirit De’ Corps inspires workers to work harder.
14. Centralization
• Centralization refers to the degree to which subordinates are involved in
decision making.
• Whether decision making is centralized (to management) or decentralized (to
subordinates) is a question of proper proportion.
The task is to find the optimum degree of centralization for each situation.
Theory X
• Average worker is lazy
• Dislikes work
• Will try to do as little as possible
• Have little ambition and avoid
responsibility
Theory Y
• Workers are not inherently lazy
• Do not naturally dislike work
• If given the opportunity, will do what is
good for the organization.
Theory X and Y Douglas McGregor
Scope & Characteristics of Management
Scope of Management
The management is a must for every organization.
• The existence of management ensures proper function and running of an enterprise.
• Management plans the activities, coordinates and utilizes the available resources
effectively and efficiently at minimum cost.
It should be stable.
It should be applicable to all kinds of organization.
It should be transparent.
Its approaches are to be clear and objective oriented.
It should be simple yet effective.
Characteristics of Management
Basics of Management
Organization
Organizations are groups of people, with ideas and resources, working toward
common goals.OR
A systematic arrangement of people brought together to accomplish some
specific purpose is called organization.
People
DeliberateStructureDistinct Purpose
Characteristics of Organization
Manager
• A manager is someone whose primary responsibility is to
carry out the management process within an organization to
achieve the organizational goals.
Managerial Skills
Primary Skills• Conceptual Skill
• Technical Skill
• Human Skill
Secondary Skills• Design Skill
• Communication Skill
• Leadership Skill
Managerial skills
Managerial skills
• Communication skills
• Team skills
• Diversity skills
• Power, political, negotiation, and networking skills
• Motivation skills
• Conflict management skills
• Ethics skills
Familiarity and competence in the use of business skills required for success on the job.
• Conceptual skills
• Diagnostic, analytical, and critical-thinking skills
• Quantitative reasoning skills
• Time management skills
Managerial skills Cont’d
Conceptual skills
Human / interpersonal
skills
• Ability to think and conceptualize abstract situations.
• Mental capacity to develop plans, strategies and vision.
• Ability to understand other people and interact effectively with them.
• Ability to work with other people in teams.
Technical skills
• Ability to use the knowledge or techniques of a particular
discipline to attain ends.
Managerial skills Cont’d
Design skills• These skills enable a manager to handle and solve any kind of unforeseen or
actual problems, that may crop up in the organization.
• Problem solving skill.
Communication skills
• Ability of exchanging ideas and information effectively.
• To understand others and let others understand comprehensively.
Managerial skills Cont’d
Leadership skills • Ability to influence other people to achieve the common goal.
Skill distribution at various management levels
Roles of manager Role: a set of expectation for one’s behavior.
• In 1960, Henry Mintzberg conducted a study to understand about the managerial roles. • He identified 10 managerial roles that are common to all managers. • These 10 managerial roles are grouped under: Interpersonal, decisional, and informational roles.
Roles of Manager
Interpersonal • Figurehead• Leader• Liaison
Informational• Monitor• Disseminator• Spokesperson
Decisional• Entrepreneur• Disturbance handler• Resource allocator• Negotiator
Management Skills, Functions, and Roles
Roles of manager Cont’d
FigureheadRole: Represents the company on social occasions. E.g. Attending the flag hosting ceremony, receiving visitors or taking visitors for dinner etc.
Inter-personal Role
Leader Role: The manager motivates, encourages, and builds enthusiasm among the employees. Training subordinates to work under pressure.
Liaison• Relating to others outside the group or organization.• Serves as a link between people, groups or organizationE.g. Negotiation of prices with the suppliers regarding raw materials.
Roles of manager Cont’d
Entrepreneur • Act as an initiator and designer and encourage changes and innovation, identify new ideas, delegate idea and responsibility to others.
Decision Role
Disturbance handler
• Take corrective action during disputes or crises; resolves conflicts among subordinates; adapt to environmental crisis.
Resource allocator
• Decides distribution of resources among various individuals and groups in the organization.
Negotiator• Negotiates with subordinates, groups or organizations- both internal and
external.E.g. Represents department during negotiation of union contracts, sales, purchases, budgets; represent departmental interests.
Roles of manager Cont’d
Monitor • Emerges as nerve center of internal and external information about Information.
Informational Role
Disseminator • Transmits information received from other employees to members of the organization.
Spokesperson
• Transmits information to the people who are external to the organization, i.e., government, media etc.
E.g., manager addresses a press conference announcing a new product launch or other major deal.
Levels of Management
First-Line ManagementForeman, Supervisors, Office Managers
Middle ManagementPlant Managers, Division Managers,
Department Managers
TopManagement
President, CEO,Executive
Vice Presidents
Non- Managerial Employees
Top Level
• Sets the Vision, mission and goals, develop policies.
• Evaluates the overall performance of various departments.
• Responsible for the business as a whole and is concerned mainly with long-term planning.
Levels of Management
Middle Level• Develops departmental goals.
• Executes the policies, plans and strategies determined by top level management.
• Develops medium- term plans and supervises and coordinates lower-level managers’ activities.
Lower Level• Takes charge of day-to-day operations.
• Involved in preparing detailed short-range plans.
• executes plans of middle management.
Skills/Functions performed at the different Management levels
Importance of management functions to managers in each level
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TopManagers
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Management & Administration
• Administration involves “thinking”, it is a top level function.
• Management involves “doing” and is a lower level function.
Management & Administration
Characteristics Administration ManagementMain Function Planning ,Organising and staffing Leading & Controlling
Status Act as owner Act as an agency
Skills Good Administrative skills More technical skills
Level in the organization Top level Middle/Lower level
Position MD, Owner, CEO Manager , Supervisor, foremen etc…
Objective Makes the polices & objective to be achieved
Implements the plans and policies
Involvement No direct involvement in production or service
Directly involves in the execution of plans and achieving objectives
Evolution of Management
Major Approaches to Management
Historical Background
The Egyptian pyramids and the Great Wall of China are proof that projects of tremendous scope, employing tens of thousands of people, were completed in ancient times. It took more than 100,000 workers some 20 years to construct a single pyramid. Who told each worker what to do? The answer is managers.
In 1776, Adam Smith published The Wealth of Nations, in which he argued the economic advantages that organizations and society would gain from the division of labor (or job specialization)—that is, breaking down jobs into narrow and repetitive tasks. Using the pin industry as an example, Smith claimed that 10 individuals, each doing a specialized task, could produce about 48,000 pinsa day among them.
Late 18 century when machine power was substituted for human power, a point in history known as the industrial revolution, it became more economical to manufacture goods in factories. Large efficient factories needed someone to forecast demand, ensure that enough material was on hand to make products, assign tasks to people, direct daily activities, and so forth. That “someone” was a manager.
Classical Approaches
• The first studies of management, often called the classical approach.
• Based on the belief that employees have only economical and physical needs.
• Social needs and need for job satisfaction does not exists/unimportant.
• Mainly concerned with increasing efficiency of workers.
• Classical approach includes scientific, administrative & bureaucratic management.
Scientific Management Focuses on the ‘One Best Way” to do a job.
Administrative Management Focuses on the Manager & Basic Managerial Functions.
BureaucraticManagement Focuses on how to structure the organization better.
Scientific Management Theories
Classical Approach
General Administrative Theories
F.W. Taylor
Frank & Lillian Gilbreth
Henry Gantt
Henri Fayol
Max Weber
Scientific Management
Frederick Winslow Taylor (Contribution to Modern Management Theory-1911)
Frederick Winslow Taylor(1856-1915)
1911- Frederick Winslow Taylor’s “Principles of Scientific
Management” was published.
Its contents were widely embraced by managers around the world.
Taylor’s book described the theory of scientific management:
Use of scientific methods to define the “one best way” for a job to be done.
Background
• Frederick Winslow Taylor (20 march 1856 - 21 March 1915) known as F.W.
Taylor, was an American Mechanical Engineer.
• He sought to improve Industrial Efficiency.
• He is regarded as the father of Scientific Management, and was one of the
first Management consultants.
• Published principles of scientific management in 1911.
Frederick Winslow Taylor (Contribution to Modern Management Theory-1911)
Frederick Winslow Taylor(1856-1915)
Frederick W. Taylor’s - Pig-Iron Experiment
Bethlehem Steel Company Shop Floor
Pig-Iron Experiment
Bethlehem Experiments – Pig-Iron Handling
• Taylor was hired by the Bethlehem Steel Company to increase the output of one of the larger
machine shops which had been a serious production bottleneck.
• In this experiment, workers used to loaded “pigs” of iron (each weighing 12.5 tons)
onto rail cars.
• Their daily average output was 12.5 tons.
• Taylor believed that by scientifically analyzing the job to determine the “one best
way” to load pig iron.
• Taylor went down to the yard, offered a few of the best workers double wage for the day if they
would participate in his experiment.
• Excited about the money, the workers loaded a whopping 16.5 tons in 45 minutes.
• He had to adjust for rest and breaks, so he made a 40% cut.
• Each worker should load 47.5 tons of pig iron per day with extra pay for reaching the goal and
penalties for failing.
• Unfortunately, the workers were not excited about needing to work 4x harder.
• To prove it was possible, Taylor hired a new man with a 60% rise in wages. After an intense
day, the new man loaded 45.75 tons, almost hitting the quota.
• Taylor decided he had succeeded.
Pig-Iron Experiment
The Story
Pig-Iron Experiment
The main things Taylor noticed for inefficiency;
1. The lack of standard tools or techniques.
2. There is no match between skill and job.
3. No motivation from the management.
Frederick Winslow Taylor(1856-1915)
1. Taking breaks key to productivity.
Periodic rests enabled a worker to produce more than continuous work.
By a systematic resting time and improved methods average productivity was raised from 12.5
tons to 47.5 tons per day.
2. Workers should be selected according to job fit.
By putting the right person on the job with the correct tools and equipment, having
the worker follow his instructions exactly, and motivating the worker with an
economic incentive.
Outcome of Pig-Iron Experiment
Taylor’s 4 principles of Scientific Management
Frederick Winslow Taylor (Contribution to Modern Management Theory-1911)
1. Develop a science for each element of an individual’s work to replace
the old rule-of thumb method.
2. Scientifically select, then train and develop the worker.
3. Heartily cooperate with the workers so as to ensure that all work is
done in accordance with the principles of the science that has been
developed.
4. Divide work and responsibility almost equally between management
and workers.
Frederick Winslow Taylor(1856-1915)
Frank B Gilbreth & Lillian M Gilbreth
Frank B Gilbreth
• Refused a place in MIT to work as a laborer.
• His first job was apprentice brick layer.
• He was able to lay 2700 bricks/day compared to others who
were laying an average of 1000 bricks/day.
• Motions to lay a brick reduced to 4 from 18. Frank B Gilbreth
(1868-1924)
Gilbreth’s new methods, bricks are arranged to be grabbed easily.
Typical construction site in Boston before Gilbreth’s New method.
Building constructed by Frank at MIT in record time.
Frank B Gilbreth & Lillian M Gilbreth
Frank B Gilbreth & Lillian M Gilbreth
• Followers of Taylor
• Frank B Gilbreth (1868-1924) pioneered Time & Motion study.
• His work had great impact on medical surgery, by drastically reducing the
time patients spent on operating table.
• He invented a device – “Micro Chronometer” in order to record workers
movement and the amount of time spent on job.
• He performed experiments that focused on specific motions such as
“Bricklaying experiment”, resulted in a dramatic decrease in the number of
motions required to lay bricks.
• On the basis of their study and experiments he gave shape to 17 principles
known as “THERBLIG”
THERBLIG / 17 principles
• Therbligs are 18 kinds of
elemental motions used in the
study of motion economy in the
workplace.
• A basic motion element is one
of a set of fundamental motions
required for a worker to perform
a manual operation or task
General Administrative Theories
General Administrative Theories
Henri Fayol
Max Weber
General Administrative Theories (Henry Fayol)
Henry Fayol(1841-1925)
• Father of Modern operational management theory.
• French Mining Engineer & Management Theorist.
• Started as an Engineer at a mining company and became Director in 1888.
• Viewed management as profession that can be trained and developed.
• First one to analyze the functions of management.
• Developed 14 principles of management—fundamental rules of management
that could be applied to all organizational situations.
Three major contributions to the theory of management
1. A clear distinction between Technical & Managerial skills.
2. Identified functions constituting the management process (FPOCCC).
3. Developed 14 principles of management.
General Administrative Theories (Henry Fayol)
Henry Fayol(1841-1925)
General Administrative Theories (Max Weber)
• German Theorist and Sociologist
• Follower of General Administrative Theory proposed by Henry Fayol.
• Introduced most of the concepts on bureaucratic organization.
• Weber envisioned organization would be managed on an Impersonal and
Rational basis. This form of organization is known as Bureaucracy.
Max Weber(1864-1920)
Characteristics of Weber's Bureaucracy
Characteristics of Weber's Bureaucracy
Behavioral Approach
Early OB Advocates
Behavioral Approach
Hawthorne Studies
OB
• The field of study that researches the actions (behaviour) of people at work is
called organizational behaviour (OB).
• Much of what managers do today when managing people—
Motivating, leading, building trust, working with a team, managing conflict,
and so forth—outcome of OB research.
Early OB Advocates
• People were the most important asset of the organization and should be managed accordingly.
• It provides the foundation for management practices, like employee selection procedures, motivation programs, and work-teams.
Early OB Advocates
Early OB Advocates
Hawthorne Studies/Experiment
Elton Mayo (left) with Fritz J Roethlisberger
• George Elton Mayo, born December 26, 1880, in Australia.
• In 1926, Mayo became the professor of industrial research at
Harvard University where he met Fritz Roethlisberger.
• Received scholarship to do research at the University of
Pennsylvania’s Wharton school.
• During his time in Pennsylvania, he conducted the experiment
which made him famous, the Hawthorne Experiment.
George Elton Mayo
Hawthorne Studies / Experiment
I. Part I - Illumination Experiments (1924-27)
II. Part II - Relay Assembly Test Room Study (1927-1929)
III. Part III - Mass Interviewing Programme (1928-1930)
IV. Part IV - Bank Wiring Observation Room Experiment (1932)
Hawthorne Studies / Experiment
The Hawthorne experiment consists of four parts
Western Electric Company
Illumination Experiment (1924-1927)
• Funded by General Electric.
• Purpose of the study: To Study The Effect Of Various Lighting Conditions
on The Workers Productivity.
• Divided the workers into two Groups.
• Hypothesis: with higher illumination, productivity would increase.
• Group -1 :- Lighting Condition Improved And The Productivity Went
Up.
• Group-2 :- Lighting Condition Remained Constant And The Productivity
Increased.
• Measured Light Intensity vs. Worker Output.
Illumination Experiment
Result :
– Rejected the hypothesis.
– Higher worker productivity and satisfaction at all light levels.
– Worker productivity was stopped with the light levels reached moonlight intensity.
Conclusions:
– Light intensity has no conclusive effect on output.
– Productivity has a psychological component.
Concept of “Hawthorne Effect” was created.
Relay Assembly Test Room Study (1927-1929)
• Under these test two small groups of six female telephone relay
assemblers were selected. • Each group was kept in separate rooms.
• From time to time, changes were made in working hours, rest
periods, lunch breaks, etc.
• They were allowed to choose their own rest periods and to give
suggestions. • Output increased in both the control rooms.
• It was concluded that, social relationship among workers,
participation in decision-making, etc. had a greater effect on
productivity than working conditions.
Women in the relay test assembly room
Mass Interviewing Programme (1928-1930)
• Conducted 20,000 interviews.
• Objective was to explore information, which could be used to
improve supervisory training.
• Initially used the method of Direct Questioning and changed to Non
Directive.Results:
Merely giving an opportunity to talk and express grievances would
increase the morale.
Complaints were symptoms of deep-rooted disturbances.
Workers are governed by experience obtained from both inside and
outside the company.
Bank Wiring Observation Room Experiment (1932)
• A group of 14 male workers (9 Wiremen, 3 Soldermen, 2 inspector) in
the bank wiring room were placed under observation for six months.
• A worker's pay depended on the performance of the group as a whole.
• The researchers thought that the efficient workers would put pressure
on the less efficient workers to complete the work.
• However, it was found that the group established its own standards of
output, and social pressure was used to achieve the standards of output.
• The informal relations among workers influence the workers behavior and performance.
• Employees will perform better if they are allowed to participate in decision-making.
• Employees will also work more efficiently, when they believe that the management is interested in
their welfare.
• When employees are treated with respect and dignity, their performance will improve.
• Financial incentives alone cannot increase the performance. Social and Psychological needs must
also be satisfied in order to increase productivity.
• Good communication between the superiors and subordinates can improve the relations and the
productivity of the subordinates.
• Special attention and freedom to express their views will improve the performance of the workers.
CONCLUSIONS OF HAWTHORNE STUDIES / EXPERIMENTS
Quantitative Approach
– Used quantitative techniques to improve decision- making.
– Evolved from mathematical and statistical solutions developed for military
problems during World War II.
– W. Edwards Deming and Joseph M. Duran’s ideas became the basis for total
quality management (TQM).
System Approach
Contemporary Approach
Contingency Approach
Contemporary Approach
The Systems Approach Defines a system as a set of interrelated and interdependent parts
arranged in a manner that produces a unified whole.
• Open system: A system that dynamically interacts with its environment. • Closed system : A system that is not influenced by and does not interact with its environment.
• Stakeholders: Any group that is affected by organizational decisions and policies.
System Approach
System Approach
Open-system Perspective of an OrganizationOpen system: A system that dynamically interacts with its environment.
Contingency Approach / Situational approach
• The contingency approach says that organizations are different, face different situations (contingencies), and require different ways of managing.
• A good way to describe contingency is: “if, then.”
• If, this is the way my situation is; then, this is the best way for me to manage in this situation.
Contingency Variables
Contingency Approach / situational approach
Organization SizeAs size increases, so do the problems of coordination. E.g.: Organization structure appropriate for an organization of 50,000 employees is likely to be inefficient for an organization of 50 employees
Routineness of Task Technology
To achieve its purpose, an organization uses technology.• Routine technologies require organizational structures, leadership styles, and
control systems
Environmental Uncertainty
Degree of uncertainty caused by environmental changes influences the management process.
Individual Differences
Individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity, and expectations.
End of Module