Chapter 1

Nature and Significance of Management

Meaning Nature Objectives and Importance of Management

What is meant by management? - 2 marks

According to Harold Koontz, “Management is the art of getting things done through and with people in formally organized groups”. Management creates environment where individuals work together efficiently towards attaining the objectives. It brings together all the other factors of production in the right proportion and leads them to attain predetermined goals.

What are the objectives of management? - 5 marks

Optimum utilization of resources

The most important objective of management is the effective utilization of economic resources of the business. This will ensure maximum return or profit to the business

Fair return on investment

The primary goal of a business is to ensure that the investor gets a fair return. Without profit a business cannot survive long. The investors must derive adequate benefit out of their investment.

Adequate reward for employees

Efficiency of business will directly result in economic gain to employees. Efficient management utilizes all the resources effectively, which will enable them to offer best salaries and service conditions to the staff.

Human betterment and social justice

Business is an important organ of the society. The business goals cannot be attained disregarding the social expectations. When the business makes progress the benefit passes on to society by way of employment opportunities and increased purchasing power for people.

‘Management is the art of getting this done through other people’. Explain the importance of management in light of the statement. 5 marks

OR

Explain the significance of management in running a modern enterprise. 7 marks

Management is very essential for successful running of a business. It ensures proper utilization of physical and human resources and derives best results. It leads to higher productivity and prosperity. The importance of management can be outlined as follows:

i) It helps in achieving group goals

Management assembles and coordinates group efforts in achieving organizational goals. It adds effectiveness to the goals of the enterprise.

ii) Optimum utilization of resources

Management helps to derive maximum result from minimum resources. In other words it brings out the best out of the available resources. This leads to increased productivity and higher profitability.

iii) Reduces cost

Efficiency in utilizing the physical resources directly result in reduced cost. Management prepares the program for utilization of resources and monitors the utilization of such resources. It continuously strives to keep cost under control to generate maximum profit out of it.

iv) Establishes a sound organization

Management ensures soundness of the organizational structure. All departments are coordinated to ensure smooth flow of work. It is the function of management to ensure the process of communication, implementation and feed back comes automatically. Thus the organization remains lively, active and efficient.

v) Maintains equilibrium

Management maintains the right balances every factor in a business. Application of any factor of production beyond proportion will result in inefficiency. Unused resources put pressure on the available revenue and bring down the overall performance of the organization. It is the management that keeps an eye on the application of resources efficiently in the organization.

 Management as an activity, process, discipline and as a group

Explain the meaning of management as a process. 5 marks

i). Social process

The main function of management is to deal with the human element in the business. Human factor is the most sensitive factor of production. It activates other factors of production in the business. Therefore it is essential that the management deal with human factor with care and skill.

ii) Integrating process

Every business requires the right combination of human, physical and financial resources. Management integrates the factors men, machines, materials, methods and money to achieve organizational goals.

iii) Continuous process

Since business is a continuous activity, the management is a continuous process. It is the constant process of leading the business activities in the pre determined course. It involves verifying results at every stage with the targets set. Management continuously identifies the potential areas of trouble and implements corrective measures before they become crisis in business.

iv) Universal process

Management functions are not restricted to business alone. They are important in every form of organization whether it is social, religious or cultural organization. When there is an activity to be performed by a group all managerial functions such as planning organizing, directing and controlling becomes essential to make that group activity successful.

Explain the meaning of management as an activity. 5 marks

According to the functional point of view management is classified into three activities as follows:

i)        Informational activity

It basically considers the communicative part of the management activity. Management is to receive and give information. It links between subordinates and superiors. The managerial authority and responsibility varies at various levels of management. The nature of communication will also vary accordingly.

ii)      Decisional activity

Management involves decision making. Timely decisions of management trigger actions in the business and they bring in prosperity into the business. It ensures smoothness in the business activity.

 iii)    Interpersonal activity

Management is a team work and group activity. Maintaining good relations between various individuals involves in the business is an essential factor for success. The managerial success depends on the efficiency in building up harmonious relationship between individuals and departments.

What is meant by management as a discipline? 5 marks

Management is identified as a separate field of study. The following factors highlight management as an academic discipline:

i) Systematic body of knowledge

There is a systematic body of knowledge in the field of management which can be effectively imparted in academic setting.

ii) Presence of Experts

There are experts in the field of management who have rendered dedicated service to develop and organize knowledge in the field of management in a formal setting. They are available for analysis and improvement. The knowledge is formally organized for presentation in academic use.

iii) Presence of specialized institutions

There are several managerial institutions all over the world imparting the knowledge and training the prospective mangers through carefully planned system of education.

Explain management as a group. 2 marks

Management as a group refers to the section of people in an organization whose responsibility is to perform managerial activities. It is the group occupying managerial positions in the organization. Technically all the individuals starting from the Chief Executive to the lowest level supervisor comes under the category of management. However the term management is commonly referred as the top segment involving the Board of Directors and the Chief Executive of an organization.

Explain briefly the nature and characteristics of management. 5 marks (nature / characteristics / features)

Purposive or goal oriented activity

Management is an activity with specific aim. It is goal oriented. Management aims at making maximum benefit out of the available resources. Management without objectives does not have meaning.

Integrates human and physical efforts

Management is an activity integrates the resources. They are brought together in the organizational framework. All these factors work in coordinated motion to achieve the objectives.

A continuous process

Management is a process that never stops. The business has unlimited life. The continuous existence of business requires a brain that functions continuously. Managerial programs should be charted out to the minute details possible on daily basis. It is the activity of fixing the program on one side and monitoring it on the other side. Deviations are immediately detected and corrected.

Group activity

Management of an organization involves coordinated efforts of many people. Decisions, communication, implementation, feed back and further decision all take place in the management process. The success depends on how effectively the top management could motivate the lower levels and how much each individual or department cooperates towards achieving the targets.

Science as well as art

Management involves systematic study. There are predetermined rules and regulations in business. At the same time it cannot be considered a pure science. It is influenced by the human side. The skill efficiency in leading a team is more of art than science. Therefore management is said to be an activity in which art and science inseparably linked.

Management is pervasive

Management is relevant in all types of organizations. It is important in social, economic, religious or political organizations. Wherever group activity is required to achieve predetermined objectives management principles and techniques are applicable.

Management as science, art and profession

‘For managing an enterprise effectively both knowledge of principles of management as well as their systematic application is required”, explain 5 marks

Management is both science as well as art. Explain 5 marks

As a Science

Science is the systematic body of knowledge which establishes the relationship between causes and their effects. Management is regarded as a science because the following characteristics of science are applicable to management as well.

i) Existence of systematic body of knowledge

Management is often referred as management science. There is a systematic body of knowledge as part of the management study. This

ii) Scientific methods of observation

Management principles evolved from scientific methods of observation. The cause effect relationship which normally part of science is applicable in management also. Therefore management principles are accurate and reliable.

iv)     Universally accepted principles

Management principles are universally valid. The established principles of modern management have universal applicability. Principles of division of labour and specilisation, unity of command etc. are accepted everywhere.

v)       Predictability of results based on cause / effect relationship

The result of application of any management technique can be predicted due to the direct cause / effect relationship. Management theories have been formulated after carefully observing the behavior in the organization and market to the application of management techniques.

As Art

Practical application of knowledge is art. It is application of skill and knowledge to achieve the desired results. Following features of art is present in management.

i) Practical knowledge

Practical knowledge is highly essential to implement management principles. A manager is to work in real situations to experience the pressure and gain skill in taking wise decisions. While theoretical knowledge provides a firm foundation to further polishing the skills, it can never substitute experience.

ii) Personal skill and creativity

Success of a manger is largely dependent on his personal skill. He should be able to establish a cordial relationship in the organization without compromising on discipline. An efficient manager is the one who knows how to maintain the delicate relationship between these two objectives.

iii) Tangible results

Efficiency is always judged on the basis of results. Management is continuous process of goal oriented march. Thus the art of management is achieving the results.

iv) Constructive Objectives

Managerial objectives are creative and constructive. It is always striving to achieve better and better results every time. It builds up economic strength and nurtures the existing achievements.

v) Perfection thorough practice

Each moment of practice fine tunes the skills of an artist. Management is also a skill that can be perfected by practice. Experienced managers handle stress with relative ease. They often suggest right solutions to problems that often crop up in business.

Is management a profession? Explain in brief. 5 marks OR

“Management has not yet gained the status of a full fledged profession”. Why? 5 marks OR

Why is management not considered as a profession comparable to medical or legal profession? 7 Marks

A profession is an occupation based on highly specialized skill. The practice of the profession is controlled by professional body which sets the code of conduct which the members are expected to observe. Management meets the following criteria of profession:

i) Specialized body of knowledge

Successful management requires specialized knowledge. Without high degree of training and skill, the complex task of modern management cannot be carried out.

ii) Formal Training

Excellent management professionals are produced by management training reputed management institutes. Student for such institutes are carefully selected and trained through highly specialized management program.

iii) Professional Association

A professional body to formulate code of conduct and regulate the practice of members is essential in any profession. There are management associations in several countries. In Indian we have All Indian Management Association and India Management Development Association.

iv) Ethical Standards or Code of Conduct

Ethical standards are set by the professional body. Every professional is expected to follow these standards. There are no universally accepted formal ethical standards for management profession. However, the All India Management Association laid down a code of conduct for its members.

Management has a great degree of characteristics of a formal profession. This is a relatively new field of specialization. Management falls short in certain criteria to be recognized as a full fledged profession even though it is fast moving towards that direction. Management fall short on the following areas to be recognized as a full fledged profession like medicine or law.

i) Not obligatory for registration

Registration or membership is not compulsory to practice management. There are practical difficulties in insisting everybody who manages a business should first obtain registration from the management association. This is mainly because every economic activity involves some kind of management. Thus an association can not draw a line that distinguishes the management skill that requires professional approval and the one which does not require approval.

ii) Not subject to any formal code of conduct

Medical or legal profession involves a skill that is easily identifiable and therefore it is easier for a professional body to formulate code of conduct and expect the members to comply. Management on the other hand is a fluid concept. A code of conduct by a management association cannot have an effect beyond an advisory status. It is hard to pin point violation and equally hard to establish responsibility. If a member ignores the Association, there is hardly anything that the Association can do abut it, beyond stop sending the management magazine.

iii) No prescribed educational qualifications

Educational qualification is the most essential pre condition for every profession. But it is not practical to prescribe an educational qualification for managing a business. Nobody can question the right of a person to manage a business that he owns. If the owner of a business decides to hire a person having no formal qualification to manage a business it is an unquestionable decision. Nobody can practice other recognized professions without academic qualifications.

Thus the management, in spite of all the recognition and respect it commands, is not a fully recognized profession, in comparison with medical or legal professions.

What is meant by the term administration? 2 marks

Administration is the activity mainly concerned with the formulation of objectives and the policies for attaining those objectives. It is often referred as management. But administration is mainly a thinking function at the top level. It determines the goals and decides the broad outline of activities for reaching those goals.

Distinguish between administration and management 5 marks

Levels of Management – top, middle and supervisory

Define the various levels of management 5 marks

Who are regarded top management in a business? 2 marks (refer common answer below)

Who are considered operative management in a business? 2 marks (same answer)

Three are three levels of management, which are top level management, middle level and supervisory level management.

Top level management

To management holds the highest level in the managerial hierarchy. This level consists of Board of Directors Chief Executive and the Departmental Heads. The activities at this level is mainly the formulating the policies of the business. It also determines the overall program of the business. The top management is also concerned with keeping cordial relations with outside world. It keeps it maintains good relation with government policies and try to influence the government decisions related to the business.

Middle level management

This level consists of departmental managers. This level is mainly acts as a link between the top management and the supervisory management. This level of management transmits orders, explains and interprets decisions made by the top level management to the lower level supervisory management. They issue details instructions to lower levels of management and co-ordinates the activities of various divisions and departments. Their tasks involve taking departmental decisions and inspiring lower level managers towards better performance.

Supervisory / operative management

The lowest level of management consists of first line supervisors. They generally have designations such as superintendent, section officer, supervisor, foreman etc. They are directly in touch with the workers, clerks, salesmen etc. Managers of this level have the primary task of getting thing done by the workers and staff at the operative level. There are no managers below this level. These managers have to supervise the work directly and ensure the production meets the exact requirements of plans both in quality and quantity.

State any there functions of lower level management.   3 marks

The operative level is the first level of management. This group consists of superintended, supervisors, section officers etc. The following are the important functions of supervisory management:

a)       Planning day-to day activities

b)      Arranging machinery and tools for the day’s work

c)       Assigning jobs and duties to workers

d)      Assisting and advising workers by explaining work procedures

Describe briefly the role of middle level management in an organization. 3 marks

Middle level management consists of departmental managers. Following are the main functions of middle level management.

a)       Linking the top management and the supervisory management

b)      Transmission of orders from the top management to supervisory management and communication of problems and suggestions to the top management

c)       Explaining and interpreting policy decisions to lower management

d)      Issuing detailed instructions to lower level management

e)       Co-ordination of various levels of management

State any three functions of top level management.  3 marks

Top level management consists of the Board of Directors, Chief Executive and departmental heads. The functions generally performed by top level management are:

a)       Determining the policies and long term goals of the organization

b)      Maintaining liaison with the outside world

c)       Providing direction and leadership to the organization

Management functions – planning, organising, staffing, directing and controlling

Explain briefly the functions of management 5 marks

Management functions can be broadly classified as under:

1. Planning

Planning is the ongoing process of developing the business' mission and objectives and determining how they will be accomplished. Planning includes both the broadest view of the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a specific goal. In order to achieve the business objectives every activity should be carefully planned. Each task should be well thought in advance as to who is to perform the task, when why and how it is to be done. A well conceived plan must be simple flexible, balanced and should make the best possible use of available resources.

2. Organizing

Organizing is establishing the internal organizational structure of a business. The focus is on division, coordination, and control of tasks and the flow of information within the organization. It is in this function that managers distribute authority to job holders. The management is required to make the arrangement of requisite human and physical resources. Physical organization consists of making the right raw materials, machines, tools and equipment. Human organization involves placing the right men to do the right job and to ensure that they activities are assigned according to the plan.

3. Staffing

Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training, evaluating and compensating are the specific activities included in the function. In the family business, staffing includes all paid and unpaid positions held by family members including the owner/operators. It consists of selection of employees, remuneration of employees and development of employees.

Right men should be selected for the job. They must be given adequate training to perform their job efficiently. Management should fix remuneration on the basis of their job requirement, qualification and experience of employees and the availability of the persons to do the job. Management also should make proper facility for the professional growth and development of employees. There should be proper arrangement for the training, placement, transfer and promotion of employees.

4. Direction and Leadership

Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all personnel to accomplish the organization's mission and objectives while simultaneously helping them accomplish their own career objectives. Direction concerns the manner in which the management influences actions of his subordinates. Direction is viewed as the function of command, and moving to action and supplying stimulating power to the group.

5. Control

Controlling is a four-step process of establishing performance standards based on the firm's objectives, measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary Controlling is the process of ensuring the activities of the organization conforms to the predetermined goals. It is continuous monitoring of results and comparison with the objectives. The function of controlling also involves the corrective measures when deviations from goals to ensure the success of the plan.

Each of these functions involves creative problem solving. Creative problem solving is broader than problem finding, choice making or decision making. It extends from analysis of the environment within which the business is functioning to evaluation of the outcomes from the alternative implemented.

Coordination - nature and importance

What is meant by coordination? 2 marks

Coordination is an important management function. It is the task of integrating the activities of different departments and functional areas of an organization according to the common program. The purpose of coordination is to ensure the smooth functioning of various activities in perfect harmony. Estimated demand for goods in the market should guide the production targets which in turn should decide the procurement of raw-materials and labour deployment. . Absence of coordination will result wastage and shortage in various areas and overall inefficiency of the organization

State the meaning and nature of co-ordination 5 marks

Coordination is an important management function. It is the task of integrating the activities of different departments and functional areas of an

organization according to the common program. Coordination is the process whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of action in the pursuit of common purpose

In a group performance mismatches should be removed. Supply of material should come, when production needs it. If there is a mismatch in the time schedule it is an instance of lack of coordination. It is the central task of the manager to reconcile differences in approach, timing, effort or interest and to harmonize individual goals with organizational goals. Coordination is the effort to ensure a smooth interplay of the functions and forces of all the different component parts of an organization so that its purpose will be realized with minimum friction and maximum collaborative effectiveness.

The nature / characteristics of coordination can be summarized as follows:

1. Coordination is needed at all levels

Coordination is an essential function at all levels of management. The content and scope of coordination will vary at different levels. However it is part of duty of every managerial personnel right from operational level to the top management.

2. Coordination is the essence of management

Management function revolves round making arranging things; moving thing is an organization in relation to overall objective of the organization. Thus coordination can be considered the core function of management which ensures all the factors in the business work together smoothly.

3. The object of coordination is to unify, integrate and harmonize the different activities in the undertaking towards common objective.

Co ordination is the essence of management. Explain this statement briefly. 5 marks

Co-ordination is needed at all levels of management. Explain 3 Marks / 5 marks

Explanation should cover any five of the following points:

Co-ordination is needed at all levels of management, as various persons in an organisation have to :

1. Inter dependent on one another

Business activities are interdependent. Therefore they should be coordinated. Coordination enables the business to make efficient use of available resources.

2. attain objectives of the organisation

It is essential that the various functional areas of business are focused on the objectives of the business. Proper coordination ensures this essential focus to the organization.

3. achieve the unity of direction

Each individual department attempt to pursue independent goals the organization cannot achieve its goals. There should be one common goal for the entire organization, and the activities should be directed on the basis of the common goal.

4. avoid duplication of work

Coordination ensures proper guidance and planning. When the work is properly divided and allocated, there will be predetermined individual, group or department responsible for each task. Thus the organization can avoid the wastage of duplication of work.

5. ensure the timely completion of the target, objectives, and

Coordination promotes efficiency. The work runs in a smooth flow. This helps faster completion of work

6. harmonize and integrate the various activities

The core of coordination is harmony. Various sections of productions runs with harmonious relation with each other.

Distinguish between co ordination and co operation 3 marks