Nature and Significance of Management

1.Meaning of Management
It is a process which consists of series of interrelated functions that are
performed by all managers to effectively achieve the goals of an
organisation.
2. Concept of Management
(i) Traditional Concept The traditional concept of management is concerned with
accomplishing organisational objectives by directing the efforts of others or it is
an art of getting things done through others.
(ii) Modern Concept The modern concept insists on achieving goals effectively
and efficiently. Thus, it is defined as a process of getting things done with the aim
of achieving goals effectively and efficiently.
Effectively means completing the task/work on time while efficiently means
doing the task correctly and with minimum cost.
3. Characteristics of Management
(i) Goal-oriented process
(ii) Group activity
(iii) Intangible force
(iv) All pervasive
(v) Multi-dimensional
(vi) Continuous process
(vii) Dynamic function
4. Objectives of Management
(i) Organisational Objectives are related with survival, profit earning and growth
of an organisation.
(ii) Social Objectives involve creation of benefits for the society.
(iii) Personal Objectives are related to fulfilling the financial, social and higher
level needs of employees.
5. Importance of Management
(i) It helps in achieving group goals.
(ii) It increases efficiency.
(iii) It creates a dynamic organisation.
(iv) It helps in achieving personal objectives.
(v) It helps in the development of society.
6. Nature of Management
(i) Management as Science Like a science,
management has a systematised body of knowledge that explains general truths
and factual situations. But it is not considered as a perfect science as it is
concerned with human behaviour which is unpredictable.
(ii) Management as an Art Like an art, management is a personalised process in
which managers apply their personal experiences in real life situations.
(iii) Management is a Science as well as an Art Management is a science as well
as an art because it is a combination of an organised body of knowledge (science)
and skilful application of this knowledge (art).
(iv) Management as Profession Like a profession, management has well defined
body of knowledge but it is not considered as full-fledged profession as it lacks
certain distinct features of profession such as code of conduct and professional
association.
7. Levels of Management
(i) Top Level consists of members who are concerned with framing of policies.
This level includes board of directors, chief executives, managing directors, etc.
(ii) Middle Level consists of members who are concerned with the work of
implementation. This level includes head of the departments, branch and regional
managers, etc.
(iii) Operational Level consists of members who are concerned with execution of
the work. This level includes foreman, clerks, inspectors, etc.
8. Functions of Management
(i) Planning is the process of deciding in advance what is to be done, when, how
and by whom it is to be done.
(ii) Organising is the process of assigning duties, grouping tasks, establishing
authority and allocating resources required to carry out a specific plan.
(iii) Staffing is the process of filling all positions in an organisation with adequate
and qualified personnel.
(iv) Directing function is related with leading, influencing, guiding, supervising
and motivating people towards the attainment of planned targets.
(v) Controlling is the process of ensuring that the organisation is able to attain the
organisational goals. It ensures that activities conform to the standards set for
performance.
9. Meaning of Coordination
It is the force that binds all the functions of management. It is considered as the
essence of management.
10. Characteristics of Coordination
(i) It integrates group efforts.
(ii) It ensures unity of action.
(iii) It is a continuous process.
(iv) It is required in all organisations and at every level.
(v) It is a deliberate function.
(vi) It is the responsibility of all managers.
11. Importance of Coordination
(i) Coordination is necessary to manage large organisations.
(ii) Due to functional differentiation in departments and divisions, it is required
to bring in a degree of homogeneity.
(iii) To create unity of action among specialists, it is required in organisations.
Principles of Management
1. Concept of Management Principles
2. These are broad and general guidelines for decision-making and behaviour.
These principles serve as general practical guidelines for the manager,
assisting him to make decisions, take action and solve problems
systematically.
2. Nature of Principles of Management
(i) Universal applicability
(ii) General guidelines
(iii) Formed by practice and experimentation
(iv) Flexible
(v) Cause and effect relationship
(vi) Contingent
(vii) Mainly behavioural
3. Significance of Principles of Management
(i) To provide managers with useful insights into reality.
(ii) Optimum utilisation of resources and effective administration.
(iii) To take scientific decisions.
(iv) Meeting changing environment requirements.
(v) Fulfilling social responsibilities.
(vi) Management training, education and research.
4. Fayol’s Principles of Management Henry Fayol
has given fourteen principles of management which are as follows
(i) Division of Work: Work is divided into small tasks. This helps in taking the
advantage of specialisation.
(ii) Authority and Responsibility: There must be a balance or parity between
authority and responsibility.
(iii) Discipline: It signifies obedience to organisational rules and regulations
which are necessary for the smooth working of an organisation.
(iv) Unity of Command :A subordinate should receive orders from one superior
only at a given point of time.
(v) Unity of Direction: Each group of activities having the same objective must
have one head and one plan.
(vi) Subordination of Individual Interest to General Interest: In all situations,
company’s interest should supersede the interest of individual.
(vii) Remuneration of Employees: The quantum and methods of remuneration
payable to the employees should be fair and reasonable.
(viii) Centralisation and Decentralisation : An organisation should strive to
achieve a proper balance between centralisation and decentralisation.
(ix) Scalar Chain and Gang Plank : Scalar chain refers to the chain of authority
and communication that runs from top to bottom and should be followed by
managers and their subordinates.
Gang plank refers to an arrangement in which two managers working at the same
level can communicate with each other directly for quick communication.
(x) Order : People and materials must be in suitable places at appropriate time
for maximum efficiency.
(xi) Equity : This principle advocates that everyone should be equal in the eyes
of the management. There should be no discrimination against any one on account
of sex, religion, language, caste, belief or nationality.
(xii) Stability of Personnel : Personnel should be selected and appointed after
due and rigorous procedure. But once selected they should be kept at their
position for a minimum fixed tenure.
(xiii) Initiative: Fayol suggested that employees at all levels should take
initiative without any force or boundations.
(xiv) Esprit de Corps: Management should promote team spirit of unity and
harmony among employees.
5. Principles of Scientific Management FW Taylor
has given four principles of management which are as follows
(i) Science, not Rule of Thumb : Taylor is of the view that there is one best
method of doing a job which should be developed through scientific study and
analysis rather than wish of manager or hit and trial method and it should
substitute the age old method of doing a job.
(ii) Harmony, not Discord : There should be harmony between the management
and the workers.
(iii) Cooperation, not Individualism : There should be cooperation between
workers and management. Everyone should work for the betterment of the
organisation.
(iv) Development of Each and Every Person to his/her Greater Efficiency
and Prosperity:
Adequate opportunities must be made available for employees, so that they strive
to improve their performance to achieve new heights in their careers.
6. Techniques of Scientific Management
(i) Functional Foremanship : Under this technique, planning and execution are
separated from each other. Taylor advocated the appointment of eight foremen;
out of which, four of them will be responsible for planning viz, route clerk,
instruction card clerk, time and cost clerk and disciplinarian and the rest four viz,
speed boss, gang boss, repair boss and inspector will be concerned with the
execution of work.
(ii) Standardisation of Work refers to the process of setting standards for every
business activity.
(iii) Simplification of Work aims at eliminating unnecessary varieties, sizes and
dimensions of products.
(iv) Method Study This technique is conducted to find out the one best way of
performing a particular task.
(v) Motion Study It refers to the study of movements like lifting, putting objects,
sitting and changing positions, etc. which are undertaken while doing typical jobs.
(vi) Time Study It determines the standard time taken to perform a well defined
job.
(vii) Fatigue Study This study seeks to find out the amount and frequency of rest
intervals required in completing a task.
(viii) Differential Piece Wage System Under this system of wage payment,
wages are paid on the basis of work done.
(ix) Mental Revolution refers to change in mind on the part of both workers and
management, towards each other from competition to cooperation.
Business Environment
1. Business Environment means the sum total of all individuals, institutions and
other forces that are outside the control of a business enterprise but that may affect
its performance.
2. Features of Business Environment
(i) Totality of external forces
(ii) General and specific forces
(iii) Inter-relatedness
(iv) Dynamic nature
(v) Uncertainty
(vi) Complexity
(vii) Relativity
3. Importance of Business Environment
(i) It enables the firm to identify opportunities and getting the first mover
advantage.
(ii) It helps the firm to identify threats and early warning signals.
(iii) It helps in tapping useful resources.
(iv) It helps in coping up with rapid changes.
(v) It helps in planning and policy formulation.
(vi) It helps in improving performance.
4. Dimensions of Business Environment
Dimensions or the factors constituting the business environment consist of the
external forces, which directly or indirectly affect the functioning of a business
enterprise.
The following are the dimensions of business environment
(i) Economic Environment consists of the factors and forces concerning with
means of production and distribution of wealth. e.g., balance of payment, money
supply in the economy, etc.
(ii) Social Environment consists of all the social and cultural forces within which
business firms operate. e.g., quality of life, family structure and values, etc.
(iii) Technological Environment includes forces relating to scientific
improvements and innovations, which provide new ways of production, method
and techniques. e.g. Innovations and inventions, scientific improvements, etc.
(iv) Political Environment consists of the forces concerning management of
public affairs and their impact on business. e.g., political structure, foreign policy,
trade policy, etc.
(v) Legal Environment provides the regulatory framework, within which
business has to function. e.g., packets of cigarettes must carry the statutory
warning, etc.
Planning
1. Planning is deciding in advance the objectives to be achieved during a given
period, formulating alternative courses of action to achieve them and selecting
the best course of action.
2. Features of Planning
(i) It focuses on achieving objectives.
(ii) It is a primary function of management.
(iii) It is all pervasive.
(iv) It is continuous.
(v) It is futuristic.
(vi) It involves decision-making.
(vii) It is a mental exercise.
3. Importance of Planning
(i) It provides direction.
(ii) It reduces the risk of uncertainty.
(iii) It reduces overlapping and wasteful activities
(iv) It promotes innovative ideas.
(v) It facilitates decision-making.
(vi) It establishes standards for controlling.
4. Limitations of Planning
(i) Internal Limitations
(a) It leads to rigidity.
(b) It may not work in a dynamic environment.
(c) It reduces creativity.
(d) It involves huge costs.
(e) It is a time consuming process.
(f) It does not guarantee success.
(ii) External Limitations
(a) Unforeseen events
(b) Political outlook
(c) Environmental changes
(d) Competitors’ strategy
5. Process of Planning
Planning is to decide in advance what to do and how to do. It is an activity, which
follows certain logical steps, which are as follows
(i) Setting Objectives Plans are prepared to achieve certain objectives or goals.
(ii) Developing Premises Planning is concerned with future, which is uncertain.
Therefore, the manager is required to make certain assumptions about future and
these assumptions are known as premises.
(iii) Identify Alternative Courses of Action In this step, the manager identifies
all possible alternatives and collects and analyse all relevant information related
to these alternatives.
(iv) Evaluating Alternative Courses This step is to weigh the pros and cons of
each alternative.
(v) Selecting an Alternative In this step, the best plan has to be selected by the
manager.
(vi) Implementing the Plan This step is concerned with putting the plan into
action.
(vii) Follow Up Planning is a continuous process, so that the managers keep on
following up the plans to see that activities are being performed as per the
schedule or not.
Organising
1. Organising is the process of identifying and grouping different activities in the
organisation and bringing together the physical, financial and human resources to
establish most productive relations for the achievement of specific goals of an
organisation.
2. Importance of Organising
(i) Benefits of specialisation
(ii) Clarity in working relationships
(iii) Optimum utilisation of resources
(iv) Development of personnel
(v) Expansion and growth
(vi) Adaptation to change
(vii) Effective administration
3. Process of Organising
(i) Identification and Division of Work In this step, organising involves
identifying and dividing the work according to pre-determined plan.
(ii) Departmentalisation In this step, those activities which are similar in nature
are grouped together.
(iii) Assignment of Duties In this step, work is allocated to different individuals
as per the knowledge and skills acquired by them.
(iv) Establishing Reporting Relationship In this step, hierarchical structure
should be followed with proper coordination.
4. Functional Structure is an organisational structure that groups similar or
related jobs together. This organisational structure is suitable when the size of the
organisation is large, has diversified activities and operations and requires a high
degree of specialisation.
5. Divisional Structure In divisional structure, the organisation structure
comprises of separate business units or divisions. Divisions are created when
product expansion, diversification, manufacturing and marketing are being done.
This organisational structure is suitable for those business enterprises where a
large variety of products are manufactured using different productive resources.
6. Delegation refers to the downward transfer of authority from a superior to
subordinate. It is a pre-requisite for the efficient functioning of an organisation
because it enables a manager to use his time on high priority activities.
7. Elements of Delegation
(i) Authority refers to the right of an individual to command his subordinates and
to take action within the scope of his position. It flows downward.
(ii) Responsibility is the obligation of a subordinate to properly perform the
assigned duty. It flows upward, i.e., a subordinate will always be responsible to
his superior.
(iii) Accountability implies being answerable for the final outcome. It flows
upward as subordinate will be accountable to his superior.
8. Importance of Delegation
(i) Effective management
(ii) Employees development
(iii) Motivation of employees
(iv) Facilitation of growth
(v) Basis of management hierarchy
(vi) Better coordination
9. Decentralisation refers to systematic effort to delegate to the lowest level all
authority except that which can be exercised at central points.
10. Importance of Decentralisation
(i) Develops initiative among subordinates
(ii) Develops managerial talent for the future
(iii) Facilitates quick decision-making
(iv) Provides relief to top management
(v) Results in better control and facilitates growth
Marketing Management
1. Marketing is a social process by which individuals and groups obtain what they
need and want through creating, offering and freely exchanging products and
services of value with others.
2. Features of Marketing
(i) Need and want
(ii) Customer value
(iii) Exchange mechanism
(iv) Creating a market offering
3. Functions of Marketing
(i) Gathering and analysing market information
(ii) Market planning
(iii) Product designing and development
(iv) Standardisation and grading
(v) Packaging and labelling
(vi) Branding
(vii) Customer support services
(viii) Pricing of products
(ix) Promotions
(x) Physical distribution
(xi) Transportation
(xii) Storage and warehousing
4. Marketing Philosophies
(i) Production Concept Under this concept, the focus was on improving the
efficiency of production and distribution.
(ii) Product Concept Under this concept, the focus shifted from quantity of
production to quality of production.
(iii) Selling Concept Under this concept, firms began to undertake aggressive
selling and promotional efforts to attract and persuade customers to buy.
(iv) Marketing Concept Under this concept, customer satisfaction became the
focal point of all business decisions.
(v) Societal Marketing Concept Under this concept, customer satisfaction is
supplemented by social welfare.
5. Marketing Mix is the set of marketing tools that firm uses to pursue its
marketing objectives in the target market.
6. Elements of Marketing Mix The elements of marketing mix are popularly
referred to as 4ps which are product, price, place and promotion.
7. Product is any good or service that a consumer wants. It is a bundle of utilities
or a cluster of tangible and intangible attributes which can be exchanged for a
value.
8. Branding is the process of assigning a distinctive name or symbol to a product,
by which it can be remembered. Important terms related to branding include
brand, brand name, brand mark and trade mark.
9. Labelling means designing a label to be put on the package. A label is a small
slip placed on the product to denote its nature, contents, ownership, destination,
etc.
10. Packaging refers to the combination of those activities, which are related with
the designing and production of the containers in which the products are packed.
Packaging consists of three levels, i.e., primary packaging, secondary packaging
and transportation packaging.
11. Price may be defined as the amount of money paid by a buyer in consideration
of the purchase of a product or a service.
12. Factors Affecting Price Determination
(i) Product cost
(ii) The utility and demand of the product
(iii) Extent of competition in the market
(iv) Government and legal regulations
(v) Pricing objectives
(vi) Marketing methods used
13. Physical Distribution is concerned with making the goods and services
available at the right place, so that people can purchase the same. There are two
important decisions related to physical distribution. They are
(i) Channels of distribution
(ii) Physical movement of goods
14. Promotion refers to the use of communication with the twin objectives of
informing potential customers about a product and persuading them to buy it.
15. and its Elements Promotion mix consists of all the activities aimed at
persuading customers to buy the products. The various elements of promotion
mix are as under
(i) Advertising Promotion Mix
(ii) Personal selling
(iii) Sales promotion
(iv) Public relations
16. Advertising involves dissemination of information about a product, service
or enterprise to induce people to take actions beneficial to the advertiser.
17. Features of Advertising
(i) Paid form
(ii) Impersonal communication
(iii) Identified sponsor
18. Personal Selling is the process of informing, assisting and persuading people
to buy a product or service through direct personal contact.
19. Sales Promotion refers to all the activities, which are undertaken for the
purpose of increasing sales.
20. Sales Promotion Techniques
(i) Samples (ii) Prize contests
(iii) Exchange offers (iv) Discount
(v) Lucky draw (vi) Quantity deals
21. Public Relations evaluate public attitudes, identify the policies and
procedures of an organisation with the public interest to earn public
understanding and acceptance.
22. Role of Public Relations
(i) Building awareness and a favourable image for a company
(ii) Managing crisis that threatens company’s image
(iii) It is an efficient way to reach masses