Management Lecture #1

Notes

Definition and Role of Management

 Management is the process of designing and maintaining an environment

in which individual working together in groups efficiently accomplish
selected aims.
 Management is an art of getting things done through others. Management
is to plan, organise, direct and control the resources of the organization
for obtaining common objectives or goals. It is related with resources like
material, money,machinery, methods, manufacturing and marketing.
 Management principles are universal in nature.
 Management is necessary for all types oforganization, such as public
sector, private sector, govt department, hotel, hospital, hostels,educational
institutes, require management for several growth and expansion.

Importance of Management

1. Management is goal oriented.

2. Management is associated with group efforts.

3. Management is intangible.

4. Management is an activity and not a person or group of person

5. Management is situational

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6. Management is the combination of art, science and profession.

7. Management is universal.

Characteristics of Management

Following are the key features or characteristics of Management:

1. Organized activities: Management is a process of organized activities.

Groups of people cannotbe involved in the performance of activities without
organized activities.Management comes into existence where a group of people
are involved in achieving a objective. The organized activities may take a
variety of forms ranging from a tightly structured organization to a loosely-knit
organization.

2. Existence of objectives: The existence of objectives is a basic criterion of

every human organization. The organizational objectives are the desired state of
affairs which an organization attempts to realize.• This realization of objectives
is sought through the coordinated efforts of the people constituting an
organization.

3. Decision-making: Management process involves decision making at all

levels. Decision-making describes the process by which a course of action is
selected as the way to deal with specific problem. If there is only one
alternative, the question of decision making does not arise. The quality of
alternatives which a manger selects determines the organization's performance
and the future of the organization.

4. Relationship among resources: The essence of management is integration

of various organizational resources. Resources include money, machine,

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materials and people.Management is concerned with the properutilization of
human resources which, in turn,utilize other resources.

5. Working with and through people:Management involves working with

people andgetting organizational objectives achievedthrough themWorking
through people is interpreted in terms ofassigning activities to subordinates.

Levels of Management in any Organization are Described by the

Pyramid

 Generally management function is divided into three levels.

1. Top level Management
2. Middle
3.Lower

Top level
management

Middle level management

Lower level
management

1. Top Management:

a. Also called as strategical level of managers.

b. It is represented by

i. Board of Directors (BOD)

ii. Chief Executive Officer (CEO)

iii. Chairman/President

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 iv. Managing Director etc.

c. They handle companywide overall functions.

d. Functions of top level management:

i. Overall strategic work.

ii. To determine and finalize aims/goals of organization.

iii. To define vision of work.

iv. To workout long term plans.

e. Responsible for overall developments in the organization.

2. Middle level management:

a. This is a comparatively larger group of managers.

b. It is represented by

i. Factory manager

ii. Plant manager

iii. Heads of department

iv. Senior manager

c. Functions:

i. To plan the execution strategies.

ü. To decide medium scale policies,

iii. To play role as "Buffer group" between top level and lower level
management.

iv. To help top management in strategic decisions.

d. They are accountable for the work done by their juniors.

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 3. Lower level management :

a. Also called as operational level managers.

b. They occupy bottom of the pyramid.

c. It is represented by

i. Shift in charges

ii. Trainee engineers

iii. Sr. supervisors

iv. Jr. managers

d. They have direct responsibility of machinery and materials.

e. Skilled workers, operators, workforce is working immediately below

them.

f. Functions :

i. To supervise the operations/activities.

ii. To plan and execute daily work schedules.

iii. To ensure smooth operations.

iv. To guide workforce about their work.

g. Lower management may be called as "actual face of management or

"fighting chaps" as they are directly related to operational activities. Also
called as tactical level of managers.

1.2.3 Administration

 The administration is the top level of the organization with the decisive
functions,

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  They are responsible for determining the policies and objectives of the
organization or the firm,
 The main administrative function is handling the business aspects of the
firm, such as finance. Other administrative functions usually include
planning, organizing staffing directing controlling and budgeting.
 Administration must integrate leadership and vision, to organize the people
and resources, in order to achieve common goals and objectives for the
organization.

Functions of Management : Planning, Organizing, Leading/Directing,

Staffing and Controlling

1.3.1 Functions of Management

• Functions of management are :

1. Planning

 Planning is decision making process.

 It is making decisions on future course of actions.
 Planning involves taking decisions on vision, mission, values, objectives,
strategies and policies of an organization.
 Planning is done for immediate, short term, medium term and long term
periods.
 It is a guideline for execution/implementation
 It is a measure to check the effectiveness and efficiency of an
organization

2. Organizing

 Organizing involves determination and grouping of the activities.

 Designing organization structures departmentation based on this
grouping.

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  Defining the roles and responsibilities of the departments and of the
job positions within these departments.
 Defining relationships between departments and job positions.
 Defining authorities for departments and job positions.

3. Staffing

 It includes manpower or human resource planning,

 Staffing involves recruitment, selection, induction and positioning the
people in the organization.
 Decisions on remuneration packages are part of staffing.
 Training, retraining development, mentoring and counselling are
important aspects of staffing.
 It also includes performance appraisals and designing and
administering the motivational packages.

4. Directing

 It is one of the most important functions of management to translate

company's plans into execution.
 It includes providing leadership to people so that they work willingly
and enthusiastically.
 Directing people involves motivating them all the time to enthuse
them to give their best.
 Communicating companies plans throughout the organization is an
important directing activity.
 It also means coordinating various people and their activities.
 Directing aims at achieving the best not just out of an individual but
achieving the best through the groups or teams of people through team
building efforts.

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 5. Controlling

 It includes verifying the actual execution against the plans to ensure

that execution is being done in accordance with the plans.
 It measures actual performance against the plans.
 It sets standards or norms of performance.
 It measures the effective and efficiency of execution against these
standards and the plans.
 It periodically reviews, evaluates and monitors the performance.
 If the gaps are found between execution levels and the plans,
controlling function involves suitable corrective actions to expedite
the execution to matchup with the plans or in certain circumstances
deciding to make modifications in the plans.

Planning:

“Planning is about managing resources and priorities in an organized way”.

Planning is the process of thinking about the activities required to achieve a

desired goal. It is the first and foremost activity to achieve desired results.

Planning is the fundamental management function, which involves deciding

beforehand, what is to be done, when is it to be done, how it is to be done and
who is going to do it. It is an intellectual process which lays down
an organisation’s objectives and develops various courses of action, by
which the organisation can achieve those objectives. It chalks out exactly, how
to attain a specific goal.

Types of Planning:

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Operational Planning

This type of planning typically describes the day-to-day running of the

company. Operational plans are often described as single use plans or ongoing
plans. Single use plans are created for events and activities with a single
occurrence (such as a single marketing campaign). Ongoing plans include
policies for approaching problems, rules for specific regulations and procedures
for a step-by-step process for accomplishing particular objectives.

Strategic Planning

“Strategic plans are all about why things need to happen,” Story said. “It’s big
picture, long-term thinking. It starts at the highest level with defining a mission
and casting a vision.”

Strategic planning includes a high-level overview of the entire business. It’s the
foundational basis of the organization and will dictate long-term decisions. The
scope of strategic planning can be anywhere from the next two years to the next

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10 years. Important components of a strategic plan are vision, mission and
values.

Tactical Planning

“Tactical plans are about what is going to happen,” Story said. “Basically at the
tactical level, there are many focused, specific, and short-term plans, where the
actual work is being done, that support the high-level strategic plans.”

Tactical planning supports strategic planning. It includes tactics that the

organization plans to use to achieve what’s outlined in the strategic plan. Often,
the scope is less than one year and breaks down the strategic plan into
actionable chunks. Tactical planning is different from operational planning in
that tactical plans ask specific questions about what needs to happen to
accomplish a strategic goal; operational plans ask how the organization will
generally do something to accomplish the company’s mission.

Contingency Planning

Contingency plans are made when something unexpected happens or when

something needs to be changed. Business experts sometimes refer to these plans
as a special type of planning.

Contingency planning can be helpful in circumstances that call for a change.

Although managers should anticipate changes when engaged in any of the
primary types of planning, contingency planning is essential in moments when
changes can’t be foreseen. As the business world becomes more complicated,
contingency planning becomes more important to engage in and understand.

Organization:

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Organization refers to a collection of people, who are involved in pursuing
defined objectives. It can be understood as a social system which comprises all
formal human relationships. The organization encompasses division of work
among employees and alignment of tasks towards the ultimate goal of the
company.

It can also be referred as the second most important managerial function, that
coordinates the work of employees, procures resources and combines the two,
in pursuance of company’s goals.

Process of Organization

 Step 1: Determination and classification of firm’s activities.

 Step 2: Grouping of the activities into workable departments.
 Step 3: Assignment of authority and responsibility on the departmental
executives for undertaking the delegated tasks.
 Step 4: Developing relationship amidst superior and subordinate, within
the unit or department.
 Step 5: Framing policies for proper coordination between the superior
and subordnate and creating specific lines of supervision.

Organization is a goal oriented process, which aims at achieving them, through

proper planning and coordination between activities. It relies on the principle of
division of work and set up authority-responisbility relationship among the
members of the organization.

Types of Organization Structure

1. Formal Organization Structure: The organization structure of jobs and

positions, with specified activities and relationships, is known as formal

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 organization structure. It is created by management, to attain the
objectives of the company.
o Line Organization: Line organization is the oldest and simplest
pattern of orgnization, wherein the supervisor has outright
supervision over the subordinate. The flow of authority is from the
top level executive to the person at the lowest level of the
organization’s echelon.

o Functional Organization: As the name suggests, functional

organization structure is one in which the thorough task of
managing and directicting the employees, is grouped as per the
functions or type of work involved.

o Line and Staff Organization: This type of organization structure

is an improvement over the traditional line organization. In line and
staff organization primary and supportive activities are related to

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 the line of supervision by appointing supervisor and specialist, who
are linked to line authority.

o Project Management Organization: Project Organization is not

an independent organization, like the organization structure
discussed above. Instead it is a set up within an organization, so as
to accomplish a project or firm’s objectives. It is led by project
manager, who is responsible for project objectives.
o Matrix Organization: Matrix organization is the emerging
structure of the organization, which is a combination of functional
organization and project organization. In such an organization, the
functional departments such as production, accounting, marketing,
human resource, etc. constitute a vertical chain of command, while
project division consitute horizontal line of authority.
2. Informal Organization Structure: The relationship between the
employees, that relies on personal attitudes, prejudices and interests
rather than procedures. It is system of personal and social connection,
whose creation is not needed by formal organization.

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Functional Areas of Management

In order to achieve its objectives, a business enterprise performs many functions

which may be broadly grouped under the following headings – Production,
Marketing, Finance and Personnel. In big business organisations, there are
separate departments to look after these functional areas. It may be noted that
these functions are inter-dependent and inter-related.

For instance, production department depends upon marketing department to sell

its output and marketing department depends upon production department for
the products of required quality to satisfy its customers. Thus, there must be
proper integration of various functional areas of business to achieve its
objectives. This can be achieved by the management of the enterprise by
effective planning, organisation, direction and control.

The important functions of a business are briefly discussed below:

1. Finance Function:

It deals with arrangement of sufficient capital for the smooth running of

business. It also tries to ensure that there is proper utilisation of resources. It
takes many important decisions such as raising capital from various sources of
finance, investment of funds in productive ventures, and levels of inventory of
various items.

2. Production Function:

It is concerned with transformation of inputs like manpower, materials,

machinery, capital, information and energy into specified outputs as demanded
by the society. The production department is entrusted with many activities such

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as production planning and control, quality control, procurement of materials
and storage of materials.

3. Marketing Function:

It is concerned with distribution of goods and services produced by production

department. A business can perform this function efficiently only if it is able to
satisfy the needs of the customers. For this purpose, the marketing department
guides the production department in product planning and development. It fixed
the prices of various products produced by the business. It promotes the sale of
goods through advertisement and sales promotion devices such as distribution
of samples and novelty items, holding contests, organising displays and
exhibitions, etc.

4. Personnel Function:

This function is concerned with finding suitable employees, giving them

training and fixing their remuneration and motivating them. The quality of
human resources working in the enterprise is a critical factor in the achievement
of business objectives. Therefore, it is necessary that the work-force is highly
motivated and satisfied with the remuneration and facilities provided by the
business.

5. Purchase Function:

Traditionally, purchasing is considered a part of the production function. But in

big organisations, there may be a separate department to perform complicated
purchase activities such as inviting tenders, choosing the sources of supply,
making transport arrangements and import of raw materials and machines and
equipment.

6. Public Relations Function:

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Modern business houses want to be in touch with the public and government
through their public relations departments. This department organises publicity
campaigns to increase the image and goodwill of the business in the society.

7. Legal Function:

In a big organisation, the legal department may be organised to ensure that the
business house is abiding by the rules and regulations framed by the
government. It also gives advice to the management in case of disputes with the
customers, suppliers and even government over various commercial matters.

Functional Areas of Management – Quick Notes

1. Production Management:

Production or operations management is the area of management so as to

produce the products and services. There products and services should be
available in right quality and quality, at the right time, and at the right cost.

It consists of the following activities:

i. Designing the product.

ii. Location and layout of plant and buildings.

iii. Purchase and storage of materials.

iv. Planning and control of factory operations.

v. Repairs and maintenance.

vi. Inventory control and quality control.

vii. Research and development etc.

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2. Marketing Management:

Marketing management includes the identification of consumer’s needs and

supplying them the products and services which can satisfy those needs.

It includes the following activities:

i. Marketing research to determine the needs and expectations of consumers.

ii. Planning and developing suitable products.

iii. Fixation of appropriate prices.

iv. Selection the right channels of distribution, and

v. Promotional activities through advertising and salesmanship to communicate

with the customers.

3. Financial Management:

Financial management ensures the flow of funds in the business with suitable
and fruitful financial policies.

It involves the following activities:

i. Estimating the volume of funds required for business.

ii. Determining the appropriate sources of funds.

iii. Raising the required funds at the right time.

iv. Ensuring proper utilization and allocation of raised funds so as to maintain

safety and liquidity of funds.

v. Administration of earnings.

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4. Personnel Management:

Personnel management involves planning, organizing, staffing, directing and

controlling the procurement, development, compensation, maintenance etc of
the human resources in an organization.

It comprises the following activities:

i. Manpower planning.

ii. Recruitment & selection.

iii. Training and development.

iv. Placement and induction.

v. Appraisal.

vi. Compensation and promotion.

vii. Employee services and benefits.

viii. Personnel records and research etc.

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