Notes of Ch 1 Nature and Significance of Management| Class 12th Business Studies

Summary and Notes of Ch 1 Nature and Significance of Management| Class 12th Business
Studies

Concept

Definition of Management (According to Harold Koontz and Heinz Weihrich)

"Management is the process of designing and maintaining an environment in which

individuals, working together in groups, efficiently accomplish selected aims."

Effectiveness Versus Efficiency

Effectiveness and efficiency are two sides of the same coin. Effectiveness refers to complete
the job on time, no matter whatever is the cost and on the other hand, efficiency refers to
do the job in a costeffective manner.

Characteristics of Management

• Management is goal-oriented process.

• Management is all-pervasive.

• Management is Multidimensional .

• Management is a continuous process.

• Management is a group activity.

• Management is a dynamic function.

• Management is an intangible force.

Objective of management

1. Organisational objectives: While fixing these objectives, management keeps in to

consideration thebenefit of all the related parties like (shareholder, employees, customers
and the government). This alsofulfils organisational economic objectives which are survival,
profit and growth.

2. Social objectives: It refers to the consideration of the interest of the society during
managerial activities. Organisation runs through the resources made available by the
society. That is why it becomes the responsibility of every organisation to account for social
benefits. Main social objectives of management are included in the following list:

• To make available employment opportunities.

• To save the environment from getting polluted.

• To contribute in improving living standard.

3. Personal objectives: Organisations are made up of people who have different

personalities, background, experiences and objectives. They all become part of the
organisation to satisfy their diverse needs. These vary from financial needs such as
competitive salaries and perks, social needs such as peer recognition and higher level needs
such as personal growth and development.

Importance of Management

• Management helps in achieving group goals.

• Management increases efficiency.

• Management creates a dynamic organisation.

• Management helps in achieving personal objectives.

• Management helps in the development of society.

Management as Science, Art and Profession.

Management as an art

• Existence of theoretical knowledge: Management is an art as a lot of literature is available

in various areas of management.

• Personalised application: The use of this basic knowledge varies from individual to
individual for example two dancers, two actors, two speakers or two writers will always
differ in demonstrating their art.

• Based on practice and creativity: Just as art can be embellished with the help of practice,
in the same way managerial skill also improves with practice.

Management as a science

Science refers to that systematic body of knowledge which is acquired on the basis of
observation and experiments and verification of this knowledge is possible

• Systematised Body of knowledge: Science is a systematic body of knowledge because its

principles are based on a cause and effect relationship.

• Principle based on experimentation: Scientific principles are first developed through

observation and then tested through repeated experimentation under controlled
conditions.

• Universal validity: Scientific principles have universal validity and application.

The management cannot be treated as a perfect science, but as its principles are subject to
change with time, situation and human nature, it is better to call it applied science or
inexact science.

Management as a Profession

Well- defined Body of knowledge: All profession are based on a well- defined body of
knowledge that can be acquired through instruction.

• Restricted Entry: The entry to a profession is restricted through an examination or

educational degree.

For example charted accountant in India a candidate has to clear a specified examination.
But as for management is concerned there is no such condition for being a manager. Hence,
on this basis management cannot be accepted as a profession.

• Professional association: All professions are affiliated to a professional association which

regulates entry, grants certificate of practice and formulates and enforces a code of conduct
for Example Bar council of India for lawyers, medical council of India for doctors etc. on this
basis management cannot be accepted as a profession.

• Ethical code of conduct: All professions are bound by a code of conduct which guides the
behaviour of its members for example when doctors take a oath of ethical practice at the
time they enter the profession. On this basis management cannot be accepted as a
profession.

• Service motive: The main motive of profession is to serve the society and this feature is
same as management.

Levels of Management

• Top-level Management: In top level management, Board of Directors, Chief Executive

officer, etc are included. Management has all the authorities, and because of these
authorities officers of these levels are accountable to owners or shareholder of the
company.

• They formulate overall organisation goals and strategies for their achievement.

• They are responsible for all the activities of the business and for its impact on society.

Determining objectives, determining policies, determining activities, assembling resources,

controlling the work performance, approving budget etc are the function of the top level
management.
• Middle-level Management: It lies between top-level and lower –level management. Under
this divisional head, departmental head, deputy departmental heads, plant superintendents,
and operations managers are included.

The main work of middle level management:

• Interpret the policies framed by top management.

• Ensure that their department has the necessary personnel.

• Assign necessary duties and responsibilities to them.

• Co-operate with other departments for smooth functioning.

• Lower-level Management: It is also known as supervisory management or operational

management.

Supervisors directly oversee the efforts of the workforce. Their authority and responsibility
is limited according to the plans drawn by the top management. Supervisory management
interact with their actual work force and pass on instructions of the middle management to
the workers.

Function of Management

1. Planning: It means setting a goal in advance and developing a way of achieving them
efficiently and effectively. Planning cannot prevent problems, but it can predict them and
prepare contingency plans to deal with them if and when they order.

2. Organising: It refers to harmonious adjustment of various parts to achieve common

objectives. It is the function of assigning duties, grouping tasks, establishing authority and
allocating resources.

Staffing: it means appointing competent persons according to the importance of the post in
the organisation. This is also known as the human resource function and it involves activities
such as recruitment, selection, placement, and training personnel.

3. Directing: It refers to instructing, guiding, communicating, and inspiring people in the

organisation.

Under directing following four activities are included:

• Supervision

• Communication

• Leadership

• Motivation
4. Controlling: It is the management function of monitoring organisational performance
towards the attainment of organisational goal. The task involved is:

• It involved establishing standards of performance.

• Comparing this with established standards and taking corrective action where any
deviation found.

5. Coordination: It is a process to establish harmony among the different activities of an

organisation, so that the desired objectives can be achieved.

Characteristics of coordination

• Coordination Integrates Group effort.

• Coordination Ensures unity of action.

• Coordination is a continuous process.

• Coordination is an all- pervasive function.

• Coordination is the responsibility of All Managers.

• Coordination is a Deliberate Function.

Importance of coordination

Coordination is important as it integrates the efforts of individuals, departments and

specialists. The primary reason for coordination is that departments and individuals in the
organisation are interdependent.

• Growth in size: As organisations grow in size, the number of people employed by the
organisation also increases. Therefore, for organisation efficiency it is important to
harmonise individual goals and organisational goal through coordination.

• Functional Differentiation: organisation divided in to separate departments for each

function. All these departments may have their own objectives, policies. And each unit and
department is performing activities in isolation from others and barriers between
departments are becoming more rigid. So, the activity of each department needs to be
focused on attainment of common organisational goals.

• Specialisation: Specialists usually think that they only are qualified to evaluate, judge, and
decide according to their professional criteria. They do not take advice from others in
serious matter. This often leads to conflict amongst different specialists as well as others in
the organisation.