CHAPTER ONE

1. THE NATURE, SCOPE AND FUNCTION OF

MANAGEMENT.

1.1 WHAT IS MANAGEMENT;

The word management refers to all the tasks and activities undertaken by the people in an
organization for the successful achievement of goals and targets. It involves continuous
activities such as planning, organizing, leading and monitoring physical, financial and
information resources. Any organization’s success depends on the strength of those in
management positions.

The term management is flexible and has been used in various ways. While it refers to
organizational activities, it also denotes a body of knowledge or discipline. Some describe it as a
means of leadership while others view it as an economic resource. To understand the meaning
and nature of management, let’s look at the concept from a broader perspective. Here are
various categories that describe management in multiple contexts.

1.2 NATURE OR CHARACTERISTICS OF MANAGEMENT.

MANAGEMENT IS A PROCESS:
As a process, management aims at increasing productivity and efficiency in an organization. The
purpose is to strengthen the client base, improve the knowledge, skills and capacity of employees
to achieve particular targets and goals. Management is also a never-ending process that brings
different teams and individuals together. Everyone works in harmony to achieve common
objectives.

MANAGEMENT IS AN ACTIVITY:
As an activity, management looks at the daily tasks and accomplishments of an employee. It
helps them prioritize activities and monitor progress, which further helps them grow in their
roles. It prevents miscommunication and task repetition as everyone is aware of their roles and
responsibilities.

(C) MANAGEMENT IS A PROFESSION;

Management as a profession has been popularized by academic institutions across the globe.
Several organizations today prefer individuals with a Master of Business Administration (MBA)
degree. Specialized knowledge (such as an MBA degree) provides an individual with a
competitive edge, making them more desirable for managerial roles. Therefore, management has
evolved as a body of knowledge that continues to solve various workplace problems.

(D) MANAGEMENT IS A UNIVERSAL ACTIVITY;

Management is a universal activity and is essential for all organizations. If there is human
activity, there is management. The principles of management are applicable irrespective of the
size, nature and location of a business. The universal principle also means that managerial skills
can be developed over time and they’re transferrable.

(E) MANAGEMENT IS PURPOSEFUL

Management always has an end goal of achieving an organization’s objective, mission and
vision. The success of management can be measured by the extent to which an organization
achieves its objectives. The objectives should be realistic, attainable and time-bound.

(F) MANAGEMENT IS INTANGIBLE;

There is no physical proof of the management process. Its success can be measured by the
outcomes of its efforts. For example, lower turnover(absenteeism) rates indicate there’s high
employee engagement and job satisfaction. This further shows that managers or individuals in
managerial roles have taken proactive(positive) steps toward improving employee retention.
(G) MANAGEMENT IS A SYSTEM OF AUTHORITY;
Authority means power to make others act in a predetermined manner. Management formalizes a
standard set of rules and procedures to be followed by subordinates and ensures their compliance
with the rules and regulations.

(H) MANAGEMENT IS DYNAMIC AND NOT STATIC;

Management should be dynamic at its core because businesses are often influenced by economic,
social, political and technological factors. With room for flexibility and adaptability, individuals
can perform well even in stressful situations. There should be adequate training and facilitation
within the process.

(I) MANAGEMENT INVOLVES DECISION MAKING:

Management implies making decision regarding the organization and operation of business in the
different dimensions. The success or failure of an organization can be judged by the quality of
decisions under taken by the managers. Therefore, decisions are the key to the performance of a
manager.

(J) MANAGEMENT NEED NOT BE OWNERS;

It is not necessary that managers are owners of the enterprise. In Joint stock companies,
management and owners are different entities

1.3 SCOPE OF MANAGEMENT.

Clearly defined responsibilities, concepts, theories and principles related to managerial functions
define the scope of management. Let’s look at the various aspects of this.

FINANCIAL MANAGEMENT
Every enterprise prioritizes financial management because finances can get extremely
complicated if not managed properly. Effective financial management ensures there are fair
returns to stakeholders, and proper estimation of capital requirements. It includes preparation and
examination of financial statements, creating proper dividend policies and negotiations with
external stakeholders. Summarily, financial management is the application of general
management concepts to the financial resources of a company.

2. MARKETING MANAGEMENT.
The scope of management in marketing extends to planning, organizing, directing and
controlling activities in the marketing department. Identifying customer requirements is crucial
for providing business solutions. When a manager is fully aware of the benefits of the products
and/or services the organization provides, they achieve better results. Marketing management
ensures that available resources are properly utilized and the best possible outcomes are
achieved.

3. PERSONNEL MANAGEMENT
Personnel management—as the name suggests—deals with personnel or individuals in a
business environment. It includes the recruitment, transfer, termination, welfare and social
security of employees. This aspect of management is extremely important as employees form
teams drives an organization’s goals. Individual productivity also contributes to overall
efficiency. Without attending to employee needs and wants, an organization is likely to struggle.

4. PRODUCTION MANAGEMENT.
This type of management refers to the process of creating utilities. When you convert raw
materials to finished products and oversee the planning and regulation, you’re engaging in
production management. Without production, there isn’t any finished good or service and
without it, organizations can’t generate interest or profits. The final product must fulfill customer
requirements. The process includes quality control, research and development, plan layout and
simplification (i.e . the process of reducing the variety of products manufactured.)

5. OFFICE MANAGEMENT.
This includes controlling and coordinating all office activities to achieve an organization’s goals
and targets. For example, an administration’s efficiency impacts a business significantly. The
more organized the departments and responsibilities are, the more effective an organization is.

1.4 FUNCTIONS OF MANAGEMENT.

Management has been described as a social process involving responsibility

for economical and effective planning & regulation of operation of an enterprise in the
fulfillment of given purposes. It is a dynamic process consisting of various elements and
activities. These activities are different from operative functions like marketing, finance,
purchase etc. Rather these activities are common to each and every manager irrespective of his
level or status.

Different experts have classified functions of management. According to George & Jerry, “There
are four fundamental functions of management i.e. planning, organizing, actuating (motivating)
and controlling”.

According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to
control” But the most widely accepted are functions of management given by KOONTZ and
O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of management but
practically these functions are overlapping in nature i.e. they are highly inseparable. Each
function blends into the other & each affects the performance of others.
Planning

It is the basic function of management. It deals with marking out a future course of action &
deciding in advance the most appropriate course of actions for achievement of pre-determined
goals. According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how
to do. It bridges the gap from where we are & where we want to be”. Planning is determination
of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways
& means for accomplishment of pre-determined goals. Planning is necessary to ensure proper
utilization of human & non-human resources. It is an intellectual activity and it also helps in
avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing.
It is the process of bringing together physical, financial and human resources and developing
productive relationship amongst them for achievement of organizational goals. According to
Henry Fayol, “To organize a business is to provide it with everything useful i.e. raw material,
tools, capital and personnel’s”. To organize a business involves determining & providing human
and non-human resources to the organizational structure. Organizing as a process involves:

· Identification of activities.

· Classification and grouping of activities.

· Assignment of duties.

· Delegation of authority and creation of responsibility.

· Coordinating authority and responsibility relationships.

2. Staffing

It is the function of manning the organization structure and keeping it staffed. Staffing has
assumed greater importance in the recent years due to advancement of technology, increase in
size of business, complexity of human behavior etc. The main purpose of staffing is to put right
man on right job i.e. square pegs in square holes and round pegs in round holes. According to
Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure
through proper and effective selection, appraisal & development of personnel to fill the roles
designed in the structure”. Staffing involves:

· Manpower Planning (estimating man power in terms of searching, choose the person and
giving the right place).

· Recruitment, Selection & Placement.

· Training & Development.

· Remuneration.
· Performance Appraisal.

· Promotions & Transfer.

2. Directing

It is that part of managerial function which triggers the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and staffing
are the mere preparations for doing the work. Direction is that -personnel aspect of management
which deals directly with influencing, guiding, supervising, motivating subordinate for the
achievement of organizational goals. Direction has following elements:

· Supervision

· Motivation
· Leadership
· Communication
Supervision- implies overseeing the work of subordinates by their superiors. It is the act of
watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging subordinates with zeal to work.

Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of
subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of deviation if

any to ensure achievement of organizational goals. The purpose of controlling is to ensure that
everything occurs in conformities with the standards. An efficient system of control helps to
predict deviations before they actually occur. According to Theo Haimann, “Controlling is the
process of checking whether or not proper progress is being made towards the objectives and
goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell
“Controlling is the measurement & correction of performance activities of subordinates in order
to make sure that the enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore, controlling has following steps:

· Establishment of standard performance.

· Measurement of actual performance.

· Comparison of actual performance with the standards and finding out deviation if any.

· Corrective action.