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 UNIT 1
BASIC AND HISTORY OF
MANAGEMENT
• Definition and Characteristics
• Scope and Importance
• Overview of Functional areas of Management
• Skills, Roles and Functions of Manager
• Evolution of Management Thought
• Contingency perspectives of Management
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BASIC AND HISTORY OF
MANAGEMENT
Management
as group of
Individuals
Management Management
as Process as Discipline

Concept of
Management

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 BASIC AND HISTORY OF
MANAGEMENT
• Definition: -
– By Great Management Scholars
– Peter Ferdinand Drucker (Nov 1909 – Nov 2005) – Practice of Management
– Fredrick Winslow Taylor (Mar 1856 – Mar 1915) – Principles of Scientific Management
– Henry Fayol (Jul 1841 – Nov 1925) – General & Industrial Management
– Harold Koontz (1909 – 1984) & Heinz Weihrich – Essentials of Management
– By Management Association and leading Business Schools

• Management is / was always there right from the settlement of human civilization and anyone cannot
think of business or commercial activity without management although its importance and term came
up much later. Even in our daily life, management is there every moment and in every action / task.
We need to plan, schedule and organize priority of things needed to be done by self or through others
• When we talk of managing a business, it is group activity and therefore need more complex form to be
more logical, rational and problem solving so that the outcome is efficient and comparable to best
performance of the business
• Erstwhile rulers in ancient time did not undergo formal management but by training and education or
guided by superiors managed their kingdom well, those who did not follow this discipline, vanished in
short period of time
• Management expression is changing with objectives and goals but in all cases the bottom line is
Efficiency and effectiveness in utilization of resources
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 BASIC AND HISTORY OF
MANAGEMENT
• Economists –
Management as a
resource
• Bureaucrats –
System of Authority
• Sociologists – Class
Elite
• Business dictionary
– The interlocking
• General dictionary
– Executive ability
• General – Business
activities
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 BASIC AND HISTORY OF
MANAGEMENT
• Why Management Education (Scope and Importance)
– The management program prepares the students for various
managerial positions, in the modern management system,
specialized management discipline is necessary for providing
skills and knowledge to assume managerial responsibilities
– Depending on their interests, students can choose further specific
areas under management studies to hone their skills in that sector,
example students who want to pursue hospitality management
gets opportunity to develop expertise in the field of restaurant,
tourism, hotel and hospital administration allowing them growth
in respective career paths. Similarly one who is interested in
International Business are encouraged to study the business
strategy along with culture and business practices of particular
country and some times participate in abroad study also etc.
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 BASIC AND HISTORY OF
MANAGEMENT
• Scope and Importance • Universality – helps in
connected with Business Economic development
– Responsibility towards Owners • Purposeful – Establishes a
• Run business efficiently profitable organization
• Proper utilization of resources • Coordinating Force
• Growth and appreciation of Shares
• Regular and fair return on capital
• Intangible
– Responsibility towards Lenders • Continuous Process
• Ensuring safety of Loans • Creative – helps in
• Regular pay back achieving goals
• Timely payment of principal • Social Process –
amount
motivates people
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 BASIC AND HISTORY OF
MANAGEMENT
• Scope and Importance Contd..
– Responsibility towards Employees
• Timely and regular payment of wages and statutory deposits
• Employee satisfaction depends on fair remuneration for everyone. This
includes financial and non-financial compensation
• Proper Working conditions
• Providing welfare amenities
• Better career prospects
• Job security and social security like group insurance, retirement benefits
and medical assistance etc.
• Better Living conditions like housing, transport, subsidized canteen
facility and crèches etc
• Training and development
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 BASIC AND HISTORY OF
MANAGEMENT
• Characteristics
• Basic
– Planning, Organizing, Staffing,
Directing, Controlling, Reporting and
Budgeting
• Disciplines
– Finance, Operations, Marketing,
Human Resources, Supply Chain and
Safety & Security
• Level
– Top Management, Middle
Management, Executive and Junior
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 BASIC AND HISTORY OF
MANAGEMENT
• Evolution Management
Thought
Early Modern Approach
Approach

Classical Neo Classical Quantitative Approach

Approach Approach Systems Approach
Contingency Approach
Scientific Management
Human Relation Approach
Administrative
Management Behavioural Science
Approach
Bureaucratic Management

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BASIC AND HISTORY OF
MANAGEMENT

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 BASIC AND HISTORY OF
MANAGEMENT
• Scientific Management Theory
– Principles of efficiency
– Analyzes and synthesizes workflows
– Collection of data, analysis of data
• Management of a business, industry, or
economy, according to principles of
efficiency derived from experiments in
methods of work and production,
especially from time, work and motion
studies
• Scientific management is a theory
of management that analyzes and
synthesizes workflows. Its main objective
is improving labor productivity. It was
one of the earliest attempts to apply
science to the engineering of processes
and to management
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 BASIC AND HISTORY OF
MANAGEMENT
• Scientific Management Approach
– Taylor had observed that there was excessive inefficiency in the management and
functioning of industrial enterprises. In fact, the primary blame for the inefficient
functioning of industrial enterprises was put by Taylor on management; for it was
management who did not know what constituted a fair day’s task and also ‘best way’
of doing the same. Therefore, he came out with his new concept of management,
called scientific management
• Defined as follows:
– Scientific management involves application of a scientific approach to managerial
decision making (consisting of collection of data, analysis of data and basing
decisions on the outcome of such analyses); and discarding at the same time, all
unscientific approaches, like – rule of the thumb, a hit or miss approach and a trial
and error approach.
• Taylor’s words - “Scientific Management consists in knowing what management
want men to do exactly and then seeing to it that they do it in the best and the
cheapest manner.”

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 BASIC AND HISTORY OF
MANAGEMENT
• Administrative management theory
– Administrative management theory attempts to find a rational way to design
an organization as a whole. The theory generally calls for a formalized
administrative structure, a clear division of labor, delegation of power and
authority to administrators relevant to their areas of responsibilities
• Key Components of an Organization
– Administrative management theory involves many important concepts, but
these concepts can usually be placed into the following broad categories:
• Formalized administrative structure - According to this theory, an organization uses a
very formalized structure with clear lines of authority from the top down. This is
a hierarchical structure
• For example, consider a large corporation. At the top is the board of directors who give
directions to the CEO, who in turn gives directions to vice presidents of each corporate
departments. The vice presidents will then give directions to their middle managers, who
in turn give directions to Executives and supervisors down to individual employees.

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 BASIC AND HISTORY OF
MANAGEMENT
• Division of labor - A second key structural feature of an organization designed by
administrative management theory is a clear division of labor between the organization's
departments. Each department is responsible for a particular aspect of the organization's
activities towards the achievement of organizational goals
• For example, our large corporation may have a production division, marketing division,
distribution division, and administrative division. Each works on a particular aspect of
the company's business: the production division produces the products, the marketing
division markets the products, the distribution division sends the products to customers
or retailers, and the administrative division provides administrative support to the other
divisions
• Delegation of power and authority - Another key feature of the theory is the delegation of
power and authority to administrators commensurate with their responsibilities in the
organization. If you don't have the power and authority to engage in tasks necessary for
achieving specific objectives you are charged with achieving, the organization can't meet
its overall goal
• The administrative theory focuses on improving the efficiency of management first so
that the processes can be standardized and then moves to the operational level where the
individual workers are made to learn the changes and implement those in their routine
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 BASIC AND HISTORY OF
MANAGEMENT
• Bureaucratic organization
• A bureaucratic organization is a form of management that has a pyramidal
command structure. The bureaucratic organization is very organized with a high
degree of formality in the way it operates. Organizational charts generally exist
for every department, and decisions are made through an organized process
• Bureaucratic management may be described as “a formal system of organization
based on clearly defined hierarchical levels and roles in order to maintain
efficiency and effectiveness”
• The term "bureaucracy" is French in origin and combines the French word
bureau – desk or office – with the Greek word kratos – rule or political power. It
was coined in the mid-18th century by the French economist Jacques Claude
Marie Vincent de Gournay
• The term ‘bureaucracy’ has been widely used with invidious connotations
directed at government and business. Bureaucracy is an administrative system
designed to accomplish large-scale administrative tasks by systematically
coordinating the work of many individuals
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 BASIC AND HISTORY OF
MANAGEMENT
• Characteristics of Bureaucracy
• According to Max Weber Governments or organization functions in the
following specific manner:
– I. There is the principle of fixed and official jurisdictional areas, which are
generally ordered by rules, that is, by laws or administrative regulations
– 1. The regular activities required for the purposes of the bureaucratically
governed structure are distributed in a fixed way as official duties
– 2. The authority to give the commands required for the discharge of these
duties is distributed in a stable way and is strictly delimited by rules
concerning the coercive means, physical, social or religious, or otherwise,
which may be placed at the disposal of officials
– 3. Methodical provision is made for the regular and continuous fulfillment of
these duties and for the execution of the corresponding rights; only persons
who have the generally regulated qualifications to serve are employed

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 BASIC AND HISTORY OF
MANAGEMENT
• In public and lawful government these three elements constitute 'bureaucratic
authority.' In private economic domination, they constitute bureaucratic
'management.' Bureaucracy, thus understood, is fully developed in political and
ecclesiastical communities only in the modern state, and, in the private economy,
only in the most advanced institutions of capitalism
• II. The principles of office hierarchy and of levels of graded authority mean a
firmly ordered system of super- and subordination in which there is a supervision
of the lower offices by the higher ones. Such a system offers the governed the
possibility of appealing the decision of a lower office to its higher authority, in a
definitely regulated manner. With the full development of the bureaucratic type,
the office hierarchy is ‘monocratic approach’
• III. The management of the modern office is based upon written documents ('the
files'), which are preserved in their original or draught form. There is, therefore,
a staff of subaltern officials and scribes of all sorts. The body of officials actively
engaged in a 'public' office, along with the respective apparatus of material
implements and the files, make up a ‘bureau’. In private enterprise, 'the bureau'
is often called 'the office’
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 BASIC AND HISTORY OF
MANAGEMENT
• IV. Office management – which is distinctly modern–usually presupposes thorough and
expert training. This increasingly holds for the modern executive and employee of
private enterprises, in the same manner as it holds for the state official
• V. When the office is fully developed, official activity demands full working capacity of
the official, irrespective of fact that his obligatory time in the bureau may be firmly
delimited. In the normal case, this is only the product of a long development, in the
public as well as in private office
• VI. The management of the office follows general rules, which are more or less stable,
more or less exhaustive, and which can be learned. Knowledge of these rules represents a
special technical learning which the officials possess. It involves jurisprudence, or
administrative or business management
• Nowadays, it is found in public as well as in private enterprises; in the latter, the principle
extends even to the leading entrepreneur. In principle, the executive office is separated
from the household, business from private correspondence, and business assets from
private fortunes. The beginnings of this process are to be found as early as the Middle
Ages. More consistently the modern type of business management has been carried
through the more are these separations of the cases

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 BASIC AND HISTORY OF
MANAGEMENT
• Bureaucratic
Highest Office
Management
approach
High Office High Office – Authority
flow
Low Office Low Office Low Office

Lowest Office Lowest Office Lowest Office Lowest Office

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 BASIC AND HISTORY OF
MANAGEMENT
• The Human Relations Theory of management
– The Human Relations Approach, in the early 1920s
was a shift away from classical management theory.
This change took place as theorists began to consider
the human side of an organization and the social
needs of employees. The human relations theory of
management began development in the early 1920's
during the second industrial revolution. At that time,
productivity was the focus of business
– The human relations management theory is a
researched belief that people desire to be part of a
supportive team that facilitates development and
growth. Therefore, if employees receive special
attention and are encouraged to participate, they
perceive their work has significance, and they are
motivated to be more productive, resulting in high
quality work.
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 BASIC AND HISTORY OF
MANAGEMENT
• Behavioral Science approach and Human relations is an
interdisciplinary field
– Human relations is an interdisciplinary field because
the study of human behavior in organizational settings draws on the fields of
communications, management, psychology, and sociology
– Also called “Human Resource Approach” gave importance to attitudes,
behaviour and performance of individuals and groups in the organisations.
Gives a more complex view of human beings and their needs and motives
– Basic assumptions and propositions of Behavioural Science Approach are:-
Organisations are socio-technical systems. The management must integrate
both the systems. Work and interpersonal behaviour of people in the
organisation is influenced by many factors. Employees are motivated not only
by physiological needs but also by social and psychological needs
– Different people have different perceptions, attitudes, needs and values. These
differences must be found out and recognised by management
– In an organisation conflicts are unavoidable. Personal goals and
Organisational goals must be joined together.
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 BASIC AND HISTORY OF
MANAGEMENT
• Researched belief that people desire to be more
productive
– a series of experiments conducted by Professor Elton
Mayo and his associates at the Harvard School of Business
at the Western Electric Company’s Hawthorne Works, near
Chicago.
– These studies brought out for the first time the important
relationships between social factors and productivity.
Before it, productivity of the employees was considered to
be a function only of physical conditions of work and
money wages paid to them. For the first time it was
realized that productivity depended largely upon the
satisfaction of the employees in work situations. Thus
those who subscribe to the Human Relations School of
Thought are of the view that the effectiveness of any
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the people working in the organization
 BASIC AND HISTORY OF
MANAGEMENT
• Quantitative Approach
– The quantitative approach to management involves the use
of quantitative techniques, such as statistics, information models and computer
simulations, to improve decision making
– Modern management theory refers to emphasizing use of systematic mathematical
techniques in the system with analyzing and understanding the inter-relationship
of management and workers in all aspect. Modern management theories started after
1950s. The quantitative school of management is a result of the research conducted
during World War II . Uses scientific methods to study the group behaviour in
organisations to make decisions related to growth money wise and position wise
– Managers can use computer models to figure out the best way to do something —
saving both money and time. Managers use several science applications.
Mathematical forecasting helps make projections that are useful in planning process.
Inventory modeling helps control inventories by mathematically establishing how
and when to order a product. Queuing theory helps allocate service personnel or
workstations to minimize customer waiting and service cost, assignment problem
and transportation problem helps in employee engagement as well as distribution of
products
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 BASIC AND HISTORY OF
MANAGEMENT
• Quantitative Approach Contd…
– a quantitative basis for decision-making considers management as a system of
mathematical models and processes. This school is also sometimes called,
‘Operations Research’ or “Management Science School”. The main feature of this
school is use of mixed teams of scientists from several disciplines. It uses
scientific techniques for providing quantitative base for managerial decisions.
Exponents of this school view management as a system of logical process. The
exponents of this school believe that all the phases of management can be
expressed in quantitative terms for analysis. However, it is to be noted that
mathematical models do help in the systematic analysis of problems, but models
are no substitute for sound judgment
– Moreover, mathematical quantitative techniques provide tools for analysis but they
cannot be treated an independent system of management thought. A lot of
mathematics is used in the field of physical sciences and engineering but
mathematics has never been considered as separate school even in these fields. the
critics of this approach regard it as too narrow since it is concerned merely with
the development of mathematical models and solutions for certain managerial
problems
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 BASIC AND HISTORY OF
MANAGEMENT
• Systems Approach
– A line of thought in management field which stresses the interactive nature
and interdependence of internal and external factors, in and outside the
organization. A systems approach is commonly used to evaluate market
elements which affect profitability of a business
– System approach is set of interrelated and interdependent parts arranged in a
manner that produces unified whole. For e.g. In a company a group of people
working for a common goal or success aimed at identifying nature of
relationship among various components of organisation which is considered
as larger system to achieve goals
– Systems approach to management views the organisation as a unified,
purposeful system composed of interrelated parts

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 BASIC AND HISTORY OF
MANAGEMENT
• Systems Approach contd…
– A system can be either closed or open. Most approaches treat organization as
an open system. An open system interacts with its environment by way of
inputs, throughputs and outputs. Think of the universe. Its parts are as small
as a subatomic particle and as large as galactic clusters. Each part is distinct
but interacts to form the universe. An organization is also a system with parts
such as employees, assets, products, resources, and information that form a
complex system.
• An open system consists of three essential elements
– An organization receives resources such as equipment, natural resources, employees,
technology and information referred to as inputs. Transformation process
surrounded by environment comprising of employees work activities, management
activities and operations methods. Finally finished products or services, financial
results, information and man power working results into Output

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 BASIC AND HISTORY OF
MANAGEMENT

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ORGANIZATION AS AN OPEN SYSTEM
• Systems Approach contd…
– Inputs are transformed, into yields in terms of products or services called outputs which are released into the
external environment which include customers, competitors, other suppliers and regulators etc
• As we noted in our definition, systems can be open or closed.
– A closed system is not affected by its environment. For example, a chuck of iron ore is not substantially
affected by its environment influenced by customer demands which are constantly changing and evolving
– An open system is a system that is affected by its environment. A simple example is Google as its values and
principles are harmonized with the environment
 BASIC AND HISTORY OF
MANAGEMENT
• Contingency
approach also known
as situational
approach
• Organizations are
individually different
• Situational
• Leader-member
relations
• Task structure
• Position power Copyright @ Dr. Niranjan Mudliar / JLBS / FOM /
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BASIC AND HISTORY OF
MANAGEMENT

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