PRINCIPLES AND PRACTICES OF MANAGEMENT

UNIT 1 BASICS OF MANAGEMENT

Objectives

After going through this unit, you will be able to:

• Define the basic concepts of management and organization.

• State nature and scope and management.
• Explain various types of industries and business houses.

Structure

1.1 Introduction
1.2 Definitions of Management
1.3 Business Organization and Management
1.4 Nature of Business
1.5 Functions of Business Organization.
1.6 Business Industries
1.7 Factors affecting establishment of Business Organization
1.8 Objectives of Management
1.9 Principles of Management
1.10 Nature of Management
1.11 Levels of Management
1.12 Summary
1.13 Keywords

1.1 INTRODUCTION

An organization is a place where people come together, organize and co-ordinate activity to
achieve some specific goal. All organizations whether profit making or non-profit making need
to manage their business and direct the various efforts, towards a definite purpose. The
globalization process opens doors to multi-nationals which increases competitiveness in the
market. To manage the business for customer’s satisfaction is the challenge of this 21 st century.
This emerging economic environment forces for quick and effective changes in the business
organization. To visualize these changes, right people are needed to be appointed in the
organization. Right strategically decisions at right time will help to achieve success.

Management is a process where resources are put at its proper direction to achieve decided
goal. Management is a mechanism that constitutes basic functions for accomplishment of
objectives. Management is a science that is based on certain principles and functions.
Management is integrating function of organizing human resources, with physical resources for

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better performance and maximizing productivity with available economic resources.

Management is a group activity, where numbers of people come together and their efforts are
directed towards common objective.

Therefore management is a process where 4 basic factors i.e. men, machines, materials and
money, are involved. If these factors are managed strategically, the decided objectives could be
achieved successfully. Manager operates himself to get things done with the other people those
who are working along with him. Manager is a leader, who motivates people working with
formal as well as informal communications, interprets the instructions and supervises and co-
ordinates their work. Therefore men are treated as most important factor in the organization.
As the Herald Koontz and Cyril O’Donnell say, “Management is the art of getting things done
through and with people in formally organized groups.” Here Manager needs to control and co-
ordinate the activities in a formal way. For this managers use management principles, tools and
techniques which are derived by various management thinkers which are universally accepted.
Thus, Management has interdisciplinary approaching terms of economical, sociological,
mathematical, psychological aspects.

1.2 DEFINITION OF MANAGEMENT

Some Definitions of the term Management are given below –

Harold Koontz and Cyril O’Donnell-
“Management is the art of getting things done through and with people in formally organized
groups. It is the art of creating an environment in which people can perform as individuals and
yet co-operate towards the attainment of group goals. It is the art of removing blocks to such
performance, a way of optimizing efficiency in reaching goals.”

William Spriegel :-

“Management is that function of an enterprise which concerns itself with the direction and
control of the various activities to attain the business objectives.”

George R. Terry :-

“Management is a distinct process consisting of planning, organizing, actuating and controlling

performance to determine and accomplish the objectives by the use of people and resources.”

Dalton Macfarland :-

“Management is the process by which managers create, direct, control, maintain and operate
their organizations through coordinated, systematic and cooperative human efforts.”

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Thus, these definitions state that management is a collective activity of a group of people, to
reach a specific decided goal or objective. To manage the people is an art. Human mind is a
complex element. We need to handle it tactfully, to manage it and direct it for good efforts. So
management is the process of getting things done through and with the people. A good leader
will coordinate and control activities with cooperative human efforts. It is an art to remove gaps
between performances. Various management thinkers have provided tools and principles to
solve the problem that arise within the operation and execution level. A good manager will take
appropriate decision that would be necessary for the respective situation to carry on the work.
Proper and timely decision will prove to be beneficial.

Activity 1

Meet one manager or a person who is working as a Team Leader and discuss with him how
he manages people working with him? Which tools does he apply to solve their problems?

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

1.3 BUSINESS ORGANIZATION AND MANAGEMENT

Business is an organization where group of people undertake a particular activity to produce

goods and services, may be in the form of finished products or services to its customers.
Business organized may be profit making business or services providing i.e. non-profit making
organization. Profit making organizations could be identified as manufacturing companies, large
scale companies, small scale companies, shopping malls, retail stores etc. There are various
NGOs working in our community for the upliftment of poor and needy people, with the
government support or some large scale companies’ support. Any formal organization
established needs to manage its business for accomplishment of its goal. Business organization
activities include production and distribution of goods and services.
Now a day, government is encouraging students to undertake courses those are providing self-
employment. Numbers of vocational courses are started for this purpose. In the self-
employment, to start own business, a person should be well equipped with skills and knowledge
to conduct business, as well as should be able to manage people to execute the operations of
business effectively and efficiently. Therefore along with technical skills, management skills are
also needed to be acquired. Right from starting a business to its establishment, one has to co-
ordinate human resources with material resources.
Forms of Business Houses:-

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1. Sole proprietorship: A sole proprietorship is a profit-making business owned by one

person. The owner may operate on his or her own or may employ others. The owner of
the business has unlimited liability for the debts incurred by the business.

2. Partnership: A partnership is a for-profit business owned by two or more people. In most

forms of partnerships, each partner has unlimited liability for the debts incurred by the
business. The three typical classifications of partnerships are general partnerships,
limited partnerships, and limited liability partnerships.

3. Corporation: A corporation is a limited liability business that has a separate legal

personality from its members. Corporations can be either government-owned or
privately-owned. Corporations can organize either profit-making or not-profit making
institutions. A profit making corporation is owned by shareholders who elect a board of
directors to direct the corporation and hire its managerial staff. A profit making
corporation can be either privately held or publicly held.

4. Cooperative: Often referred to as a "co-op", a cooperative is a limited liability business

that can organize for-profit or not-for-profit. A cooperative differs from a for-profit
corporation, in the sense, it has members, as opposed to shareholders, who share
decision-making authority.

Activity 2

Divide following business houses as per their type of ownership –

Tata Motors, Big Bazar, Shaukat Panwala, Srushti co-operative society, Bhagwan and sons
Pvt. Ltd., National Kirana Bazar, Reliance Energy, SBI staff consumer cooperative store,
Adidas, Microsoft, Gyanba Vegetable store, Ranka Jewelers & Gems, Pantaloon, Shaadi
Mubarak from movie Band Baja Barat.

Sole proprietorship: __________________________________________________________

Partnership: ________________________________________________________________

Corporation: ________________________________________________________________

Cooperative: ________________________________________________________________

1.4 NATURE OF BUSINESS

1. Producing goods and services: - Production of goods like cars, scooters, machines, hardware
products, cloths etc. or service products like financial products, goods offered by banking or
insurance sectors, software products, would be basic activity of respective business
organizations.
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2. Distribution and exchange of finished products: - Distribution and exchange of goods

produced by manufacturing company for profit making activity.
3. Rendering services to needy people as a social responsibility: - In our country, though it is a
developing country, there are number of citizens who need support from the society for
their upliftment. Various government and private organizations are working for these
people. They provide services for the welfare of the community.

There are basically three components of a business :

1. Owner: - Owner is a person or a group of persons, who invests capital and takes risk in
profit or loss and dividend. He is liable for unlimited debts in the business. He is
responsible to prepare objectives, missions to carry over business. Strategically
decisions will be taken by the owner. In sole proprietorship a single person or along with
his family is treated as owner. Whereas corporate level stakeholders are also owners of
a company. They are decision-makers.
2. Employees: - Employee provides his/her services for a particular business and in return
he will receive adequate compensation in the form of salary, bonus, allowances,
recreational facilities, etc. Employees are treated as executors. Employee, may be in the
capacity of a manager, a supervisor, a worker etc., is responsible for execution and
implementation of strategies decided by owners.
3. Customers: - Customers are patrons of business enterprise. Customer satisfaction is the
sole and prime objective of any enterprise. Customer satisfaction lies with the quality
products at reasonable price with adequate and regular supply along with good timely
services.

1.5 FUNCTIONS OF BUSINESS ORGANIZATIONS

To achieve the objectives of the organization various functions need to be carried out. Those
could be grouped as Production, Marketing, Personnel, Finance etc. These functions are inter-
related and interdependent. In large organization this activity is generally decentralized
whereas in small organization it is a centralized activity. Effective planning, co-ordination,
control and execution will ensure smooth functioning of these departments.

1. Production Function: - This is a process where raw material and other resources are put
to use. After a process, final product i.e. output will be in the hands. This process is
called as production process. Type of product differ as per the type of industry, it may
be a manufactured goods or service products.
2. Marketing Function: - Sale of goods produced by production department is undertaken
by marketing department. Marketing department is responsible for deciding price of a
product. Advertisement, sales promotion through holding any contest or distributing
sample copies, market research and taking feedback from consumers for customer

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satisfaction; are prime activities of marketing department. Marketing person needs to

co-ordinate production department as per the feedback received for improvement in
the product designed.
3. Personnel Function :- Any organization, though it, is fully equipped with other resources
like material, technology, finance etc. without human beings involvement co-ordination
among them is not possible. It is a job of management to see whether human needs in
terms of work are satisfied. Proper necessary facilities in the working place for men and
women have to provide so as to create comfortable working environment.

Above mentioned functions are highly dependent on each other. Without production,
marketing of products is not possible, whereas marketing department keeps contact with
customers through after sales service public relation centers or through market research.
Suggestions received from the customers and laymen are forwarded to production
department for further improvement. Without human beings no organization could be run
efficiently though it is highly technically equipped.

Production
Department

Marketing
Department

Personnel

Fig 1.1

1.6 BUSINESS INDUSTRY

1.6.1 Basic concept

A business industry is a comprehensive collection of businesses of different scales, engaged

in varied commercial activities for earning a profit. Particular business industries may be
classified by the main activity that the businesses are involved in. The size of a business is
typically defined by the number of employees and the volume of annual sales.

There are two types of industry- Small scale and Large scale industry. A small business is one
that is independently owned and managed. In the US, a business is classified as “small” if it

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employs less than 50 people and “large” if the number of employees is more than 100. In
the European Union, the defining numbers stand at 100 and 250, respectively.

According to Indian economy, industry is also broadly separated into public sector and
private sector, of which major industrial section is generally categorized as private sector.
Industries can be classified on the basis of raw materials, size and ownership.
1.6.2 Types of Industries
A.) Primary Industries –
Primary industries are those which use natural resources as raw material. This involves
the extraction of resources directly from the earth or the universe.
A.1. Extraction Industry: - In this, it extracts out products from natural resources like
earth, sun, water etc. Finished goods of these industries are generally used by other
industries as raw material. Industries like agricultural industry, mining industry, fish
breeding, animal raring power and electricity generation are treated as primary
extraction industries.
A.2 Genetic industries: - In this business, industry is carried forward by one generation
to next generation. It could be animal breeding and animal husbandry, agriculture
industry, milk and milk product, food production and preservation etc.

B.) Secondary Industry –

B.1 Manufacturing Industry: - They carry our production process with raw material or
semi-finished goods to transform into finished products. Most of these industries
rely on raw material supplied by primary industry or other small scale industries.
Factory production is the outcome of any industry. Basically there are types of
manufacturing industry.
B.1.1 Analytical Industry – In this basic material is analyzed and separated from raw
material to process into finished products. Extracted crude oil from the earth
and process it for acquiring finished products like petrol, diesel, gas, kerosene,
separating iron from iron ores etc.
B.1.2 Synthetic Industry –When two or more materials are mixed together some
finished product is formed. Fertilizer producing, cosmetics, soap making,
cement creation etc. are some of the examples of synthetic industry.
B.1.3 Process Industry – Here raw material is processed by considering analytical or
synthetic methods. Sugar factories, Textile industry, Iron and Steel industry are
some these examples.
B.1.4 Assembly line Industry – Here raw material received from small scale industry
or primary industry is assembled in this, for example Automobile industry,
making watches, electronic goods like TV, Washing Machines etc.

B.2 Construction Industry – Construction of roads, dams, buildings, cannels etc. are
included under this type of industries. They need cement, steel and iron, sand,
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wood etc. as a raw material for construction. Even glass, marble, other decorative
stone industries are supportive to the construction industry.

C) Tertiary:-
Services providing industries are included in this section.
C.1 Financial Services –This sector provides services to other manufacturing industries
and to the society. Financial products in the form of insurance, deposits, mutual
funds, systematic investment plan, etc. are offered to industrial units, as well
patrons of the society. Here government and private institutions are established to
provide these services. Insurance Companies, Banking sector, Private Financial
Institutions comes under this sector.
C.2 Educational Services – Basically educational services are treated as noble services,
which are imparted for not profit motive. But educational institutes need to be
managed properly for qualitative education. Efficient and knowledgeable teachers
can only pass on knowledge to next generation.
C.3 Information services – This 21st century is called as Information era. There is vast
amount of information available in the society. This is most important and tedious
task to manage information in a systematic way, so it could be handled effectively.
Adequate, relevant and prompt information helps to carry out research. Print and
Non-Print medias, Publishing Houses, and now a days internet related institutions
are helping to manage these services.
C.4 Information and Technology Industry–This is also service rendering industry. This
helps, to acquire, process, store and manage data and information with the help of
technology like computer software, hardware, programming languages. This
processed data is delivered through communication technologies for free of cost
sometimes. Database along with hyperlink are providing vast of information across
the internet. Information technology along with communication technology is used
to develop these services.
D. Quaternary Industry – This is an intellectual services providing industry. Research and
development work is carried out under this. Research is carried out for the development
of human beings. Various research institutes like NCL (National Chemical Laboratory),
NEERI (National Environmental Engineering and Research Institute), IARI (Indian
Agricultural Research Institute) etc. are some of the research institutes established by the
government. Even research and development centers of pharmaceutical companies,
automobile industries work throughout on developing new products.

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Primary •Extraction industry

Industry •Genetic Industry

Secondary •Manufacturing Industry

Industry •Construction Industry

•Financial Services
•Educational Services
Tertiary
Industry •Information Services
•Information and
Technology Services

Quaternary
Industry

Fig 1.2

1.7 FACTORS AFFECTING ESTABLISHMENT OF BUSINESS ORGANIZATION

Following are the factors need to consider while establishing any business organization.
1. Nature of business: - First owner should decide about which business he can undertake.
A person will choose a nature of business as per his skills or knowledge acquired. The
business activity taken may be trading activity, manufacturing activity or service activity.
Trading activity may be sole proprietorship because it is conducted at small scale.
Manufacturing business, partnership firm or large scale companies need to establish by
offering shares and debentures.
2. Ease of Formation: - The difficulty level to bring a business into existence needs to be
analyzed first. Here problems like finding suitable partner or associate for business,
business promotion activity, funds rising, liability of business, legal formality, those
needs to be consider for establishing business.
3. Sources of Finance – This is an important function to establish any business. Nature of
business is always decided on the basis of capacity to raise adequate finance. For small
scale a proprietor or partners contribute in the capital, any profit or liability will be their
responsibility. But in Large scale companies shares and debentures are issued to a
society for capital contribution. Shareholders will be liable for dividend as per the profit
earned.
4. Expected Competition – Business is always related with competition which is there in
the market. The target consumers are always divided among various traders.
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Qualitative products and effective after sales service helps to survive in the competitive
world. Webster dictionary defines competition in business as "the effort of two or more
parties acting independently to secure the business of a third party by offering the most
favorable terms".
5. Government Regulations – To establish any firm one need to study and analyze
government rules and regulations. Some clauses of a law may differ as per the size of a
firm and the type of a ownership. A Company form of organization is subjected to a
more regulations by government than other type of firms.
6. Stability and continuity – An owner will first see for stability in the business. With
stability good returns on investment, and helps to achieve the objectives. With the
stability in the business assures its employees for long term commitment. Employees
will prove productive only when they will feel secure about their employment. Even the
society is interested in regular and timely supply of goods and services along with
satisfaction of customers.

Activity 3
Find out at least two business organizations of each type of industry working in our country.
Primary Secondary Tertiary Quaternary
Extraction Ind. Manufacturing Ind. Financial services related
Genetic Ind. Construction Ind. Educational services
Information Services
Information Technology services

1.8 OBJECTIVES OF MANAGEMENT

Goals or objective is a desired future condition that the organization seeks to achieve. Achieving
complex and difficult goals requires focus, long-term diligence and effort. Objective is a purpose
or the anticipated result that has intrinsic value. Objectives are organizational objectives, social
objectives or personal objectives. It can be described as –

1. Organizational Objectives –
a. Customer Satisfaction
b. Stability and growth of organization.
c. Improving goodwill of the organisation.

2. Social Objectives –
a. Supply qualitative products and services
b. Follow business ethics in business process.
c. Upliftment of underdeveloped people through social responsibilities.
d. To increase employment opportunities.
e. Conservation of environment and natural resources.
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3. Personal Objectives –

a. Fair returns for work performed.

b. Reasonable working conditions.
c. Continuity in employment

Activity 4

Frame the objective of your life within next 5 years. Write down steps how you will achieve
the decided objective?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

1.9 PRINCIPLES OF MANAGEMENT

The basic principles of management are profound by Henry Fayol, a French industrialist and the
father of modern management. These principles are used for decision making when any
manager faces dilemmatic situation. These principles aim at smooth administration of any
industry.

1. Division of Work – this principle emphasis on work assignment. Work assigned to every
individual will be according to his specialization, skills and knowledge acquired by him.
This is applied to all industries irrespective of its scale of business.
2. Authority and Responsibility – Authority and responsibility are the two terms that go
hand in hand. Authority without responsibility will increase inefficiency among
individuals. To achieve the organizational objective is a basic responsibility of every
person working within. To handle this responsibility, authority limits are allotted as per
the position.
3. Discipline - It is an essential activity of any efficient organization. Discipline means to
instruct a person to follow a particular code of conduct or order. Discipline means an
activity, exercise or a regimen that develops or improves a skill through training.
Therefore if everyone observes this principle, it would affect productivity of employees.
4. Unity of Command –This principle deals with only one boss for each employee. There
should be one supervisor or manager for each employee. If a person’s receives two or
more instructions to follow, he would get confused. Thus may results in conflicts and
therefore may reduce his efficiency.
5. Unity of Directions – A one common plan should be followed for all to achieve the
objectives. Alternative plans, if implemented, may lead to confusions. Therefore there
should be one instruction at a time to employees.

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6. Centralization - Centralization and decentralization of activities is depending upon the

scale and nature of organization.
7. Subordination of individual interest to general interest – When a person joins any
enterprise he gets bound by its environment. For this, every individual’s interest would
depend on organizational goals. A manager is responsible to encourage everyone to
perform his duties towards implementation of plans.
8. Remuneration – Remuneration is the cost paid to every individual working for the
enterprise, for the services he is rendering towards an organization. Without fair wages
or salary nobody would prove production.
9. Scalar chain – This refers to the a hierarchy of authority and command that need to
maintain for smooth communication. Proper hierarchy provides proper direction to give
instructions from higher authority to lower level.
10. Order – This principle states that every individual working with organization should be
placed at its proper place and every place in the organization should be filled with
proper employee.
11. Equity – It deals with justice and humanistic approach to every employee. If this
principle is applied properly by the manager, any enterprise can enjoy success. If this
problem is handled properly,, relations between workers as well with management can
be maintained. For this, manager who possess emotional intelligence and experience,
can handle it successfully.
12. Stability of tenure of personnel – This principle deals with stability and continuity. If
employee knows that his services will be appreciated in the future with good returns,
then that person will prove to be productive. He will take more interest in his work and
perform better up to his maximum capacity. But if there is no assures of security he
loses his interest of work. This may result in searching other job opportunity. This
situation increase attrition in the organization.
13. Initiative – The principle of initiative refers to the ability and quality of manager to think
and execute a plan. A manager is responsible for encouraging others for better
performance. Leonardo Da Vinci said “Knowing is not enough; we must apply. Being
willing is not enough; we must do." As per this quote a good manager will apply his
knowledge and encourage others to apply and be innovative in their work.
14. Esprit de Corps – Here the sense of belongingness, unity and team spirit among
employees of the organization has to be encouraged to receive maximum output. All
successful organizations survive only when there is spirit of unity and team work. For
this, managers must create a culture and environment with the help of above
mentioned other principles, like equality, stability, specific industrial goals, putting right
person at a right place, etc.

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1.10 NATURE OF MANAGEMENT

A. Management as an art

Art is nothing but the application of principles. Art refers to creative skills and talents to
achieve the goal. As Harold Koontz and other management thinkers say “Management is the
art of getting things done through people.” The human psychology is complicated; need to
divert it for qualitative productivity, one needs to manage it properly. As Webster’s
Dictionary say “Art is skill in conducting human activity.” Henry Mintzberg is probably the
most well-known and prominent advocate of the school of thought, that management is an
art. He is an academic researcher, whose work capturing the actual daily tasks of real
managers was ground breaking research for its time. Mintzberg, through his observation of
actual managers in their daily work, determined that managers did not sit at their desks,
thinking, evaluating, and deciding all day long, working for long, uninterrupted time periods.
He also determined that mangers are engaged in very fragmented work, with constant
interruptions and rare opportunities to quietly consider managerial issues.

Peter Drucker, a well-known management scholar, is best known for developing ideas
related to total quality management. He terms management "a liberal art," claiming that it
is so because it deals with the fundamentals of knowledge, wisdom, and leadership, but
because it is also concerned with practice and application. Drucker argues that the
management attempts to create a paradigm for managers, in which facts are established,
and exceptions to these facts could be ignored just because of irregularities. He criticized
assumptions that make up the management paradigm, because these assumptions change
over time as the society and the business environment change. Thus, management is more
of an art, because scientific "facts" do not remain stable over the time.

Frederick W. Taylor's, a father of Scientific Management described management an art as -

1. Managers must study the way their workers perform their tasks and understand the
job knowledge (formal and informal) workers have, and then find ways to improve
how tasks are performed.
2. Managers must codify new methods of performing tasks into written work rules and
standard operating procedures.
3. Managers should hire workers who have skills and abilities needed for the tasks to be
completed, and should train them to perform the tasks according to the established
procedures.
4. Managers must establish a level of performance for the task that is acceptable and
fair and should link it to a pay system that rewards the workers who perform above
the acceptable level.

B. Management as a Science

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Webster’s College Dictionary defines science as "any skill or technique that reflects a precise
application of facts or a principle." Therefore science is a systematic body of knowledge
which could be applied derives facts and based on certain principles which are capable of
verification that is universally accepted. Science faculty is divided into two criteria’s –
1. Basic & Pure Science
2. Social Science.
Physics, Chemistry, Biology, Electronics, Mathematics, and Information Technology are
some of the branches of Pure Science. These subjects are based on accurate principles. If it
is applied the output will be the same universally everywhere. Where as in Social Science it
is based on certain principles but output may very according to situation, as it is mostly
related with human psychology. Management is a branch of Social Science faculty.
F. W. Taylor is known as father of scientific management. He emphasis, his studies in
“efficiency in work for better productivity”. For this he laid down certain fundamentals such
as accuracy in work, trained person at right place etc. He told decentralization of task is
more important.

Henry Fayol contributed to management studies with basic principles of management and
the “Functional Approach”. He divided all industrial activities into six groups. These
activities are important though the organization is small or large scale.

Peter Drucker introduced a concept MBO, Management by Objectives which is further

modified by Schleh as ‘Management by results.’

W. Edward Deming derived a statistical approach to management with the concept Kaizen.
It deals with standardization of operations and activities through Deming cycle, Shewhart
cycle, PDCA techniques to meet requirements and increase productivity.

TQM technique is a management approach for quality improvement. This approach came
from the teachings of such quality leaders as Philip B. Crosby, W. Edwards Deming, Armand
V. Feigenbaum, Kaoru Ishikawa and Joseph M. Juran. This is based on approach “the
customer is always right.”To satisfy this approach, Taguchi Technique has been built by
Japanese engineer Genichi Taguchi which is built on basic idea to remove the effects of
adverse conditions instead of removing causes.

In 1986 Motorola, USA, has developed business strategy ‘Six Sigma’ that seeks to improve
the quality of output by identifying and removing the causes of defects and minimizing
variability in manufacturing and business processes.

Motivational Theories i.e. Maslow’s Need Hierarchy Theory, Herzberg’s Two-Factor Theory
McGregor’s Theory X and Theory Y, Victor Vroom’s Expectancy theory are some techniques
pioneer in management faculty.

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All such techniques developed by management practitioner and thinkers supports that
management can be regarded as a science faculty. Management is a process of systematic
collection and processing of information for decision making. The processed data is then
analyzed and then managers by using their judgment, experience and techniques takes a
decision.

C. Management as a Profession

Webster’s Dictionary of English Language defines profession as, “that occupation requiring
specialized knowledge and academic training”. Therefore profession involves some branch
of advanced learning or skills. This knowledge is applied as a solution to many problems,
takes decisions and executes the plans to achieve decided goal. Thus knowledge of
management and a manager, as a working profile, is treated as a high class profession.

Characteristics of Profession

1. Systematic body of knowledge – When any occupation is based on the expert

knowledge is treated as profession. Expert knowledge possesses principles or
techniques, methods of knowledge. This knowledge can be applied to process, execute,
and carry the operation of any enterprise.
2. Universal Acceptance –In profession universally accepted theories, principles and
techniques are applied for practical working. Methods and principles evolved by
management thinkers are universally accepted and are used to base as solution to
dilemma.
3. Formal Education – A systematic body of knowledge when acquired through formal
education, it can be treated as a profession. Theoretical knowledge supported by short
term practical training of management is imparted from recognized institutes in India as
well throughout the world.
4. Specialization – Professionals may specialize in a particular field like engineers. As
engineers possess specialized knowledge in the field of electronics, information
technology, mechanics etc, as even managers can choose their specialization as per the
interest area like finance, marketing, personnel etc.
5. Code of conduct – Any good profession is always guided by a code of conduct. A
manager has to follow professional business ethics, while executing his responsibilities.
6. Independent Office – Many professionals work from their independent office. Some
management professionals work as a consultant and practice independently. Their
services are hired by other organizations.
7. Fees – Professionals charge fees in the form of consultancy fees or remuneration for the
services offered by them, as this management consultant charge fees as against
consultancy provided to their clients.

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8. Social Responsibility – Professionals are liable to the society. Their work is regarded as
vital to society.
9. Work Autonomy - Professionals are autonomous as they can make independent
judgments about their work. A professional enjoys freedom to exercise their
professional judgment. Even managers enjoys freedom in practicing their knowledge
and can make new experiments.
10. Status – Professionals enjoy high prestige and good rewards. Specialized technical
knowledge always gains status in the society. As Managers are treated as skilled workers
they receive prestige and status for their profession.

According to some management thinkers managers are treated as professionals and

management is a high class profession.

Activity 4

List out various occupations those are accepted as profession.

Select any professional person other than manager. Check how his/her work profile could
be treated as profession with the help of above characteristics.
___________________________________________________________________________
___________________________________________________________________________

1.11 LEVELS OF MANAGEMENT

According to the principles of division of work, job is divided among employees as per
individual’s caliber. Therefore there will be many managerial positions irrespective of the scale
of an organization. Positions in the organization are marked by authority, responsibility,
functions and roles etc. Job profile varies as per the position varies in the organization. Thus
managerial positions are classified as per the work profile and responsibilities allotted. A
demarcation is drawn to decide the level of these positions. Levels of management consist of
various managerial positions in the structure of an organization. It may differ from one
organization to another, size of organization or as per the span of control. The level of
management decides the role play, contribution and authority and responsibility of that
position. Therefore in the levels authority along with responsibility increases as the person
moves upward. Levels of management are broadly classified as-

1. Top Level Management

2. Middle level Management
3. Lower-Level Management

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•Owners
•Shareholders
Top Level •Directors

•Professionals
•SKilled and Intellectual Employees
Middle Level

•Operational level Employees

Lower Level •Semi-skilled or Unskilled Labours

Fig 1.3

1. Top Level Management –

Individuals those are involved in decision making process are regarded as Top Level
Managers. They are mainly responsible for drafting strategic decisions and framing
objectives and goals of an organization. Generally owners are incorporated in top level.
Owners along with their family members or in case of corporate companies’ representatives
of shareholders, CEO’s, directors and chief executives are also treated as decision makers.
These groups are responsible for entire management of the organization and responsible for
the activities carried out within the enterprise. They are answerable to the owners about
the current position. Activities carried out by top level Managers –
1. Frame Mission, Vision and Objective statements of an organization.
2. Plan out the strategies to achieve the objectives decided.
3. Prepare long term, short term, departmental planning to support the strategies.
4. Financial matters will be controlled by these managers.
5. Managers are involved in innovating new products and encourage others for the
same.
6. They are responsible for controlling and co-coordinating activities within various
departments.
7. They appoint right executives at right place.
8. They will keep a watch on organizational structure and can suggest modifications if
required.
9. They take decision for the alternate plans for any dilemma.
10. They calculate share of profit or dividend to distribute among owners of the
enterprise.
11. They are completely responsible for stability, growth and expansion of an
organization.
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12. They are leaders of an organization.

2. Middle Level Manager
Employees who are responsible for execution of policies are Middle Level Managers,
therefore they are also called as Executives. Project planning is mainly done by these
employees. They collect information, process it and forward it to top level executives for
final decision. Their suggestions and participation could be welcome by top managers.
Generally Departmental Managers, Deputy managers, Foreman, Administrative managers
etc. are middle level managers. They need to follow following functions as an executive –
1. To decide departmental goals to support organizational goals.
2. Work out plans and strategies to carry out those goals.
3. They are responsible for suggestions and recommendations to their managers for
constant improvement in the enterprise.
4. They guide and direct the work of their subordinates.
5. They are responsible to carry out functions like performance appraisal, arranging
training and development activity, for their subordinates.
6. They act as a spokesperson between top level managers and lower level managers
and bridge the gap in communication. Instructions received by top level are
communicated to the subordinates while any suggestions received by junior
managers are passed on to directors.
7. They motivate and encourage lower level managers for better performance.
8. Their responsibilities and authorities are limited as compared to director level
managers.
9. They will directly report to the top managers.
3. Lower Level Manager –
Lower level managers are also known as First line or Supervisory managers. They help
workers to carry out day to day functioning of workers. Though these managers does
not set goals, they have strong influence on the organization. If a manager performs
poorly, workers may lack to prove productive.
1. They are responsible to manage and carry out day to day activity i.e. basic
enterprises functioning.
2. To encourage and motivate flower workers and other employees.
3. Prepare plans to carry out the operation of enterprise.
4. To look into day to day problems of workers and helps to solve those as per their
capacity.
5. They are responsible for quality and quantity of production.
6. They are responsible to provide on the job training to workers.
7. They receive various grievances and they communicate those to top management.
8. Make an arrangement and provide all required resources for production.
9. Ensure discipline and safety of workers within the premises.
10. They supervise and guide workers.
11. They report day to day activity to higher level managers.
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1.12 SUMMARY
Management is an activity of organizing and coordinating people with resources, process
and technology. Management is often included as a factor of production along with
machines, materials, and money. While managing one, need they keep the end result in
mind i.e. decided the goal or objectives decided. To achieve the objectives, manager directs
controls and coordinates the activities. To process functions like production, marketing and
controlling financial aspect and personnel in the organization is main task of any
organization. According to management guru, Peter Drucker basic tasks of management are
marketing and innovation. These functions are divided among personnel available according
to their capacity and skill they acquire. Accordingly they serve for certain designation.
Though the nature and type of industry may vary, the basic managerial activities will be
same, though the organization is formal or informal. Principles and other management
theories support this discipline to adopt as a profession but still some experts say that to
manage is an art while according to other contributors it is science also.

1.13 KEYWORDS
1. NGO – Non-government-organization, those who work for the community or society on
no profit- no loss basis.
2. Strategically – something important in plan of action
3. Globalization – Growth to global or worldwide scale
4. Anticipate – To fee or realize beforehand
5. Conserve – To use carefully by avoiding waste

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