DPUE

2nd PUC

BUSINESS STUDIES

Chapter1
Nature and Significance of Management
 CHAPTER - 1
Nature and Significance of Management
Definition of Management:
“Management is one process of designing and maintaining an environment in which individuals
working together in groups efficiently accomplish selected aims.”
- Harold Koontz and Heinz Weihrich

“Management is defined as the process of planning, organizing, activating and controlling an

organization’s operations in order to achieve co-ordination of human and material resources essential
in the effective and efficient attainment of objectiveness”.
- Robert L Trewelly and M Gene Newport

“Management is the process of working with and through others to effectively achieve organizational
objectives by efficiently using limited resources in the changing environment.”
- Kreitner

Meaning of management:
Management is the process of getting the work done through and with the help of others in order to
achieve the specific organizational objectives.
It is the process of getting things done with the aim of achieving goals effectively and efficiently.
Meaning:
Effectiveness: It is concerned with doing the right task, completing activities and achieving goals. It
is concerned with the end result.
Efficiency: Means doing the task correctly and with minimum cost.
Process: Primary functions/activities performed by the management in order to achieve organization
objectives.
Characteristics of Management:
• Management is a goal oriented process.
• Management is all pervasive.
• Management is multi-dimensional.
- Management of work
- Management of people
- Management of operation
• Management is a continuous process
• Management is a group activity.
• Management is a dynamic function
• Management is an intangible force.
i) Management is goal oriented process: Every organization has a set of basic goals which
have to be achieved. Different organizations have different goals. These goals should be simple
and clearly stated. The management unites the efforts of different individuals in the
 organization towards achieving these goals. For ex: The goal of a retail store may be to
increase its sales.
ii) Management is all pervasive: The activities involved in managing an enterprise are common
to all organization whether economic, social or political, for example a petrol pump needs to be
managed as much as a hospital or a school.
iii) Management is multidimensional: Management is a complete activity that has 3 main
dimensions. These are:
a) Management of work: All organizations exist for the performance of some work.
Management translates this work in terms of goals to be achieved. For ex: In a factory a
product is manufactured, in a garment store the customers need is satisfied. This is done in
terms of problems to be solved, decisions to be made, plans to be established, budgets to be
prepared, responsibilities to be assigned and authority to be delegated.
b) Management of people: Human resources or people are an organization’s greatest asset.
Despite all developments in technology, “getting work done through people” is still a big task
for the manager. The manager deals with employers as individuals and as a group of people.
The task of management is to make people work towards achieving the organization’s goals.
c) Management of operation: The organization has to produce some product or render some
service in order to survive. This requires a production process, which is interlinked with both
the management of work and management of people.
iv) Management is continuous process: The process of management is a series of continuous,
composite but separate functions like planning, organizing, directing staffing and controlling.
These are performed by all managers all the time. The task of a manager consists of an
ongoing series of functions.
v) Management is a group activity: An organization is collection of different individuals with
different needs. Every member has a different purpose for joining the organization, but as
members of the organization, they work towards achieving the common organizational goal.
This requires team work and co-ordination of individual effort in a common direction.
vi) Management is a dynamic function: Management is a dynamic function and has to adapt
itself to the changing environment. In order to be successful an organization must change itself
and its goals according to the needs of the environment.
vii) Management is an intangible force: that cannot be seen but its presence can be felt in the
way the organization functions. The effect of management is seen in an organization, when
targets are met according to the plans, the employs are happy and satisfied and there is
orderliness in the organization.
Objectives of Management:
Management seeks to achieve certain objectives which are the desired result of an activity. On any
organization there are different objectives and management has to achieve all the objectives in an
effective and efficient manner. Objectives can classified into 8:

i) Organizational objectives: Management is responsible for setting and achieving objectives

for the organization. The main objectives of an organization should be to utilize human
resource and material resource to the maximum possible advantage i.e. to fulfill the economic
objectives of a business. These are
a) Survival
 b) Profit
c) Growth
a) Survival: is the basic objective of any business management must strive to ensure the
survival of the organization. In order to survive an organization must each enough revenues to
cover the costs.
b) Profit: Only survival is not enough or the business. Management has to ensure that an
organization makes sufficient profit. Profit is essential for covering cost and risks of the
business. It is also an vital incentive for the continued successful operation of the organization.
c) Growth: A business needs to add to its prospects in the long run, far this it important for the
business to grow to remain in the industry. Management must exploit fully growth potential of
the organization. It can be measured in terms of sales volume, increase in number of employs,
number of products, increase in capital investment etc.
ii) Social objectives: It involves creation of benefit for the society. As a part of one society,
every organization whether it is business or non business, has a social obligation to fulfill. This
includes:
• Using environmental friendly methods of production
• Giving employment opposite to the disadvantaged section of society.
• Providing basic amenities like schools and colleges to employees children.
iii) Personal objectives: Organizations are made up of people who have different personalities,
backgrounds, experiences and objectives. They all become part of the organization to satisfy their
diverse needs. They vary from financial needs.
- Salaries and other perks
iv) Social needs: Recognition
v) Higher level needs: Personal growth and development. Management has to reconceive
personal goals with organizational objective for harmony in the organization.

Importance of Management:

• Management helps in achieving group goals.

• Increases efficiency
• Creates dynamic organization.
• Helps in development of society

i) Management helps in achieving group goals

Management is required for achieving the goals of a organization. The task of a manager is to
give a common direction to the individual effort in achieving the overall goals of the
organization.

ii) Management increases efficiency:

The aim of the manager is to reduce cost and increase productivity through better planning,
organizing, directing, staffing and controlling activities of organization.

iii) Management creates dynamic organization:

 All organizations have to function in an environment which is constantly changing. It is
generally seen that individuals in an organization resist change as it often means moving from
a familiar secure environment into a new and more challenging one. Management helps people
to address these changes so that the organization is able to maintain its competitive edge.

iv) Management helps in achieving personal objectives:

A manager motivates and leads his team in such a manner that individual members are able to
achieve personal goals by contributing the overall organizational objective. Through motivation
and leadership management helps individual to develop team spirit, cooperation and
commitment to group success.

v) Management helps in development of society:

An organization has multiple objective to serve the purpose of the different groups that
constitute it. In a process of fulfilling all these management helps in the development of the
organization and through that it helps in the development of the society. It helps to provide
good quality product and service, creates employment opportunities, adopts new technology
for the greater good of the people and leads the path towards growth and development.

1. Management as an Art: Art is the skillful and personal application of existing knowledge to
achieve desired results. It can be acquired through studies, observation and experience.
Management can be said to be an Art since it satisfies the following features.
i) Existence of theoretical knowledge: Art presupposes the existence of certain theoretical
knowledge. Experts in their respective areas have derived certain basic principles which are
applicable to a particular form of art. For ex: literature on dancing, public speaking, acting or
music etc. There is lot of literature available in various areas of management like marketing,
finance and human resources which the manager has to specialize in. Thus there is existence of
theoretical knowledge.
ii) Personalized application: The use of basic knowledge varies from individual to individual; Art
is very personalized concept. For ex: Two dancers, 2 doctors will always differ in demonstrating
their art. There are various theories of management which prescribe certain universal
principles. A manager applies these scientific methods and body of knowledge to a given
situation, as a problem or an issue, in his own unique manner. Students of management also
apply these principles differently depending on how creative they are.
iii) Based on practice and creativity: Art involves the creative practice of existing theoretical
knowledge. A manager applies this acquired knowledge in a personalized and skillful manner in
the light of realities of a given situation. A good manager works through a combination of
practice, creativity, imagination, initiative and innovation. He achieves perfection after long
practice.
2. Management as a Science:
Science is a systemized body of knowledge that explains certain general truth or the operation
of general laws.
The features of science are:
 i) Systemized body of knowledge: Science is a systemized body of knowledge. It’s principles
are based on cause and effect, relationship. Eg: The phenomenon of an apple falling from a
tree is explained by law of gravity. Management has its own theory and principles that have
developed over a period of time. It has its own terms and concepts. Thus management has
systemized body of knowledge.
ii) Principles based on experimentation: Scientific principles are first developed through
observation and then tested through repeated experimentation under controlled condition. The
principles of management has evolved over a period of time based on repeated
experimentation and observation in different types of organization. Since management deals
with human beings and human behavour differs, management and cannot be predicted as
exact science but it can be called as inexact science or social science.
iii) Universal validity: Scientific principle have universal validity and application. Since
principles of management are not as exact as the principles of science, their application and
use is not universal. They have to be modified according to given situation.
3. Management as both “An art and as a Science”:
Management has feature of both science and art. The practice of management in an art,
however managers can work better if their practice is based on principles of management.
These principles constituted the science of management. Management as an art and a science
are therefore not mutually exclusive, but complement to each other.
4. Management as a Profession:

Management does not reach the exact criteria of a profession. However it has some of the
features of profession.

i) Well – defined body of knowledge: All professions are based on a well – defined body of
knowledge that can be acquired through instructions.

Management is based on a systemized body o knowledge having well defined principles based
on a variety of business situations. This knowledge can be acquired at different colleges and
professional institutes and through a number of books and journals.

ii) Restricted entry: The entry to a profession is restricted through an examination or

through acquiring an educational degree. For ex: to become a charted Accountant in India, a
candidate has to clear a specified examination conducted by the Institute of Charted
Accountants of India (ICAI). There is no restriction on anyone being designated or appointed as
a manager in any business enterprise. Anyone can be called a manger irrespective of the
educational qualification possessed.

iii) Professional association: All professions are affiliated to a professional association

which regulates entry, grants certificate of practice and formulates and enforces the code of
conduct.

There are several associations of practicing managers in India like All India Management
Association (AIMA) that has laid down a code of conduct to regulate the member’s activities.
However there is no compulsion for manager to be the members of such association.

iv) Ethical code of conduct: All professions are bound by a code of conduct which guides the
behaviour of its members.
 v) Service motive: The basic motive of any profession is to serve their client’s interest by
rendering dedicated and committed service.

A basic purpose of management is to help the organization to achieve its stated goal. However
profit maximization as objective of management does not hold true and is fast changing.
Therefore if an organization has a good management team, that is efficient and effective, it
automatically serves society by providing good quality products at reasonable prices.

Level of Management:
It refers to line demarcation between various managerial positions in an organization.
Management is a universal term used for certain function performed by individuals in an enterprise
who are bound together in a hierarchy of relationships. Here every individuals is responsible for
successful completion of a particular task. To be able to fulfil the responsibilities. He is assigned or
given a certain amount of authority. This authority, responsibility binds individuals superiors and
subordinates and gives rise to different levels in a organization. There are 3 levels in a hierarchy of a
organization.
1. Top Management: This consists of senior most executives of an organization who are referred
to as chairmen, CEO, COO, President and vice-president. This team consists of managers from
different functional levels i.e. finace, marketing, productions. They integrate and co-ordinate
the activities of different departments according to overall objectives of the organization. They
formulate the organizational goals, responsible for welfare and survival of organization, they
ananley business environment and its implication for survival of the organization.
2. Middle Management: Is the link between top and lower level managers. They are sub-
ordinates to top managers and superior to first line managers. They are known as division head
like finance manager, production manager and H.R. manager. Middle management is
responsible for implementing and controlling plans, responsible for all the activities of the
organization. They need to interpret the policies ensure necessary personnel, assign duties and
responsibilities, motivate the personnel to achieve the objectives.
3. Supervisory or operational management: Comprises of inspectors supervisors, foremen
supervisors directly oversee the efforts of the workforce. They interact with the actual
workspace and pass on the instruction to the workers. The quality of the workmanship and the
quantity of output depends on hard work, discipline and loyalty of workers.
Functions of management:
Management is described as the process of planning, organizing, directing, controlling the efforts of
organizational members and of using organizational resources to achieve specific goals.
i) Planning: is the function of determining in advance as to who has to do it, what is to be done
and when it is to be done. This implies setting goals in advance or 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.
ii) Organizing: It is the management function of assigning duties, grouping tasks, establishing
authority and allocating resources required to carry out a specific plan. It examines the acts
and the resources required to implement the plan. It involves grouping of the required task into
different departments and establishing authority and reporting relationships.
iii) Staffing: It is a very important aspect of management which ensure that right people with
right qualification are available at the right place and time to accomplish the goals of the
 organization. It means finding the right person for right job at the right time. It involves
activities such as recruitment, selection, placement and training of personnel.
iv) Directing: It involves leading, influencing and motivating employees to perform the task
assigned to them. Leadership is influencing others to do what the leader wants them to do.
Motivating workers means simply creating an environment that makes them want to work.
Directing also involves communicating effectively and supervising employees at work.
v) Controlling: It is management function of monitoring organizational performance towards the
attainment of organization goals. It involves establishing standards of performance, measuring
current performance, comparing actual performance with standards and taking corrective
action where in the deviation is formed.
Co-ordination: Meaning:
The process by which a manager synchronizes the activities of different department is known as co-
ordination. It is the force that binds all other functions of management. It is the common thread that
runs through all acts such as purchase, products, sales and finance to ensure continuity in the
working of organization.
Definition: By Mc Farland:
Co-ordination is the process whereby an executive develops an orderly patterns of group, efforts
among his subordinate and secured unity of action in the pursuit of common purpose.
Characteristics:
i) Integrates group efforts
ii) Co-ordination ensures unity of action
iii) Continuous process
iv) All pervasive function
v) Responsibility of all managers
vi) Deliberate functions
i. Co-ordination integrates group effort: Co-ordination unifies unrelated or diversed interest
into purposeful work activities. It gives common focus to group efforts to ensure that
performance is as it was planned and scheduled.
ii. Co-ordination ensures unity of action: Co-ordination acts as the binding force between
departments and ensures that all actions is aimed at achieving the goals of the organization.
iii. Co-ordination is the continuous process: Co-ordination is not a one time function but a
continuous process. It begins at the planning stage and continues till controlling.
iv. Co-ordination is an all pervasive function: Co-ordination is required at all levels of
management due to the interdependent nature of activities of various department. It integrates
the efforts of different departments and different levels. In the absence of co-ordination there
is overlapping and chaos instead of harmony and integration of activities.
v. Co-ordination is responsibility of all managers: It is the function of every manager in an
organization. Top level managers need to co-ordinate with their subordinates to ensure that
overall policies of the organization are duly carried out. Middle level management co-ordinate
with both the top level and first line manager (operational). Operational level managers co-
ordinate the activities of workers to ensure that work proceeds according to plan.
vi. Co-ordination is a deliberate function: The manger has to co-ordinate the efforts of
different people in a conscious and deliberate manner. Even where members of a department
willingly co-operate and work, co-ordination gives a direction to that willing spirit.

Importance of co-ordination:
i) Growth in size: As organization grow in size, the number of people employed by the
organization also increases. At times, it becomes difficult to integrate their efforts and
activities. It becomes necessary to ensure that all individuals work towards the common goal.
Therefore for organizational efficiency and attainment of organizational goals, co-ordination is
important.
ii) Functional differentiation: Functions of an organization are divided into departments,
divisions and sections. For Ex: Department of finance, production, HR or marketing. All these
departments have their own objectives, policies and method of working. All departments and
the individuals are interdependent and they have to depend on each other for information to
perform their activities towards the attainment of common organizational goals. The process of
linking the activities of various departments is done by co-ordination.
iii) Specialization: Modern organizations are characterized by high degree of specialization.
Specialization arises out of the complexities of modern technology and the diversity of the
tasks to be performed. Therefore organization need to employee a no of specialists who are
qualified to evaluate, judge and take a better decisions. This often leads to conflict amongst
different specialist as well as other employees in the organization. Therefore co-ordination is
required by an independent person to settle this differences of opinion or interest.

Chairmen,
Chief executive officer, Chief operating officer,
President and vice-president
TOP
MANAGEMENT

MIDDLE Managers: Finance manager,

MANAGEMENT Production manager, H.R. manager

OPEATIONAL
Inspector, Supervisors,
OR
Foremen
SUPERVISORY
MANAGEMENT