FUNDAMENTALS OF

MANAGEMENT
 FOR MANAGEMENT
Business
Trade
commerce
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 Business Concepts
TRADITIONAL
maximization of profit
return on risk involved
not accountable for society

MODERN APPROACH
Customer satisfaction
Accountable to society
Profit motive
What is Management?
Management is the process of getting things
done effectively and efficiently , with and
through people.
OR
Management is the art of getting things
done through with in formally organized
groups.
FEATURES
Purposive activity
Intangible in nature
Management is a group effort
Art as well as science
Pervasive
Human activity
Hierarchy of authority
As a profession
NATURE

SCIE
ART
NCE
OBJECTIVES
Achievement of objectives
Promotes effectiveness
Proper utilization of resources
Co-ordination of individual and organizational goals
Sound organisation structure
Solving labour problems
Max. production at min. cost
Beneficial to society
IMPORTANCE OF
MANAGEMENT…
FUNCTIONS OF MANAGEMENT
Collectively comprise the MANAGEMENT
PROCESS…
Planning
Organizing
Staffing
Directing
Controlling
Co-ordination
motivation
Significance of Management
FOR BUSINESS ADMINISTRATION
Setting objectives and priorities
Accomplishing objectives
Introducing change

FOR SOCIETY AND NATION

Generates employment
Provides goods and services
Contribute to prosperity of nation
LEVELS OF MANAGEMENT

TOP

MIDDLE

LOWER
 Management and Administration
ADMINISTRATION MANAGEMENT

•Refers to determination of over all •Refers to the task of complimenting

objectives and formulation of plan and the plans and policies for the
policies of the organisation. accomplishment of objectives of the
organisation.
•Thinking function •Doing function

•Largely a top level management •Lower management function

function
•Mostly done by elite or persons of •Mostly done by paid managers with
high status normal talent and status
•It takes major policy decisions •usually takes routine decisions for
affecting the whole organization. implementing major decisions taken
by administration.
•Mainly requires conceptual skills •Mainly require technical and human skills
SCOPE OF MANAGEMENT
Business management
Production management, materials management,
labour management, marketing , financial
management, personnel management, office
management.
Non-business management
environment, home , health , education, time
other areas
Innovation, conflict, CRM, risk , investment,
etc.
Managerial skills and Organizational
Hierarchy
Conceptual skills
Human skills
Technical skills
Conceptual skills
Most crucial for managers of top level
Ability to see the “big picture”
Ability to think and visualize

Human skills
Essential for every manager at levels of organization
Ability to understand people and their problems
Technical skills
To provide Technical guidance and instructions to the
subordinates
Higher the level of management , the need for
technical skills decreases.
ROLE OF MANAGERS
Interpersonal roles
leader , liaison , figure head
Information role
Monitor, disseminator , spokesperson
Decisional roles
Plans or policies , allocation of resources
disturbance handler
QUALITIES OF SUCCESSFUL
MANAGER

…..
MANAGEMENT THEORIES
CLASSICAL THEORY
Oldest theory of management
Attempts to find ways to increase output of workers
It develops set of “management principles” which are
universally applicable to all organizations (business or
non-business)
Three main theories that developed in classical school
of thought – WEBER’S THEORY , FAYOL’S
APPROACH , TAYLOR’S APPROACH.
Limitations…
Principles of management not universally
applicable(eg.unity of command does not hold today
where jobs are so specialized)
Employees are viewed as tools rather than resources.
Focus more on task than people
Monetary rewards are viewed as more important than
non-monetary rewards.
Initiative and creativity totally ignored.
BEHAVIOURAL THEORY
EVOLUTION
Focus shifted from workplace conditions to human
side of the organization.
Focus changed from job to workers who performed
those jobs.
From “production – oriented” approach to “people
oriented” approach.
LIMITATIONS
Informal groups philosophy
Interpretation of theory
MODERN MANAGEMENT
THEORY
Management is responsive to environmental change
Management is future oriented
Business organizations are dynamic institutions
LIMITATIONS
Applies more in planning and control functions
Restricted in areas that deal with human behaviour
Assumes that all problems are quantifiable
FAYOL’S ADMINISTRATIVE
MANAGEMENT
Henry Fayol’s contribution are generally
termed as operational or administrative
management because he was concerned with
general management and overall control of
organization and not with supervision and
control of operations at lower levels of
management.
Fayol looked at the problems of managing
and organization from top management
point of view.
•His contributions were first published
in book “Administration Industrielle at
Generale” in French language in 1916.
Its English version was published in
1949 in the USA.

•Fayol found that activities of an

industrial organization could be divided
into six groups.
•Technical (relating to Production and
manufacturing).

•Financial (Search for Capital and its optimum use).

•Commercial (Buying , Selling and Exchange).

•Security (Protection of Property and Person).

•Accounting ( Statistics , records , P&L , balance

sheet).

•Managerial ( Planning, Processing, Organizing etc).

Fayol has divided its Approach into
Three Parts.

•Managerial Qualities and Training.

•General Principles of Management.

•Functions of manager
1.Functions of manager.
Planning

Organizing

Commanding

Coordination

Controlling
2.Managerial Qualities and Training.
Physical (Health).
Mental Ability (Ability to understand and learn ,
interpret , analyze , arrive at conclusions).
Moral ( Loyalty, Dignity, Sense of
Responsibility).
Educational
Technical (Related to the function being
performed).
Experience (Arising from the work).
3.General Principles of Management.
Division of Labour :- To get the best out of workers,
work must be divided amongst units and employees
according to their skills. This will enable them to produce
goods of better quality with same efforts. It is also called
the cannon of “Right person at Right Job”.
Authority and Responsibility :- These are two sides of
the same coin. It must be kept in in while assigning the
work that authority in comparison to assigned
responsibility must also be given.
‘Though they exercise Authority over Subordinates, they
remain Responsible for their work.
Discipline :- it means respect for rules and agreement.
This can be brought by-
a) Effective leadership, Guidance and Motivation.
b) Good Supervision at all levels.
‘It should be self imposed and people should feel
committed to their leaders.’
Unity of Command :- there should be one boss for
one subordinate. People should receive orders
from their immediate boss only. This helps in
holding workers responsible to their superiors and
reduces overlapping of information.
Unity of Direction :- there should be one boss for one
set of operations having the same objective, e.g., all
operations related to finance should be grouped in Finance
Department headed by the Finance Manager. It refers to
one head for same set of activities.
Subordination of Individual Interest into General
Interest :- if there is conflict between individual goals and
organizational goals, preference should be given to
organization goals, i.e., individual goals should not
supersede the goals of the organization. However,
management should also have fair agreements with the
subordinates to satisfy their individual interests.
Remuneration :- there should be a fair system of
remuneration that ensures equal pay for equal work. This
will satisfy both, employers and employees.
Centralization :- it refers to declining role of
subordinates in the decision making process. Though
major decisions should be taken by top level managers,
some authority must be delegated to lower-level managers
to make them perform their jobs well.
Scalar Chain :- this is the line of authority running from
top level to lowest level of management. It is also known as
hierarchy of authority. If this line negatively affects the
organizational goals, some of the links in the chain may be
dropped. This dropping or termination of scalar chain is
called “Gang- Plank.”
Order :- everything human and non-human resources,
must be placed at the right place. Fayol followed the
concept of ‘A place for everything and everything in its
place’.
Equity :- management should be fair to sub ordinates who
should also be loyal to their bosses. Equity or concern for
each other develops cordial and harmonious relationships
in the organization.
Stability of tenure :- managers and workers should
be committed to their organizations and work place
for a fairly long period of time, High rate of labour
turnover affects efficiency of the organizations.
Initiative :- work should not be
routinised. Every worker should think of
new ways of doing the work. It develops
their potential to work and provides them
job satisfaction.
Esprit de corps :- ‘ Unity is strength’.
People should work as a team to enjoy the
benefits of synergy.
 WEBER’S
BUREAUCRA
CY THEORY
Weber's Bureaucracy Theory
Max Weber(1864-1920), a German sociologist,
made significant contribution in the fields of
bureaucratic management.
At the time when managers had traditional
authority (authority by virtue of belonging to a
particular class by birth) or charismatic authority
(authority by virtue of their appeal and social
power), Weber propagated the need for
organizations to be managed in more rational
manner.
He introduced rational-legal authority
(bureaucracy)system (rather than
charismatic and traditional authority) for
managing business organizations.

Weber evolved an ideal type bureaucracy

which was a superior form of organization
with features of efficiency, objectivity, unity,
discipline etc.
PRINCIPLES OF BUREAUCRACY
A managers' formal authority derives from the
position held within the organization.
People should occupy positions on basis of
their performance not because of their social
status or personal contacts.
The existence of each position’s formal
authority and task responsibilities and its
relationship to other positions in an
organization should be clearly specified.
Managers must create a well-defined system of
rules , standard operating procedures and
norms so as to maintain effective control in the
 FEATURES
Division of Labour : in a bureaucratic
organization, jobs are broken into smaller units on the
basis of specialization.
Scalar chain : business organizations follow a
hierarchy of authority where orders and instructions
flow from top to bottom and obedience flows from
bottom to top.
Appointments on the basis of merit : all
appointments or selections are based purely on merit
performances on the jobs.
Formal rules and procedures : rules
and regulations to govern employees
behaviour are in writing. This ensures
uniformity, coordination and
consistency in their behaviour.
Impersonal : all individuals are
treated at par irrespective of their
position and status. This ensures
impartiality in handling people and
events.
Official records : all decisions and
activities of the organization are
formally maintained in official records
and preserved for future reference.
Professional officials : managers are
not the owners of the units they
manage. They are the career-oriented
qualified, competent officials who work
for a salary.