Basics of Mgt (Useful for 1st yr BBA)

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Principles of Management

What is Management?

One of the most human activities is managing. Every human being has several needs and desires. But no individual can satisfy all his wants. Ever since people realized that they could not achieve as individuals, people work together to meet their mutual needs. By working and living together in organized groups and institutions, the people satisfy their economic and social needs. Managing has been essential to ensure the coordination of individual efforts. The society has come to rely on increasingly on group efforts. Many organized groups have become large and the task of managers has been rising in importance. The task of getting results through others by coordinating their efforts is known as management.

Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims. This basic definition needs to be expanded as under:

1. As managers people carry out the managerial functions of planning, organizing, staffing, leading and controlling.
2. Management applies to any kinds of organization.
3. It applies to managers of all levels in the organization.
4. The main aim of all managers is the same - to create a surplus.
5. Managing is concerned with productivity; this implies effectiveness and efficiency.

Definition of Management:

It is difficult to give precise definition of the term ‘management’. Different authors have interpreted management from their own angles. Some of the leading management thinkers and practitioners have defined as under:

1. F.W. Taylor - Management is the art of knowing what you want to do and then seeing that it is done in the best and cheapest way.

2. American Society of Mechanical Engineers – Management is the art and science of organizing and directing human efforts applied to control the forces and utilize the materials of nature for the benefit of man.

3. James L. Lundy. - Management is principally the task of planning, coordinating, motivating and controlling the efforts of others towards a specific objective.

4. Henry L. Sisk - Management is the coordination of all resources through the process of planning, organizing, directing and controlling in order to attain stated objectives.

5. Peter Drucker – Management is a multipurpose organ that manages a business and manages Managers and managers Workers and work.

Concepts of Management:
The concept of management has been interpreted in several ways. The Important concepts are as under:

“Management is the process of assembling and using sets of resources in goal-directed manner to accomplish tasks in a organizational setting”.

This definition will be subdivided in to its key parts:

1. Management as an Activity: It is an activity just like playing, studying, teaching. As a management activity, it has been defined as the art of getting things done through the efforts of other people. It is group activity to achieve the objectives of the group. The management activities may be: Interpersonal activities, Decisional activities, Informative activities.

2. Management as a Process: It involves a series of interrelated functions of getting the objectives of an organization and taking steps to achieve that objective. The management process includes: planning, organizing, staffing, directing, controlling, deciding and evaluating. The process has following implications:

• Social Process: Interaction with people to achieve the goal.
• Integrated Process: Management bring human, physical, financial resources together to put into effect. It integrates human efforts to maintain harmony among them.
• Continuous Process: It is a continuous process of identifying and solving problems till the goal is achieved.
• Interactive Process: It requires interaction with internal and external factors.

3. Management as an Economic Resource: Management is an important factor of production. It is a process that bring together, and puts into use, a variety of resources: Man, Material, Money, Machinery and Technology.

4. Management as a Team: It involves acting in a goal-directed manner to accomplish tasks. A team of managers, who have the responsibility of guiding and coordinating the efforts of others, operate at different levels. Thus, it does not represent random activity but rather activity with a purpose and direction. It includes efforts to complete activities successfully and to achieve particular levels of desired goals.

5. Management as an Academic Discipline for an Organizational Setting: Management has emerged as a specialized branch of knowledge. It comprises principles and practices for effective management of organization. It is a process undertaken in Organizations by people with different functions intentionally structured and coordinated to achieve common purpose.

6. Management as a Group: Management means the group of persons occupying managerial position for managing the company. There are several types of managers:
• Family managers who become managers by virtue of their being owners or relatives of the owners of a company.
• Professional managers who have been appointed on account of their degree in management.
• Civil servants who manage public sector undertakings.

Managers have become a very powerful and respected group in modern society since they take decision that affect the lives of a large number of people.

Nature and Characterizes of Management:
Following are some of the features which highlight the nature of management:

1. Management is goal-oriented: Management is a means to achieve certain goals which are of group goals or the organizational goals. The basic goal of management is to ensure efficiency and economy in the utilization of human, physical and financial resources. The success of management is measured by the extent to which the established goals are achieved. Thus, the management is purposeful.

2. Management is Universal: The activity of management exists in all fields irrespective of size or nature of activity. All types of organizations. E.g. family, club, university, government, army, cricket or business requires management. Managers at all levels perform the same basic functions.
3. Management is an Integrative Force: The essence of management lies in the coordination of individual efforts into a team. It recognizes the individual goals with organizational goals. It integrates human and other sources.
4. Management is a Social Process: Management is done by the people for the benefit of people. It is a social process because it is concerned with interpersonal relations. Human factor is the most elements in management. According to Appley, “Management is the development of people not the direction of things.” A good manager is a leader, and not a boss.
5. Management is multidisciplinary: Management has to deal with human behaviour and dynamic conditions. It depends upon the knowledge derived from several disciplines like engineering, sociology, psychology, economics, finance, etc.
6. Management is continuous process: Management is an on-going process. The cycle of management continues to operate as long as there is organized action for the achievement of goals.
7. Management is Intangible: Management is an unseen or invisible force. It cannot be seen but its presence can be felt everywhere in the form of results. But the managers who perform the functions or management are very much tangible and visible.
8. Management is an Art as well as Science: It contains a systematic body of theoretical knowledge and it also involves the practical application of such knowledge. It is also a discipline involving specialized training and an ethical code arising out of its social obligations.

The perfect definition:
On the basis of these characteristics, management may be defined as “a continuous social process involving the coordination of human and material resources in order to accomplish desired objectives. It involves both the determination and the accomplishment of organizational goals.”

Objectives of Management: The objectives of the Management are as under:

Organisational Objectives: Management is expected to work for the achievement of the objectives of a particular organization in which it exists. The objectives include:
1. To aim at achieving reasonable profits so as to give a fair return on the capital invested in business.
2. Survival and solvency of the business i.e. continuity.
3. Growth and expansion of the enterprise.
4. Improving the goodwill or reputation of the enterprises.

Personal objectives: An organization consists of several persons who have their own objectives.
Fair remuneration for work performed.
1. Reasonable working conditions.
2. Opportunities for training and development.
3. Participation in management and prosperity of the enterprise.
4. Reasonable security of service.

Social Objectives: Management is not only a representative of the owners and workers, but is also responsible to the various groups outside the organization. It is expected to fulfill the objectives of the social group.
1. Quality of goods and services at fair price to customers.
2. Honest and prompt payment of taxes to the Government.
3. Conservation of environment and natural resources.
4. Fair dealings with suppliers, dealers and competitors.
5. Preservation of ethical values of the society.

Role and Importance of Management:
Management is indispensable for the successful functioning of every organization. It is very important in business enterprises and needs repeated stimulus which can only be provided by management. According to Peter Drucker, “Management is a dynamic life-giving element in an organization without it the resources of production remain mere resources and never become production.” The following are some of the highlights of the importance of management.

1. Achievement of group goals: A human group consists of several persons, specializing in different task. Each person may be working efficiently, but the group as a whole cannot realize its objectives unless there is mutual cooperation and coordination among the members of the group. Management creates teamwork and reconciles the objective so the group and motivate the group to their best contribution towards the accomplishment of group goals. Managers provide inspiring leadership skills towards working hard.

2. Optimum utilization of resources: Managers forecast the need for materials, machinery, money and manpower. They ensure that the organization has adequate resources and also maintain that there does not have idle resources. Managers ensure that the workers know their jobs well and use the most efficient methods of work. They provide training and guidance to employees so that they can make the best use of available resources.

3. Minimization of cost: The cut-throat competition in business forces the organization to provide goods and services at the lowest possible cost per unit. Management directs day to day operation s in such a manner that all wastage and extravagance are voided. By reducing cost and improving efficiency, it is possible to face competition and earn profits.

4. Survival and Growth: Modern business operates in a rapidly changing environment. Management keeps in tough with the existing business environment and plans for the future trends. It takes steps in advance to meet the challenges of changing environment. Changes in business create risks as well as opportunities. Managers enable the organization to minimize the risk and maximize the benefits of opportunities for future growth.

5. Generation of Employment: By setting up and expanding business enterprises, managers create employment opportunities for the people. People earn their livelihood by working in these organizations. They also ensure that the employees get job satisfaction and happiness. Indirectly this helps the employees to satisfy the economic and social needs of the society.

6. Development of the nation: Efficient management is equally at the national level. Management is the most crucial factor in economic and social development. The development of a country largely depends upon the quality of the management and its resources. Capital investment and import of technical know-how cannot lead to economic growth unless the wealth producing resources are managed efficiently. By producing wealth, management increases the national income and the standard of living of people. Thus, management is regarded as a key to the economic growth of a country.

Distinction between Management and Administration:

There is some controversy on the use of these two terms management and administration. Many experts make no distinction and use them as synonyms but several American writers consider them as two distinct functions. The distinction is important to clearly understand the role of people in administrative positions versus those in managerial positions.

Oliver Sheldon in his “The Philosophy of Management” defines ‘Administration as a function is concerned with the determination of the corporate policy, the coordination of finance, production and distribution, the settlement of the structure of the organization under the ultimate control of the executives.’ On the other hand, ‘Management is concerned with the execution of the policy, within the limits setup by administration and the employment of the organization for the particular objects before it.’ Thus Sheldon declares administration as a thinking process and management as doing process.

E.F.L. Breach distinguishes administration and management. He considers management as a social process entailing the responsibility for effective planning, regulation, coordination and control of operations including the responsibility for personnel supervision. According to him, the administration is that part of management which is concerned with the installation and carrying out the procedures by which the progress of activities is regulated and checked against plans.

Few authors treat administration as part of management. The three points of view are as under:

1) Administration is different from management: According to this view point :-
1. Administration is a higher level activity while management is a lower level function.
2. Admn. is a determinative function concerned with determination of objectives and policies while management is an executive function involving the implementation of policies and direction of efforts for the achievement of objectives.
3. Admn. Involves decision making and policy formulation while management is concerned with the execution of policies and supervision of work.
4. Admin. is superior to management as the latter has only a peripheral role in determination of objective and policies.

2) Administration is a part of management:
1. According to the European School of thought – ‘Management is a wider term including administration and organization.’
2. According to Breach – “Management is the generic term for the total process of executive control involving responsibility for effective planning and guidance of operations of an enterprise. Administration is that part of management which is concerned with the installation and carrying out of the procedures by which the programme is laid down and communicated and the progress of activities is regulated and checked against plans”.
3. According to Kimbal and Kimbal – Administration is only an implementing agency while management is determinative. Thus, the European viewpoint is exactly opposite to the American opinion.

3) Administration and management are One:
Many writers like Henri Fayol, William Newman, Chester Barnard, make no distinction between management and administration.
1. According to Newman, management or administration is “the guidance, leadership and control of the efforts of a group of individuals towards some common goals”.
2. According to Fayol, all undertakings require the same functions and all must observe the same principles. There is some common science applied equally well to public and private affairs. In actual practice, the two terms are used interchangeably. The term Admn. is more popular in Govt. and other public organizations and the word management is more commonly used in the business world where economic performance is of primary importance.

In order to resolve the terminological conflict between the two, we may classify management into :
1. Administrative management – It involves determination of objectives and policies.
2. Operative management - It is primarily concerned with the execution of plans for the achievement of objectives.

At every level of management, an individual manager performs both types of functions. Every manager spends part of his time on administrative management and the remaining time on operative management.

Distinction between Management and Administration

Points of Discussion Administration Management
1 Nature Determinative or thinking function It is an executive or doing function.
2 Type of work Concerned with the determination of major objectives and policies Concerned with implementation of policies.
3 Levels of Authority Mainly a top level function Largely middle and lower level function
4 Influence Administrative decisions are influenced mainly by public opinion and other outside forces Managerial decisions are influenced by objectives and policies of the organization.
5 Direction of human efforts Not directly concerned with the direction of human efforts Actively concerned with direction of human efforts in the execution of plans.
6 Main functions Planning and control Directing and organizing
7 Skills required Conceptual and human skills Technical and human skills.
8 Usage Used largely in Government and Public Sector Used mainly in business organizations
9 Illustrations Commissioner, Registrar, Vice-Chancellor, Governor, etc. General Manager, Sales Manager, Branch Manager, etc.

LEVELS OF MANAGEMENT:

• Every business organization, irrespective of its size, has many managerial positions in its structure.
• The levels are created through the process of delegation of authority from top to lower levels.
• Each position is marked by authority, responsibility, functions, roles and relationships.
• As one promotes or moves upward, the managerial position plays an important role, larger the contribution, greater the authority and higher the responsibility.

An organization has two levels of management: Functional and Operative.
1. The Functional Level of management is concerned with the process of determining primary objectives, formulating basic policies, making vital decisions and controlling and coordinating activities of personnel.
2. The Operative level of management is related to implementation of plans and decisions, and pursuit of basic policies for achieving the objectives of the organization.

For conducting the business efficiently, managerial personnel in a Joint Stock Company may be placed in three levels i.e. top, middle and lower or supervisory level of management.

Levels of Organisation
Top Level Management Board of Directors, Managing Director, General Manager.
Middle Level Management Departmental Manager, Deputy Manager, Assistant Manager, Forman
Lower Level Management Supervisor First Line

1) Top Level Management:
This is generally occupied by the ownership group. Equity shareholders are the real owners of the company. They elect their representative as directors; form a board, known as board of directors. This constitutes the top level of management. Besides Board of Directors, there will be managing director, general manager or chief executive to help directors. It is the highest level of managerial hierarchy. They are accountable to the owners and responsible for overall management of the organization. The major functions of the top level management are as under:

• To make corporate plan for the entire organization covering all areas of operations.
• To decide upon the matters which are vital for the survival, profitability and growth of the organization like introduction of new product, shifting to new technology, opening new plant, etc.
• To decide corporate goals.
• To decide structure of organization, creating various positions there in.
• To exercise overall managerial control on financial and operating results.
• To make decisions regarding disposal and distribution of profits.
• To select key officials and executives for the company.
• To coordinate various sub-systems of the organization.
• To maintain liaison with outside parties like government, trade unions.
• To formulate basic policies and providing direction and leadership to the organization as a whole.

2) Middle Level Management:
This consists of departmental managers, deputy managers, foreman and administrative officers. They are mainly concerned with over all functioning of their respective departments. They act as a link between top and lower level managers. The responsibilities involve determining departmental goals, devising the ways and means for accomplishing them. The main functions are:

• Prepare departmental plans covering all activities within the basic frame work of the corporate plan.
• Establish departmental goals and decide upon various ways and means for achieving these goals.
• Perform all other managerial functions with regard to departmental activities and secure good result.
• Issue detailed orders and instructions to lower level managers and coordinate activities of various work units.
• Explain and interpret policy decisions made at the top level to lower level managers.

3) Lower Level or Supervisory Level management:
Lower level is known as Supervisory Management. It is concerned with personal oversight and direction of operative employees. It consists of factory supervisors, superintendents, foremen, sales supervisors, accounts officers, etc. they direct guide and control the performance of rank and file workers. They issue orders and instructions guide day to day activities. They also represent the grievances of the workers to the higher levels of management. Following are the main functions:

• Planning of day to day work.
• Assignment of jobs and issuing orders and instructions.
• Supervising and guiding workers.
• Maintaining close personal contacts with workers to ensure discipline and team work.
• Evaluating operating performance.
• Sending reports and statements to higher authorities.
• Communicating the grievances and suggestions of workers to higher authorities.

NATURE OF MANAGEMENT:
The basic nature of management must be analysed in terms of art and science in relation to administration and as a profession, in terms of managerial skills and style of mangers.

Management is Combination of Art and Science:
The management knowledge exhibits characteristics of both art and science. Every discipline of art is always backed by science which is the basic knowledge of that art. Art basically deals with an application of knowledge, personal skill and know-how in a specific situation for efficiently achieving a given objective. It is concerned with the best way of doing things and is consequently, personalized in nature.