CHAPTER -1

NATURE AND SIGNIFICANCE OF MANAGEMENT

Concept of Management

"Management is the 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, organising, actuating and controlling
all organisation's operations in order to achieve coordination of the human and material
resources essential in the effective and efficient attainment of objectives.”

"Management is the process of working with and through others to effectively achieve
organizational objectives by efficiently using limited resources in the changing
environment."
"Management is the coordination of all resources through the process of planning,
organising, directing and controlling in order to attain stated objectives."

"Management is the process by which a cooperative group directs actions of others

towards common goals."

"Management is the art of knowing exactly what you want your men to do and then
seeing that they do it in the best and cheapest way."

Effectiveness versus Efficiency

In today's competitive world, management is the process of getting things done in the manner that
organisational goals are achieved effectively and efficiently.
Effectiveness is doing the assigned task within the assigned time whereas efficiency is doing the
assigned task in such a manner that it earns maximum profits. Thus, for any business to be successful,
managers not only need to be effective but also efficient. However, at times management may have to
compromise between efficiency and effectiveness.
Example: (a) Suraj Medical Agencies deals in medical devices and have their buyers across India. They
deliver goods to their buyers through road transport, as it is the cheapest mode of delivery. They received
an urgent order from one of their buyers and had to send the goods by courier. The courier cost was three
times the cost they would have paid if goods .Were sent by road transport. However, they did not bother
about the cost and sent the goods by courier. In this case, the management had to compromise with
efficiency over effectiveness as delivering goods on time was more important.
 (b) A sales manager sold goods in the market offering high discounts just to achieve his target for the
month. Though with this he could manage big orders but eventually the company could not make any
profits due to heavy discounts offered by the sales manager. So, the manager was neither effective nor
efficient in his work.
Therefore, we can conclude that it is important that we achieve goals with minimum resources while
maintaining a balance between effectiveness and efficiency. Of course, we cannot be effective without
being efficient but undue emphasis on efficiency may lead to poor management.
CHARACTERSTICS OF MANAGEMENT

ALL PERVASIVE

GOAL
CONTINOUS
ORIENTED

FEATURES OF
MANAGEMENT

DYNAMIC
GROUP ACTIVITY

INTANGIBLE MULTI
DIMENSIONAL

(i) Management is a Goal-oriented Process

Effective management aims to unite efforts of all individuals to achieve organisational goals.
Therefore, it is important that each organisation must have simple, clearly stated and achievable
goals.
Example: Every business organisation has an aim to earn maximum profits. To achieve this, the
 management should conduct market research to find out demand for their product and plan the
production accordingly. The production manager must target to produce goods at minimum cost,
whereas a sales manager must sell goods with a goal to increase the market share.
ili} Management is All-pervasive
Management being pervasive means it is felt everywhere and is followed by one and all. Each and
every organisation, be it business or non-business, requires managing of financial and non-financial
activities of the enterprise however the manner in which the activities are managed may differ from
enterprise to enterprise and country to country due to differences in culture, tradition and history.
Pervasive : management is a universal concept. It is wide-spread and is observed while doing
each and every activity
Example: A housewife manages her family, a teacher manages his/her class, a principal manages
his/her school, a CEO manages his/her business organisation, a Prime Minister manages his/her
country. Therefore, management is widespread, required everywhere and for each activity.

(iii) Management is Multi-dimensional

Management is not specific to a task or an activity. Management includes managing work, people
and operations of an enterprise so that the organisation achieves its goals. With the help of
management, an enterprise plans the process of getting work done, organises the means to transform
inputs into desired output for consumption and controls the people performing the task. It includes
taking decisions, solving problems, dealing with employees as individuals and as a group to make
their strengths effective and weaknesses irrelevant. Thus, management has various dimensions and
tasks to perform

(iv) Management is a Continuous Process

Management is an ongoing and never-ending process. Each activity for its effective completion
needs to be managed until its completion. All managers constantly and simultaneously perform all
functions of management i.e., planning, organising, staffing, directing and controlling but of
course, the degree of importance for each function may differ from time to time.
(v) Management is a Group Activity
An organisation achieves its goals with the help of diverse individuals working as a group. To make
sure that each individual works towards the common goal it is a must to see that they work as a team
and all individual efforts are well coordinatea.Effective management provides opportunities to
individuals to grow and fulfill their aspirations and as a result is able to get the best out of each
individual.
(vi) Management is a Dynamic Function
In order to be successful each enterprise has to positively respond to the changes in the external
 and internal environment, which may be due to social, economic or political factors. Thus, the
management cannot follow traditional techniques; instead it adapts to the changes and prepares
strategies to achieve the best in the given circumstances.
Example: A Korean company sells its products to various countries. It cannot follow the same price
for each country due to difference in demands and expectations. Thus, they always have different
plans for different countries to promote sales. Sometimes they formulate different strategies to
meet the changing demands of the same country.
(vii) Management is an Intangible Force
Management can be felt and experienced but not seen. If a company enables its employees to meet
their targets, keeps its stakeholders satisfied and eventually achieve its goals effectively, it is said
to be efficiently managed. Thus, the effect of management is noticeable from the manner in which
an enterprise functions.

IMPORTANCE OF MANGEMENT
(i) Management helps in achieving group goals. Organisation sets goals and management
accomplishes them. Positive direction of a manager unites the efforts of individuals and helps to
achieve the targets effectively and efficiently.
(ii) Management increases efficiency. A manager can maximize the productivity and minimize the cost
with better planning, organising, directing, staffing, and controlling business activities. Effective process
of management improves efficiency.
(iii) Management creates a dynamic organisation. Being dynamic is one of the important functions of
management. With the changing business environment, management reviews its goals, changes its
business strategies and adopts new technologies. It provides opportunities to its employees to adapt to the
changes. A dynamic management is able to maintain competitive edge and meet its customers' demand at
all times.
(iv) Management helps in achieving personal objectives. A manager's main aim is to achieve the
maximum productivity from his/her team members. A good manager delegates work to his/her team
members as per their ability, provides them opportunities for growth and development, recognizes each
member's contribution and motivates them to do their best. He/she ensures that the financial and social needs
of individuals are met. A happy, motivated and financially satisfied workforce works with team spirit,
cooperation and commitment.
Example: High Spirits Ltd., at the end of each financial year organises a review meet. In this meet, they
discuss the next year's business targets, hold motivational and team building workshops and at the end, they
announce awards for the high achievers of the company. Continuous development and recognition motivates
workers to perform better.
(v) Management helps in the development of society. Management of an organisation directly and
indirectly works towards development of society. While fulfilling the aim of greater profits and bigger
market share, it provides good quality products at reasonable prices. Business expansions create
employment opportunities, use of latest technology leads to growth and development. Big Business
enterprises also divert share of their profits towards social causes
like education, medical services, child care etc.
Example: Azim Premji chairman of Wipro runs Azim Premji Foundation a non-profit organisation
with an aim to provide quality and equity of education in India.

MANAGEMENT AS AN ART, SCIENCE OR PROFESSION

Management as an Art
Art is skill based creativity. it involves the use of theoretical knowledge, observation and creativity.
Art involves use of theoretical knowledge, observation and experiences with creativity and personal touch
to achieve desired results effectively and efficiently.
1. Existence of Theoretical Knowledge
To pursue Art, an artist requires basic theoretical knowledge in the specific field. Similarly, in
management, managers need to specialize in the areas like marketing, finance, production, human
resource etc. The theoretical knowledge can be acquired by reading books, joining a course etc.
2. Personalised Application
Every artist may acquire the same theoretical knowledge but they apply the knowledge as per their
personal skills, taste and preferences. Similarly, a manager may follow the principles as laid down in
management books but the application of such principles may differ from situation to situation,
individual to individual. An efficient manager studies critical situations, formulates his/her own
theories and adopts different styles of management in different situations.
3. Based on Practice and Creativity
To be perfect in art, continuous and creative practice of theoretical knowledge is a must. Creativity
lies in the personal interpretation of an artist. Similarly, a manager while handling complex issues,
solving diverse problems gains experience and improves managerial skills.
Management as a Science

What is Science?
Science is a systematised body of knowledge that explains certain general truths or the operation
of general laws. It is based on logically observed facts and findings.
1. Systematised Body of Knowledge
Science is a systematic body of knowledge. Its principles are based on a cause and effect
relationship. Similarly, management is also based on theories and principles developed over a
period of time. Like science, management follows its own concepts and terminology, which is
learnt either through books or by joining courses conducted to teach basic concepts of
management.
Example : Like law of gravity explains the reason of an apple falling from a tree towards -the
ground, same way the theory of human behaviour explains the nature of people working in the
organisation.
2. Principles based on Experimentation
Scientific principles are first developed through observation and then tested through repeated
experimentation under controlled conditions. Management principles are also a result of
experimentation and observations gathered while performing diverse activities in different types of
organisations. However, in science the result of an experiment can be predicted or repeated but in
management the results may not be repeated or predicted mainly because of the fact that management
deals with human beings with diverse behaviour.
Example : Theory of evolution is the result of research work done by the great scientist Charles
Darwin. Similarly, on the basis of research, management scholars like F.W. Taylor, Henri Fayol have
identified and formulated principles of management

3. Universal Validity
Scientific principles are universally valid and applicable. The principles of management do provide
standardised techniques to managers to handle different situations but these principles need .
modification to be suitable to a given situation.

OBJECTIVES OF MANAGEMENT
Objectives are the end towards which the activities of any organisation are directed.
There are three objectives.
1. Organisational objectives
These are the objectives which a organisation works for.although profit is the primary objective of a
organisation however it ids not the only aim of the organisatiopn.the objectives are:
a) Survival
b) Profit
c) Growth
2. Social objectives
a) Providing good quality products
b) Providing goods at reasonable rates
c) Making eco friendly products
d) Generation of employment in weaker areas of the country
e) Associating with govt plans like swatch bharat
3. Personal objectives
a) Good salary at market rates
b) Peer recognition
c) Social recognition
d) Offering other facilities like medical,educational facilities

Management as a Profession
1. Well-defined Body of Knowledge
Each professional may it be of a lawyer, chartered accountant or an insurance consultant is required
to gain specialized knowledge of the profession. Similarly, management also requires specialized
knowledge, which can be gained through books or courses available in various universities.
2. Restricted Entry
To be a professional it is a must that an individual acquires an educational degree or passes an
examination. But, there is no such requirement in the field of management. However individuals
may acquire a management degree from reputed universities through an examination to have an
edge over other individuals in the field of management.
Example: To pursue, CA one has to clear the entrance exam 'CPT', similarly, to get admission in
management colleges one has to clear entrance through 'CAT' on GMAT.
3. Professional Association
All professionals are affiliated to their respective professional associations, which regulate entry,
grants certificate of practice, formulates, and enforces a code of conduct. There are management
associations, which have set membership rules and ethical codes, but it is not compulsory for
managers to be a part of them.
Example: To be able to practice in India, the Chartered Accountants have to become member of the
Institute of Chartered Accountants of India. All Indian Management Association (AIMA), National
Institute of Personal Management are the management associations with whom managers may
register as members.
4. Ethical Code of Conduct
Behaviour of each professional is bound by the code of conduct laid by the professional
organisation they belong to. Similarly, AIMA, a management body has devised a code of conduct
for managers. However, at present it is not compulsory for managers to take its membership.
5. Service Motive
Professionals provide services to their clients and receive monetary benefits for the same.
Management of an organisation aims to earn maximum profits while selling quality products at
reasonable prices to its customers. A professional and a manager both aim to provide dedicated and
committed services towards the interest of their clients.
Example: A doctor provides medical services to his/her client and in the process ensures that the
patient is satisfied with the treatment. Same way to survive in the industry for long period,
management of an organisation not only works towards accomplishing its economic objectives but
also social objectives by diverting profits for the welfare of the society.
From the discussions so far, you all must have realized that it is difficult to categorise management
as a science or an art or a profession. In fact, if we closely observe, management has adopted few
characteristics from each. A good manager has to be highly qualified and trained in the area of
specialization, should have the creativity, imagination and the desire to modify the standardized
techniques according to the given situation. One can learn the facts and theories but the success
depends on the ability to put the principles into practice.
Thus, we can say that management as a science, an art or a profession is therefore not mutually
exclusive, but complements each other.

LEVELS OF MANGEMENT
Management is a universal concept. It is not restricted to a single activity or group of people.
business manages every activity and all individuals working at various levels in an organisation.
All individuals working in an organisation are responsible for specific functions to be performed
and are bound together in a hierarchy of relationship. This hierarchy gives rise to different levels of
management
TOP LEVEL MANAGEMENT
This level of management includes all such individuals who are responsible for taking core and
crucial decisions for the organisation. They are usually the senior most executive of the
organisation. They are largely responsible for planning and organising for the entire organisation.
Functions of the top management
(i) Setting of business objectives: this level defines the main objective of the organisation and sets
the short term and long term targets.
(ii) Coordinating resources: it is the responsibility of top management to integrate diverse elements
and coordinate the activities of all the departments to achieve organisational goals.

TOP LEVEL

MIDDLE LEVEL
MANAGEMENT

LOW LEVEL MANAGEMENT

HIERARCHY OF MANAGEMENT
(iii) Formulation of plans and policies. Top management is responsible for survival, welfare
and growth of the organisation. They formulate plans, policies and strategies to achieve
organisational goals and meet the challenges of ever changing market demands.
iv) Managing human resources. They constantly lead, direct, and control the efforts and
performance of all individuals working in the organisation
(v) Welfare and survival of organisation. Top level management is not only responsible for
the survival and growth of the organisation but also for the welfare of all its stake holders .

Middle Management
Middle level management is responsible for implementation and controlling the plans an
strategies developed by top-level management. In the process, they act as a link between to
managers and lower level managers. They perform all the functio.ns of management but they ar
largely organising, staffing, directing and coordinating business activities.
Examples : Head of Departments ; Factory heads ; Operation managers etc.
Functions of Middle Level Management
In order to implement and control the plans formulated by top management, the middle leve
managers perform following functions:
(i) Interpret policies and plans. The middle level managers interpret the plans and policies framed
by top management and explain them to line managers for effective implementation.
(ii) Recruitment of appropriate personnel. The middle level managers ensure that their
departments have personnel with adequate qualification and experience to perform functions
expected from them.
(iii) Organising activities. The middle level managers organise required resources and activities
so that the plans are implemented effectively and organisational goals are achieved.
(iv) Instructing and controlling employees. The middle level managers assign necessary duties
and responsibilities to first line managers. They maintain discipline, control all the activities and
evaluate performance of each workforce.
(v) Motivating personnel. The middle level managers motivate the line managers so that they
perform at their best while achieving the desired objectives. They try to provide line managers the
appropriate facilities and represent their complaints and problems before the top management.
(vi) Smooth functioning. Middle level managers make sure that all the departments work as a
team and co-operate with each other for smooth functioning of the organisation

Low level or Supervisory or Operational Management

The lower level management is directly responsible for implementation of plans developed by top
management and instructions given by middle level management. They are the lowest level in the
hierarchy of the organisation with very limited authority. The lower level of management mainly
focuses on directing and controlling.
Examples: Supervisors ; Foreman ; Line managers etc.

Functions of Low level Management

(i) First line managers interact with actual work force and transfer the information and
instructions provided by the top and middle level management.
(ii) They oversee the efforts of the workforce to achieve the maximum output at minimum
cost of production.
(iii) The first line managers supervise and monitor the production process closely to ensure
that there is minimum wastage of resources and best quality of output is achieved.
(iv) They are responsible to maintain safety standards and provide proper working conditions
to the workforce.
(v) The first line managers lead, direct and motivate workforce to achieve the organisational
goals most effectively. They appraise the performance of their subordinates and recognize
efforts their in the form of rewards, incentives or promotions.
(vi) The first line managers are responsible to maintain discipline and loyalty among the entire
workforce.

COORDINATION
It can be defined as the synchronisation of efforts from the stand point of time and sequence of
execution. In general it means bringing together the activities and resources of organisation and
bringing harmony in them.Coordination is the essence of management. It brings about unity of
action and integrates the different activities of the organisation.
Features of coordination:
1. Integrates group effort: coordination is not required at individual level. However it is needed
at group level and to bring about orderliness and integration.
2. Ensures unity of effort: to avoid conflicting problems coordination is essential.
3. Continuous process: it is a never ending process the managers work continuously to maintain
coordination.
4. Pervasive function: it is a universal function and is required at all levels in all departments
due to interdependence of all activities.
5. Responsibility of all managers: the top level managers try to coordinate the overall plan and
policy of organisation middle level try to coordinate department activities and lower level tey to
coordinate the activities of the workers.
6. Deliberate function: without coordination efforts of individual cannot be united and integrated
that is why while performing various activities in the organisation managers deliberately
perform coordination function.
 IMPORTANCE OF COORDINATION
1. SIZE OF ORGANISATION
The need of the organisation increases as the size of organisation increases because in large
organisation there are more number of persons working.

2. FUNCTIONAL DIFFERENTIATION
The function of an organisation are divided into different departments ,sections or divisions and
each departments work in isolation by giving more importance to its objectives .but in actual
practice these departments are interlinked and interdependent so there is a need to relate and
bring together the activities of different sections as they are part of one organisation only.
3. SPECIALISATON
In large organisation there is high degree of specialisation and the specialists or experts feel that
they are the only qualified people .if all of them work in their own way it will result in chaos
and confusion .so there is a need to coordinate the activities of these specialists in a common
direction to get maximum benefit.

SWATI SAINI
COMMERCE DEPARTMENT