Management Concepts

1. Explain in details the functions of Management.

Ans: Management has been described as a social process involving responsibility for
economical and effective planning & regulation of operation of an enterprise in the fulfilment
of given purposes. It is a dynamic process consisting of various elements and activities. These
activities are different from operative functions like marketing, finance, purchase etc. Rather
these activities are common to each and every manger irrespective of his level or status.
Different experts have classified functions of management. According to George & Jerry,
“There are four fundamental functions of management i.e., planning, organizing, actuating
and controlling”.
According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, &
to control”. Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for
Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for
reporting & B for Budgeting. But the most widely accepted are functions of management
given by KOONTZ and O’DONNEL
i.e., Planning, Organizing, Staffing, Directing and Controlling.
For theoretical purposes, it may be convenient to separate the function of management but
practically these functions are overlapping in nature i.e. they are highly inseparable. Each
function blends into the other & each affects the performance of others.

Planning: It is the basic function of management. It deals with chalking out a future course
of action & deciding in advance the most appropriate course of actions for achievement of
pre-determined goals. According to KOONTZ, “Planning is deciding in advance - what to do,
when to do & how to do. It bridges the gap from where we are & where we want to be”. A
plan is a future course of actions. It is an exercise in problem solving & decision making.
Planning is determination of courses of action to achieve desired goals. Thus, planning is a
systematic thinking about ways & means for accomplishment of pre-determined goals.
Planning is necessary to ensure proper utilization of human & non-human resources. It is all
pervasive, it is an intellectual activity, and it also helps in avoiding confusion, uncertainties,
risks, wastages etc.
Organizing: It is the process of bringing together physical, financial, and human resources
and developing productive relationship amongst them for achievement of organizational
goals. According to Henry Fayol, “To organize a business is to provide it with everything
useful or its functioning i.e., raw material, tools, capital and personnel’s”. To organize a
business involves determining & providing human and non-human resources to the
organizational structure. Organizing as a process involves:
 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.
Staffing: It is the function of manning the organization structure and keeping it manned.
Staffing has assumed greater importance in the recent years due to advancement of
technology, increase in size of business, complexity of human behaviour etc. The main
purpose o staffing is to put right man on right job i.e., square pegs in square holes and round
pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing
involves manning the organization structure through proper and effective selection, appraisal
& development of personnel to fill the roles designed un the structure”. Staffing involves:
Manpower, Planning (estimating manpower in terms of searching, choose the person and
giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal
 Promotions & Transfer.
Directing: It is that part of managerial function which actuates the organizational methods to
work efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect
of management which deals directly with influencing, guiding, supervising, motivating sub-
ordinate for the achievement of organizational goals.
Direction has following elements:
 Supervision- implies overseeing the work of subordinates by their superiors. It is the
act of watching & directing work & workers.
 Motivation- means inspiring, stimulating, or encouraging the sub-ordinates with zeal
to work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
 Leadership- may be defined as a process by which manager guides and influences
the work of subordinates in desired direction.
 Communications- is the process of passing information, experience, opinion etc from
one person to another. It is a bridge of understanding.
Controlling: It implies measurement of accomplishment against the standards and correction
of deviation if any to ensure achievement of organizational goals. The purpose of controlling
is to ensure that everything occurs in conformities with the standards. An efficient system of
control helps to predict deviations before they actually occur. According to Theo Haimann,
“Controlling is the process of checking whether or not proper progress is being made towards
the objectives and goals and acting, if necessary, to correct any deviation”. According to
Koontz & O’Donell “Controlling is the measurement & correction of performance activities
of subordinates in order to make sure that the enterprise objectives and plans desired to obtain
them as being accomplished”.
Therefore, controlling has following steps:
 Establishment of standard performance.
 Measurement of actual performance.
 Comparison of actual performance with the standards and finding out deviation if any.
 Corrective action.

2. Write a brief note on principles of planning.

Ans: Planning is a function of management; it must be based on certain principles to
serve as guidelines for undertaking the function in right earnest. We may outline the
principles of planning as below
1. Principle of top management interest: The chief executive of the organisation
must show genuine interest in planning, submit himself to the discipline of planning
and must inspire his team to do the same.
2. Principle of long-range view: Every manager must plan decisions after a full
analysis and understanding of their long-term future effects, and after considering all
the available facts objectively.
3. Principle of timing: the plans have the capability of contributing significantly in
the achievements of the organizational goals if the plans are properly timed. Therefore
the planning premises as well as the policies are not much helpful if the plans are not
properly timed.
4.Principle of contribution to objectives: Planning should be purposeful. It should
directly contribute to the achievement of organisational objectives or desired ends.
5.Principle of primacy of planning: As stated earlier, planning holds the prime
position in the process of management. It is logically regarded as the first function of
managers from which all other functions flow.
6. Principle of flexibility: The principle suggests that flexibility in planning helps the
organisation to cope with rapid and unforeseen changes in the external events. This
can be achieved without abandoning the predetermined plans or without inviting
adverse consequences even if drastic.
7.Principle of navigational change: This principle is related to the principle of
flexibility. It indicates that a regular process of monitoring the course of external
events is to be combined with a review and revision of plans. This should be done in
order to achieve desired goals just as a navigator negotiates his ship’s way by making
changes in his route in response to the behaviour of the water mass.
8. Principle of commitment: This principle helps in the determination of the
planning period. Planning should cover a period of time necessary to fulfil the
commitments involved in a decision. For example, if a student makes a decision to
join a three years BBA. Course, his planning period is three years.
9. Principle of the limiting factor: A limiting factor is one which stands in the way
of achieving the desired objective. Managers should pay due to attention to tackle
those limiting factors which hinder the smooth progress in the achievement of
objectives.
10. Principle of comparative strategies: this requires that while formulating their
plans, the managers should also consider the plans made by their competitors. In this
way, the managers should formulate their plans by considering what the competition
would have done in such a case.
 3. Explain the steps involved in organizational structure and design.
Ans: An organization structure serves various functions of the business. It is designed to serve
specific motives. There should also be efforts to match organization structure with changing
needs. A good structure not only facilitates communication but also brings efficiency in
different segments.
The structure provides the following roles:
1. Encourages Efficiency:The main objective of an organization structure is to infuse
efficiency in various functions. A systematic structure will not leave anything to chance and
every activity is coordinated to perform to its maximum. The organizational members try to
maximize the output of goods and services from the given inputs. There is an effort to have
systematic, rational and coordinated effort to control various waste and loss. Various
organizational models are developed to bring efficiency in operations.
2. Communication: Communication is the number one problem of every organization. A
good structure provides proper communication channel among persons working in the
organization. A reporting relationship is established and a hierarchy of who reports to whom
is also specified in a good structure. There is a need for horizontal, vertical, and lateral
communication process and it is done by a well-planned structure.
3. Optimum Use of Resources: The proper allocation of resources helps in their optimum
utilization also. The organization structure gives higher place to activities which are more
important to the achievement of organizational objectives. The activities are placed according
to their importance in the structure and proper guidelines are given for resource allocation.
The optimum allocation of resources is important for the growth of a business.
4. Job Satisfaction: A good organization structure provides clear cut assignment of duties
and responsibilities to various people working in the business. The jobs are assigned as per
their knowledge, expertise and specialization. People get an opportunity to explain their jobs.
There will be job satisfaction when persons are free to operate within prescribed limits.
5. Creative Thinking: In a good organization structure, there is a freedom to plan and
executing one’s own work. It allows a person to think and develop new and better ways of
doing work. Organization structure tries to put people at places where they are most suitable.
Many people have contributed to the development of management thinking because of their
creativity in a particular organizational structure.
6. Facilitates Management: There are a number of persons working in a business. Their
work will have to be specified and duties will be assigned as per the requirements of the
organization. A good structure will help in establishing relationship among persons working
at different positions. An organization structure is a mechanism through which management
directs, co-ordinates and controls the activities of various persons. A well thought
organization structure is a great help for good administration.
Designing Organization Structure:
An organization structure should satisfy the requirements of the business. It should ensure
optimum utilization of manpower and different functions should be properly performed.
There is a need for harmonious relationship among persons at different positions. Designing
of a structure is an important task and it should be undertaken carefully.
Following steps are essential for designing an organization structure:
1. Identifying Activities: The activities which are required to be performed in achieving
organizational objectives should be identified. The functions to be performed for achieving
different goals should be ascertained and activities relating to these functions should be
identified. The major activities are classified into a number of sub-activities. While
identifying activities it should be borne in mind that no activity has escaped, there is no
duplication in activities and various activities are performed in a coordinated way.
2. Grouping of Activities: The closely related and similar activities are grouped together for
departments, divisions or sections. The co-ordination among activities can only be achieved
through proper grouping. The grouped activities can be assigned to different positions. The
assignment of activities to individuals creates authority and responsibility. The authority is
delegated to the lower levels of various departments and responsibility is fixed.
3. Delegation of Authority: Delegation is an administrative process of getting things done
by others by giving them responsibility. When different positions are created in the
organization then work is assigned to these persons. For getting the work done there is a need
for authority. The authority is delegated to different persons in accordance with the
assignment of responsibility. Through the process of delegation, authority, structure is created
in the organization defining who will formally interact with whom.
Features of a Good Organization Structure:
A good organization structure should meet various needs and requirements of the enterprise.
The following are the features of a good organization structure:
1. Clear Line of Authority: There should be a clear line of authority from top to the bottom.
The delegation of authority should be step by step and according to the nature of work
assigned. Everybody in the organization should be clear about his work and the authority
delegated to him. In the absence of this clarity there will be confusion, friction, and conflict.
2. Adequate Delegation of Authority: Delegation of authority must be commensurate with
the responsibility assigned. If the authority is not sufficient for getting the assigned task, then
the work will not be completed. Sometimes managers assign work to subordinates without
giving them proper authority, it shows lack of decision-making on their part. An inadequate
authority will create problems for the subordinates because they may not be able to
accomplish the task.
3. Less Managerial Levels: As far as possible minimum levels of management may be
created. More the number of these levels, more the delays in communication. It will take
more time to convey the decisions from the top to the bottom. Similarly, information from
lower levels will take much time in reaching at the top. The number of managerial levels
depends upon the nature and scale of operations. No specific number of levels may be
specified for each and every concern, but efforts should be made to keep them at the
minimum.
4. Span of Control: Span of control refers to the number of people a manager can directly
supervise. A person should supervise only that number of subordinates to whom he can
directly keep under contact. The number of people to be supervised may not be universally
fixed because it will be influenced by the nature of work. Efforts should be made to keep a
well-managed group under a supervisor otherwise there will be inefficiency and low
performance.
5. Simple and Flexible: Organizational structure should be very simple. There should not be
unnecessary levels of management. A good structure should avoid ambiguity and confusion.
The system should also be flexible to adjust according to the changing needs. There may be
an expansion or diversification which required reclassification of duties and responsibilities.
The organization structure should be able to incorporate new changes without altering the
basic elements.
 4. Briefly explain importance of staffing.
Ans: Staffing is one of the essential functions of management that is concerned with
acquiring, hiring, developing, motivating, and retaining the best talent for achieving the goals
of the organisation. In other words, staffing is a process of keeping the best resources in an
organisation that will result in accomplishing the objectives of the business.
Staffing is essential as without proper human resources, the organisation will not perform as
effectively, and business will witness downfall. It is very important for the organization that
the right type of people are employed. They should be given adequate training so that
wastage is minimal.
The importance of staffing is discussed below:
Efficient performance of other tasks: Staffing is key to the efficient performance of other
management tasks. Since, if an organization does not have competent personnel, it cannot
perform management tasks properly like planning, organizing and controlling.
Effective use of technology and other resources: What is the relationship
between staffing and technology? Well, it is the human factor that helps in the effective use of
the latest and advanced technology, capital, materials etc. The management of
the organization ensures the right type of personnel by performing staffing work.
Development of human capital: Another function of staffing is related to human capital
requirements. Since management is required to determine the advance manpower
requirements. Therefore, it is also to train and develop existing personnel for career
advancement. This will meet the needs of the company in the future.
Motivation of Human Resources: In an organization, the behaviour of individuals is
influenced by various factors, which are related to the level of education, needs, socio-
cultural factors etc. Therefore, the human aspects of the organization have become very
important and hence the employee of the organization or company can also be motivated by
financial and non-financial incentives so that they can perform their tasks properly in
achieving the objectives.
Building higher morale: Employees must create the right kind of climate to contribute to the
achievement of organizational objectives. Therefore, by effectively and efficiently
performing the staffing function, management is able to describe the importance and
importance that it gives to the personnel working in the enterprise.
Reduces cost of production: Staffing also plays an important role in reducing the cost of
production. Because it helps to appoint the right person at the right time, at the right time, so
that no wastage and mistakes are made by skilled personnel during the production of the
products. Therefore, it is clear that it helps to reduce production costs.
For Job Satisfaction: Staffing is an important source for the job satisfaction of the employee.
Because through this system personnel are allocated jobs according to their ability, talent,
qualifications, and expertise which provide employees more satisfaction about their jobs. As
a result of this, they give their hundred percent effort behind their jobs.
Fulfils the present and future needs of the employees:  Staffing is very important to meet
the future needs of the employees at present. Because it gives a clear picture to the
organization how many posts will be vacant and new posts will be established in the coming
year. So that the organization can fill those vacant and new positions by appointing qualified
candidates. Thus, it is clear that the employee meets the present and future needs of the
employees in the organization.
To maintain coordination among employees: Staffing plays a major role in establishing
unity and coordination among employees. Because it provides the job according to the ability,
talent, competence, and expertise of the employee which incorporates them in their tasks and
ensures healthy and cooperative relationships among the employees.
5. What are the various devices of control?
Ans: Management is an art as well as a Science. So, management and its functions keep
evolving to stay up with the times. Controlling function of management also advances with
passing time. So let us learn the traditional and modern techniques of managerial control. 
Controlling: Control is a fundamental managerial function. Managerial control regulates the
organizational activities. It compares the actual Performance and expected organizational
standards and goals. For deviation in performance between the actual and expected
performance, it ensures that necessary corrective action is taken.
There are various techniques of managerial control which can be classified into two broad
categories namely-
 Traditional Techniques
 Modern Techniques

Traditional Techniques of Managerial Control:

Traditional techniques are those which have been used by the companies for a long time now.
These include:
1. Personal Observation: This is the most traditional method of control. Personal
observation is one of those techniques which enables the manager to collect the information
as first-hand information.
It also creates a phenomenon of psychological pressure on the employees to perform in such
a manner so as to achieve well their objectives as they are aware that they are being observed
personally on their job. However, it is a very time-consuming exercise & cannot effectively
be used for all kinds of jobs.
2. Statistical Reports: Statistical reports can be defined as an overall analysis of reports and
data which is used in the form of averages, percentage, ratios, correlation, etc., present useful
information to the managers regarding the performance of the organization in various areas.
This type of useful information when presented in the various forms like charts, graphs,
tables, etc., enables the managers to read them more easily & allow a comparison to be made
with performance in previous periods & also with the benchmarks.
3. Break-even Analysis: Breakeven analysis is a technique used by managers to study the
relationship between costs, volume & profits. It determines the overall picture of probable
profit & losses at different levels of activity while analysing the overall position.
The sales volume at which there is no profit, no loss is known as the breakeven point. There
is no profit or no loss. Breakeven point can be calculated with the help of the following
formula:
Breakeven point = Fixed Costs/Selling price per unit – variable costs per unit
4. Budgetary Control: Budgetary control can be defined as such technique of managerial
control in which all operations which are necessary to be performed are executed in such a
manner so as to perform and plan in advance in the form of budgets & actual results are
compared with budgetary standards.
Therefore, the budget can be defined as a quantitative statement prepared for a definite future
period of time for the purpose of obtaining a given objective. It is also a statement which
reflects the policy of that particular period. The common types of budgets used by an
organization.
Some of the types of budgets prepared by an organisation are as follows,
Sales budget: A statement of what an organization expects to sell in terms of quantity as well
as value
Production budget: A statement of what an organization plans to produce in the budgeted
period
Material budget: A statement of estimated quantity & cost of materials required for
production
Cash budget: Anticipated cash inflows & outflows for the budgeted period
Capital budget: Estimated spending on major long-term assets like a new factory or major
equipment
Research & development budget: Estimated spending for the development or refinement of
products & processes
 Modern Techniques of Managerial Control
Modern techniques of Controlling are those which are of recent origin & are comparatively
new in management literature. These techniques provide a refreshingly new thinking on the
ways in which various aspects of an organization can be controlled. These include:
1. Return on Investment: Return on investment (ROI) can be defined as one of the
important and useful techniques. It provides the basics and guides for measuring whether or
not invested capital has been used effectively for generating a reasonable amount of return.
ROI can be used to measure the overall performance of an organization or of its individual
departments or divisions. It can be calculated as under-
Net income before or after tax may be used for making comparisons. Total investment
includes both working as well as fixed capital invested in the business.
2. Ratio Analysis: The most commonly used ratios used by organizations can be classified
into the following categories:
 Liquidity ratios
 Solvency ratios
 Profitability ratios
 Turnover ratios
3. Responsibility Accounting: Responsibility accounting can be defined as a system of
accounting in which overall involvement of different sections, divisions & departments of an
organization are set up as ‘Responsibility centers. The head of the centre is responsible for
achieving the target set for his centre. Responsibility centers may be of the following types:
 Cost centre
 Revenue centre
 Profit centre
 Investment centre
4. Management Audit: Management audit refers to a systematic appraisal of the overall
performance of the management of an organization. The purpose is to review the efficiency
&n effectiveness of management & to improve its performance in future periods.  
5. PERT & CPM: PERT (programmed evaluation & review technique) & CPM (critical path
method) are important network techniques useful in planning & controlling. These
techniques, therefore, help in performing various functions of management like planning;
scheduling & implementing time-bound projects involving the performance of a variety of
complex, diverse & interrelated activities.
Therefore, these techniques are so interrelated and deal with such factors as time scheduling
& resources allocation for these activities.