ASHOKA HALL JUNIOR & HIGH SCHOOL

BUSINESS STUDIES
CHAPTER 1
Nature and Significance of Management

NATURE AND SIGNIFICANCE OF MANAGEMENT

Management is an art of getting things done with and through others. Management can be
defined as, the process of getting things done with the aim of achieving organizational goals
effectively and efficiently.

Efficiency and Effectiveness

Efficiency (completing the work at low cost) means doing the task correctly at minimum cost
through optimum utilization of resources while effectiveness (Completing the work on time) is
concerned with end result means completing the task correctly within stipulated time. Although
efficiency and effectiveness are different yet they are inter related. It is important for
management to maintain a balance between the two.

Characteristics of Management

1. Goal oriented Process It is a goal oriented process, which is to achieve already specified and
desired objectives by proper utilization of available resources.

2. Pervasive: Management is universal in nature. It is used in all types of organizations whether

economic, social or political irrespective of its size, nature and location and at each and every
level.

3. Multidimensional: It is multidimensional as it involves management of work, people and

operations.

4. Continuous: It consists of a series of function and its functions are being performed by all
managers simultaneously. The process of management continues till an organization exists for
attaining its objectives.

5. Group Activity: It is a group activity since it involves managing and coordinating activities of
different people as a team to attain the desired objectives of the organization.
6. Dynamic function : It is a dynamic function since it has to adapt according to need, time and
situation of the changing business environment. For example, McDonalds made major changes
in its ‘Menu’ to survive in the Indian market.

7. Intangible Force: It is intangible force as it can’t be seen but its effects can be felt in the form
of results like whether the objectives are met and whether people are motivated or not and there
is orderliness and coordination in the work environment.

Objectives of Management

(1) Organizational objectives:

Organizational Objectives  can be divided into Survival (Earning enough revenues to cover
cost); Profit (To cover cost and risk); and Growth (To improve its future prospects).
(A) Survival – Management by taking positive decisions with regard to different business
activities ensures survival of business for long term.
(B) Profit – It plays an important role in facing business risks and successful running of business
activities.
(C) Growth – Management must ensure growth which can be measured by increase in sales,
number of employees, number of products, additional investment, etc.

(2) Social Objectives:

Social objectives is to provide some benefits to society like applying environmental friendly
practices in the production process and giving employment to disadvantaged sections of society,
etc. Example: TISCO, ITC, and Asian Paints.

(3) Personal Objectives:

Personal Objectives is to focus on diverse personal objectives of people working in the
organization which need to be reconciled with organizational objectives.

Importance of Management

(1) Achieving Group Goals: Management creates team work and coordination in the group.
Managers give common direction to individual efforts in achieving the overall goals of the
organization.
(2) Increases Efficiency: Management increases efficiency by using resources in the best
possible manner to reduce cost and increase productivity.

(3) Creates Dynamic organization: Management helps the employees overcome their

resistance to change and adapt as per changing situation to ensure its survival and growth.

(4) Achieving personal objectives: Management helps the individuals achieve their personal

goals while working towards organizational objectives.

(5) Development of Society: Management helps in the development of society by producing

good quality products, creating employment opportunities and adopting new technologies.
Management as an Art
Art refers to skillful and personal application of existing knowledge to achieve desired results. It
can be acquired through study, observation and experience. The features of art as follows:

(1) Existence of theoretical knowledge: In every art, Systematic and organized study material
should be available compulsorily to acquire theoretical knowledge.
(2) Personalized application: The use of basic knowledge differs from person to person and
thus, art is a very personalized concept.
(3) Based on practice and creativity: Art involves in consistent and creative practice of existing
theoretical knowledge.

Management as a Science
Science is a systematized body of knowledge that is based on general truths which can be tested
anywhere, anytime. The features of Science are as follows:

(1) Systematized body of knowledge: Science has a systematized body of knowledge based on

principles and experiments.
(2) Principles based on experiments and observation: Scientific principles are developed
through experiments and observation.
(3) Universal validity: Scientific principles have universal validity and application.
Management has systematic body of knowledge and its principles are developed over a period of
time based on repeated experiments & observations which are universally applicable but they
have to be modified according to given situation.

As the principles of management are not as exact as the principles of pure science, so it may be
called-an inexact science. The prominence of human factor in the management makes it a Social
Science.

Management as Profession
Profession means an occupation for which specialized knowledge and skills are required and
entry is restricted. The main features of profession are as follows:

(1) Well-defined body of Knowledge: All the professions are based on well defined body of
knowledge.
(2) Restricted Entry: The entry in every profession is restricted through examination or through
some minimum educational qualification.
(3) Professional Associations: All professions are affiliated to a professional association which
regulates entry and frames code of conduct relating to the profession.
(4) Ethical Code of Conduct: All professions are bound by a code of conduct which guides the
behavior of its members.
(5) Service Motive: The main aim of a profession is to serve its clients.
Management does not fulfill all the features of a profession and thus it is not a full-fledged
profession like doctor, lawyer, etc., but very soon it will be recognized as full-fledged profession.
Levels of Management: Top, Middle and Operational Levels
“Levels of management” means different categories of managers, the lowest to the highest on the
basis of their relative responsibilities, authority and status.

Top Level
Consists of Chairperson, Chief Executive Officer, Chief Operating Officer or equivalent and
their team.

Chief task is to integrate and to coordinate the various activities of the business, framing policies,
formulating organizational goals & strategies.

Middle Level
Consists of Divisional or Departmental heads, Plant Superintendents and Operation Managers
etc.

Main tasks are to interpret the policies of the top management to ensure the availability of
resources to implement policies, to coordinate all activities, ensure availability of necessary
personnel & assign duties and responsibilities to them.

Lower Level/Supervisory Level

Consists of Foremen and supervisor etc. Main task is to ensure actual implementation of the
policies as per directions, bring workers’ grievances before the management & maintain
discipline among the workers.

Functions of Management
1.Planning: Thinking in advance what to do, when to do, and who is going to do it. It bridges the
gap between where we are and where we want to reach.

2.Organising: organization means deciding the framework of working how many units and sub-
units are needed,how many posts are needed, how to distribute the authority and responsibilities.

3. Staffing: It refers to recruitment, selection, training, development and appointment of the

employees. 4.Directing: It refers to guiding, instructing, inspiring and motivating the employees.
5.Controlling are the main functions of management.Controlling is monitoring the organizational
performance towards the attainment of the organizational goals.

Coordination (The Essence of Management):

Coordination is the force which synchronizes all the functions of management and activities of
different departments. Lack of coordination results in overlapping, duplication, delays and chaos.
It is concerned with all the three levels of management as if all the levels of management are
looked at together, they become a group and as in the case of every group, they also require
coordination among themselves. So, it is not a separate function of management, rather it is the
essence of management.

l. Coordination integrates group efforts: It integrates diverse business activities into

purposeful group activity ensuring that all people work in one direction to achieve organizational
goals.
2. Coordination ensures unity of action: It directs the activities of different departments and
employees towards achievement of common goals and brings unity in individual efforts.
3. Coordination is a continuous process: It is not a specific activity matter it is required at all
levels, in all departments till the organization continues its operations.
4. Coordination is all pervasive function: It is universal in nature. It synchronizes the activities
of all levels and departments as they are interdependent to maintain organizational balance.
5. Coordination is the responsibility of all managers: It is equally important at all the three-
top, middle and lower levels of management. Thus it is the responsibility of all managers that
they make efforts to establish coordination.
6. Coordination is a deliberate function: Coordination is never established by itself rather it is
a conscious effort on the part of every manager. Cooperation is voluntary effort of employees to
help one another. Effective coordination cannot be achieved without cooperation of group
members.

1. Reena is the manager of the Northern division of a large corporate house. At what level
does she work in the organisation? What are her basic functions?
Reena functions as the middle-level management in the organisation. She works as a link between
the top-level management and workers. The following will be her basic functions:
1. Understanding the policies set by the top management.
2. Communicating with the top and low levels of management.
3. Motivate employees to achieve productivity.
4. Coordinate with cross-functional heads to maintain transparency.
5. Assigning tasks to various departments under control.

2. Why is management considered a multi-faceted concept?

It is regarded as a multi-faceted concept due to the following reasons:
1. It involves managing the work, which is meeting the objectives over a period of time. It can also be
said to be the goals that need to be achieved.
2. Work is done by the people, therefore, managing the people is a very important part of
management which can be in the form of teams or groups of individuals. Management helps in
identifying the strengths and weaknesses of the people.
3. An organisation will be involved in production where inputs get transformed into products or some
kind of service. There needs to be continuous monitoring of such production processes to ensure
proper output. Here, management is required.

3. Discuss the basic features of management as a profession.

The following are the basic features of management as a profession:
1. Management is a systematic and well-defined body of knowledge which consists of various
theories and guiding principles. Such knowledge can be obtained through books and enrolling in
management courses.
2. Management is regulated by a professional association which looks at the functions of its
members. In India, AIMA, or the All India Management Association, is the governing body for
managers. Joining the organisation is not compulsory.
3. Professional knowledge is a required criterion and is given preference over degrees. The lack of
professional experience is a deterrent for people looking to choose a profession.
4. Only through proper management the business will grow. The guiding principles will help in
ensuring the smooth functioning of the organisation. Quality goods and services can be made
available with management.
4. Do you think management has the characteristics of a full-fledged profession?
Management does not have the characteristics of a full-fledged profession, but it does have some
qualities which make it eligible to be called a profession. These are mentioned below.
1. Management is a systematic and well-defined body of knowledge which consists of various
theories and guiding principles. Such knowledge can be obtained through books and enrolling in
management courses.
2. Management is regulated by a professional association which looks at the functions of its
members. In India, AIMA or, the All India Management Association, is the governing body for
managers. Joining the organisation is not compulsory.
3. Professional knowledge is a required criterion and is given preference over degrees. The lack of
professional experience is a deterrent for people looking to choose a profession.
4. Only through proper management the business will grow. The guiding principles will help in
ensuring the smooth functioning of the organisation. Quality goods and services can be made
available with management.
5. All business organisations look to provide the best services to the people at the best quality,
thereby serving society.
5. Coordination is the essence of management. Do you agree? Give reasons.
Coordination is essential in management as it helps in binding together all other functions of the
management. All the activities, such as sales, purchase and production, are based on coordination
with management. The following points will help establish coordination as the essence of
management:
1. The combination of efforts of all the groups increases productivity and also provides a common
focus to all the group efforts.
2. It is a continuous process and is not a one-time effort. Coordination begins at the planning stage
and is concluded at the controlling stage.
3. Coordination is a pervasive function, as it is required at all levels of management. As all
management activities are interdependent, coordination improves the efforts at various levels among
all departments.
4. It ensures that all the combined efforts of the departments act as a unity which binds all actions
together and helps an organisation achieve goals in a better way.
5. It is a deliberate function, as everyone is performing it deliberately. The tasks are done with the
objective of achieving the objectives and goals of the organisation.
6. All the departments come together and communicate regarding the work to be done in an
organisation. This communication requires coordination among employees.
6. A successful enterprise has to achieve its goals effectively and efficiently. Explain.
Management is defined as the process of getting things done with the purpose of achieving goals
efficiently and effectively. The terms effective and efficient are key terms in management and play an
important role in the functioning of management.
Effectiveness refers to the process of completing a given work in the time provided. It is the process
of doing a task with a primary focus on end result. It is considered a very important aspect of
management which helps in achieving goals. Efficiency is the process of completing a given task
with minimal use of resources and cost.
For an organisation to be successful, both these factors play a critical role in meeting the objectives
of the organisation. Effectiveness helps in achieving the defined goals, while efficiency helps in
achieving that with minimum resources and cost. Reducing the cost and resources brings profits for
the organisation and also increases it. Therefore, it is essential for an organisation to focus on both
effectiveness and efficiency. It is important to complete the work on time, along with minimum
resources. Similarly, it is essential to reduce the cost of production and finish the production at the
decided time. Hence, successful companies need to be both efficient and effective at the same time
in order to gain profits in the long run.
7.  Management is a series of continuous, interrelated functions. Comment.
Management is a series of continuous, interrelated functions. It can be explained with the help of the
following points:
Management comprises the following functions that work together:
1. Planning: It is the process of determining what works need to be done, who will do it and how it
should be done. It involves setting up goals which need to be achieved and determining the ways in
which they can be achieved. It helps in laying down a framework based on which the activities can
be implemented. It is often said to be the most important step in management.
2. Organising: Planning is followed by Organising. It is the process of identifying tasks and the
appropriate resources that are required for executing the plan. Organising allots separate tasks to
different departments with a defined plan. The hierarchy is well established, which leads to work
being carried out with efficiency and effectiveness.
3. Staffing: Staffing is the process of allotting specialised personnel for specialised work. In other
words, hiring the right person for the job. It is a part of human resources and involves hiring and
training people.
4. Directing: It is one of the important functions of a manager, which involves directing the human
resources to work in an effective manner. It also involves providing motivation to the workers so as
to drive productivity.
5. Controlling: Controlling is necessary as it checks if the assigned work is progressing in the right
direction or not. It generally involves assessing the work done with the goals of the organisations. By
measuring the extent of work, managers ensure that there is no error or discrepancy. If any such
errors surface, then appropriate steps will be undertaken so as to rectify the issue.