UNIT I

UNIT I INTRODUCTION TO MANAGEMENTAND ORGANIZATIONS

Definition of Management – Science or Art – Manager Vs Entrepreneur - types of

managers - managerial roles and skills – Evolution of Management – Scientific, human
relations , system andcontingency approaches – Types of Business organization - Sole
proprietorship, partnership, company-public and private sector enterprises - Organization
culture and Environment – Current trends and issues in Management.

DEFINITION
According to Harold Koontz, “Management is an art of getting things done through and
with thepeople in formally organized groups. It is an art of creating an environment in
which people can perform and individuals and can co-operate towards attainment of
group goals”.

LEVELS OF MANAGEMENT
The three levels of management are as follows

1. The Top Management

It consists of board of directors, chief executive or managing director. The top
management is the ultimate source of authority and it manages goals and policies
for anenterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows –
a. Top management lays down the objectives and broad policies of the enterprise.
 b. It issues necessary instructions for preparation of department
budgets,procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for
theperformance of the enterprise.

2. Middle Level Management

The branch managers and departmental managers constitute middle level. They
are responsible to the top management for the functioning of their department.
They devote more time to organizational and directional functions. In small
organization, there is only one layer of middle level of management but in big
enterprises, there may be senior and junior middle level management. Their role
can be emphasized as –
a. They execute the plans of the organization in accordance with the
policies anddirectives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the
division ordepartment.
f. It also sends important reports and other important data to top
levelmanagement.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards
betterperformance.

3. Lower Level Management

Lower level is also known as supervisory / operative level of management. It
consists of supervisors, foreman, section officers, superintendent etc. According
to R.C. Davis, “Supervisory management refers to those executives whose work
 has to be largely with personal oversight and direction of operative employees”.
In other words, they are concerned with direction and controlling function of
management. Their activities include
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation
in theorganization.
e. They communicate workers problems, suggestions, and recommendatory
appeals etc to the higher level and higher level goals and objectives to the
workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the
thingsdone.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct
contactwith the workers.

FUNCTIONS OF MANAGEMENT

Management has been described as a social process involving responsibility for

economical and effective planning & regulation of operation of an enterprise in the
fulfillment of givenpurposes. It is a dynamic process consisting of various elements
and activities. These activitiesare different from operative functions like marketing,
finance, purchase etc. Rather theseactivities 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 forreporting & B for Budgeting. But the most
widely accepted are functions of management givenby 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.

1. 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.
2. 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.

3. 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 behavior 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 man power in terms of searching,
choose theperson and giving the right place).
• Recruitment, selection & placement.
• Training & development.
• Remuneration.
• Performance appraisal.
• Promotions & transfer.

4. 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 hasfollowing elements:
• Supervision

• Motivation
• Leadership
• Communication
(i) Supervision- implies overseeing the work of subordinates by their superiors. It
is theact of watching & directing work & workers.

(ii) 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.
(iii) Leadership- may be defined as a process by which manager guides and
influences the work of subordinates in desired direction.
(iv) Communications- is the process of passing information, experience, opinion
etc from one person to another. It is a bridge of understanding.

5. 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 beingaccomplished”. Therefore controlling has following
steps:
(i) Establishment of standard performance.
(ii) Measurement of actual performance.
(iii) Comparison of actual performance with the standards and finding out
deviation ifany.
(iv) Corrective action.

Managing: Science or Art?

The best response to the question of whether management is an art or a

science is that it is both. Managing, like all other practices (e.g., music
composition, medicine, or even tennis) is an art. To manage effectively,
peoples must have not only the necessary abilities to lead but also a set of
critical skills acquired through time, experience, and practice. If we define art
as a personal aptitude or skill, then management has certain artistic
components.

On the other hand, the organized knowledge underlying the practice may
be referred to as a science. To perform at high levels in a variety of situations,
managers must be able to draw on the sciences - particularly economics,
sociology, mathematics, political science, psychology, and political science -
for assistance and guidance.

The tasks of modern managers require the use of techniques, practices, and
skills. In this context science and art not mutually exclusive but
complementary.

Management as an Art

Art involves the systematic application of theoretical knowledge and

personal skills to achieve desired results. The function of art is to effect
change and to bring about desired results through deliberate efforts. Art
represents 'how' of human behavior because it is the know-how to accomplish
concrete practical results.

Art is a personalized process as every artist has his own style. Art is
essentially creative and the success of an artist is measured by the results he
achieves. A carpenter making furniture out of wood and a goldsmith shaping
gold into ornaments are examples of art.
 Art prescribes how to do things and it can be improved through continuous
practice. Art is result-oriented involving practical way of doing specific things.

It consists of bringing about desired results through the use of skills. Art
involves practical application of theoretical knowledge.

Management is essentially an art because of the following reasons:

 The process of management involves the use of knowledge and skills.

Every manager has to apply certain knowhow and skills while dealing
with people.

 Management seeks to achieve concrete practical results, e.g., profits,

service, etc. According to Prof. John F. Mee, "management is the art of
securing maximum

 results with a minimum of effort so as to secure maximum prosperity

and happiness for both employer and employee and give the public best
possible service."

 Like any other art, management is creative. It brings out new situations
and makes resources productive. In fact, management is one" of the
most creative arts because it requires molding and welding the attitudes
and behavior of people at work for the accomplishment of specific
goals in a changing environment.

 It is the art of securing desired response from people. Management

makes things happen.

 Like any other art, management is a personalized process. Every

manager has his own approach and technique depending upon his
perception and the environmental conditions.

 As an art, management requires judgment and skills. The art of

management ]can be refined with continuous practice of management
theories and principles.

 The art of management is as old as human civilization. The importance

of management art has increased with rapid growth in the number size
and complexity of organizations.
Management as a Science:

Science is an organized or systematized body of knowledge pertaining to a

particular field of enquiry. Science is systematized in the sense that it
establishes cause and effect relationship between different variables.

Such systematized body of knowledge contains concepts, principles and

theories which help to explain past events and to predict the outcome of
specific actions. These principles are capable of universal application, i.e.,
they can be applied under different situations. They represent fundamental
truths derived through empirical results. These principles or basic truths are
developed through scientific methods of continuous observation, experiment
and testing.

When generalizations or hypotheses are empirically verified for accuracy

through continuous observation and experimentation they become principles.
Science explains 'why' of human behavior.

Management is a science because it contains all the characteristics of

science. Firstly, there is a systematized body of knowledge in management.
Principles are now available in every function of management and these
principles help to improve managerial effectiveness. For instance, there are a
number of principles which serve as guidelines for delegating authority and
thereby designing an effective organization structure. Similarly, there are
several techniques (ways of doing things) in the field of management.

Budgeting, cost accounting, ratio analysis, rate of return on investment,

critical path method (CPM), programmed evaluation and review technique
(PERT) are some of these techniques which facilitate better management.
Secondly, principles of management have been developed through continuous
observations and empirical verification. Thirdly, management principles are
capable of universal application.
ROLES OF MANAGER
Henry Mintzberg identified ten different roles, separated into three categories. The categories
hedefined are as follows

a) Interpersonal Roles

The ones that, like the name suggests, involve people and other ceremonial duties. It can
befurther classified as follows
• Leader – Responsible for staffing, training, and associated duties.
• Figurehead – The symbolic head of the organization.
• Liaison – Maintains the communication between all contacts and informers that
composethe organizational network.

b) Informational Roles

Related to collecting, receiving, and disseminating information.

• Monitor – Personally seek and receive information, to be able to
understand theorganization.
• Disseminator – Transmits all import information received from outsiders to the
membersof the organization.
• Spokesperson – On the contrary to the above role, here the manager
 transmits theorganization’s plans, policies and actions to outsiders.

c) Decisional Roles
Roles that revolve around making choices.
• Entrepreneur – Seeks opportunities. Basically they search for change, respond to
it, andexploit it.
• Negotiator – Represents the organization at major negotiations.
• Resource Allocator – Makes or approves all significant decisions related to the
allocationof resources.
• Disturbance Handler – Responsible for corrective action when the
organization facesdisturbances.

Managerial Skills:

There are four skills of managers are expected to have ability of:

Technical skills:

Technical skills that reflect both an understanding of and a proficiency in a

specialized field. For example, a manager may have technical skills in accounting,
finance, engineering, manufacturing, or computer science.

Human Skills:

Human skills are skills associated with manager’s ability to work well with others,
both as a member of a group and as a leader who gets things done through other.

Concept Skills:

Conceptual skills related to the ability to visualize the organization as a whole,

discern interrelationships among organizational parts, and understand how the
organization fits into the wider context of the industry, community, and world.
Conceptual skills, coupled with technical skills, human skills and knowledge base,
are important ingredients in organizational performance.

Design Skills:

It is the ability to solve the problems in ways that will benefit the enterprise.
Managers must be able to solve the problems.
The Skills vary at different levels:

Top management Concept and design Skills.

Middle Human Skills.

Supervisor’s Technical skills.

Skills of management at different levels.

Difference between Entrepreneur and Manager

Sl.No. Criteria Entrepreneur Manager

1 Motive The main motive of an But, the main motive of amanager

entrepreneur is to start a venture is to render his services in an
by setting up an enterprise. He enterprise already set up by
understands the venture for his someone else i.e., entrepreneur.
personal gratification.

2 Status An entrepreneur is the ownerof A manager is the servant in the

the enterprise. enterprise owned by the
entrepreneur.

3 Risk Bearing An entrepreneur being the owner A manager as a servant does not
of the enterpriseassumes all risks bear any risk involved in the
and uncertainty involved in enterprise.
runningthe enterprise.

4 Rewards The reward an entrepreneur gets A manager gets salary as reward

for bearing risks involved in the for the services rendered by him
enterprise is profit whichis highly in the enterprise. Salary of a
uncertain. manager is certain and fixed.

5 Innovation Entrepreneur himself thinks over But, what a manager does is

what and how to producegoods to simply to execute the plans
meet the changingdemands of the prepared by the entrepreneur.
customers. Hence, he acts as an Thus, a manager simply translates
innovator also called a ‘change the entrepreneur’s ideas into
agent’ practice.

6 Qualifications An entrepreneur needs to possess On the contrary, a manager needs

qualities and qualifications like to possess distinctqualifications in
high achievement motive, origi- terms of sound knowledge in
nality in thinking, foresight,risk - management theory andpractice
bearing ability and so on.
EVOLUTION OF MANAGEMENT THOUGHT

The practice of management is as old as human civilization. The ancient

civilizations of Egypt (the great pyramids), Greece (leadership and war tactics
of Alexander the great) and Rome displayed the marvelous results of good
management practices.
The origin of management as a discipline was developed in the late 19th
century. Over
time, management thinkers have sought ways to organize and classify the
voluminous information about management that has been collected and
disseminated. These attempts at classification have resulted in the
identification of management approaches. The approaches of management are
theoretical frameworks for the study of management. Each of the approaches
of management are based on somewhat different assumptions about human
beings and the organizations for which they work.
The different approaches of management are
a) Classical approach,

b) Behavioral approach,
c) Quantitative approach,
d) Systems approach,
e) Contingency approach.
The formal study of management is largely a twentieth-century phenomenon,
and to some degree the relatively large number of management approaches
reflects a lack of consensus among management scholars about basic questions
of theory and practice.

a) THE CLASSICAL APPROACH:

The classical approach is the oldest formal approach of management thought.

Its roots pre-date the twentieth century. The classical approach of thought
generally concerns ways to manage work and organizations more efficiently.
Three areas of study that can be grouped under the classical approach are
scientific management, administrative management, and bureaucratic
management.
(i) Scientific Management.
Frederick Winslow Taylor is known as the father of scientific
management. Scientific management (also called Taylorism or the Taylor
system) is a theory of management that analyzes and synthesizes workflows,
with the objective of improving labor productivity. In other words, Traditional
rules of thumb are replaced by precise procedures developed after careful study
of an individual at work.
(ii) Administrative Management.
Administrative management focuses on the management process and
principles of management. In contrast to scientific management, which deals
largely with jobs and work at the individual level of analysis, administrative
management provides a more general theory of management. Henri Fayol is the
major contributor to this approach of management thought.
(iii) Bureaucratic Management.
Bureaucratic management focuses on the ideal form of organization.
Max Weber was the major contributor to bureaucratic management. Based on
observation, Weber concluded that many early organizations were inefficiently
managed, with decisions based on personal relationships and loyalty. He
proposed that a form of organization, called a bureaucracy, characterized by
division of labor, hierarchy, formalized rules, impersonality, and the selection
and promotion of employees based on ability, would lead to more efficient
management. Weberalso contended that managers' authority in an organization
should be based not on tradition or charisma but on the position held by
managers in the organizational hierarchy.
b) THE BEHAVIORAL APPROACH:

The behavioral approach of management thought developed, in part,

because of perceived weaknesses in the assumptions of the classical approach.
The classical approach emphasized efficiency, process, and principles. Some
felt that this emphasis disregarded important aspects of organizational life,
particularly as it related to human behavior. Thus, the behavioral approach
focused on trying to understand the factors that affect human behavior at work.
(i) Human Relations.
The Hawthorne Experiments began in 1924 and continued through the
early 1930s. A variety of researchers participated in the studies, including
Elton Mayo. One of the major conclusions of the Hawthorne studies was that
workers' attitudes are associated with productivity. Another was that the
workplace is a social system and informal group influence could exert a
powerful effect on individual behavior. A third was that the style of
supervision is an important factor in increasing workers' job satisfaction.
(ii) Behavioral Science.
Behavioral science and the study of organizational behavior emerged in
the 1950s and 1960s. The behavioral science approach was a natural
progression of the human relations movement. It focused on applying
conceptual and analytical tools to the problem of understanding and predicting
behavior in the workplace.
The behavioral science approach has contributed to the study of
management through its focus on personality, attitudes, values, motivation,
group behavior, leadership, communication, and conflict, among other issues.

c) THE QUANTITATIVE APPROACH:

The quantitative approach focuses on improving decision making via the

application of quantitative techniques. Its roots can be traced back to scientific
management.
(i) Management Science (Operations Research)
Management science (also called operations research) uses mathematical
and statistical approaches to solve management problems. It developed during
World War II as strategists tried to apply scientific knowledge and methods to
the complex problems of war. Industry began to apply management science
after the war. The advent of the computer made many management science
tools and concepts more practical for industry

(ii) Production And Operations Management.

This approach focuses on the operation and control of the production
process that transforms resources into finished goods and services. It has its
roots in scientific management but became an identifiable area of management
study after World War II. It uses many of the tools of management science.
Operations management emphasizes productivity and quality of both
manufacturing and service organizations. W. Edwards Deming exerted a
tremendous influence in shaping modern ideas about improving productivity
and quality. Major areas of study within operations management include
capacity planning, facilities location, facilities layout, materials requirement
planning, scheduling, purchasing and inventory control, quality control,
computer integrated manufacturing, just-in-time inventory systems, and flexible
manufacturing systems.

d) SYSTEMS APPROACH:

The simplified block diagram of the systems approach is given below.

The systems approach focuses on understanding the organization as an

open system that transforms inputs into outputs. The systems approach began
to have a strong impact on management thought in the 1960s as a way of
thinking about managing techniques that would allow managers to relate
different specialties and parts of the company to one another, as well as to
external environmental factors. The systems approach focuses on the
organization as a whole, its interaction with the environment, and its need to
achieve equilibrium

e) CONTINGENCY APPROACH:

The contingency approach focuses on applying management principles

and processes as dictated by the unique characteristics of each situation. It
emphasizes that there is no one best way to manage and that it depends on
various situational factors, such as the external environment, technology,
organizational characteristics, characteristics of the manager, and
characteristics of the subordinates. Contingency theorists often implicitly or
explicitly criticize theclassical approach for its emphasis on the universality of
management principles; however, most classical writers recognized the need to
consider aspects of the situation when applying management principles.

MANAGEME Beginning Emphasis

NT Dates
APPROACHS

CLASSICAL APPROACH

Traditional rules of thumb are replaced by

Scientific
1880s precise procedures developed after careful
Management
study of an individual at work.
Gives idea about the primary functions of
Administrative
1940s management and The 14 Principles of
Management
Administration.

Bureaucratic 1920s Replaces traditional leadership and

Management charismaticleadership with legal leadership
BEHAVIORAL APPROACH

Human
1930s workers' attitudes are associated with
Relations productivity

Behavioral Gives idea to understand human behavior

1950s
Science in theorganization.

QUANTITATIVE APPROACH

Management
Science Uses mathematical and statistical
1940s approaches tosolve management problems.
(Operation
research)
Production and This approach focuses on the operation and
Operations 1940s control of the production process that
Management transformsresources into finished goods
and services

RECENT DEVELOPEMENTS

Considers the organization as a system

SYSTEMS
1950s that transforms inputs into outputs while in
APPROAC
constant interaction with its' environment.
H
Applies management principles and
CONTINGEN
1960s processes as dictated by the unique
CY
characteristics of eachsituation.
APPROACH

CONTRIBUTION OF FAYOL AND TAYLOR

F.W. Taylor and Henry Fayol are generally regarded as the founders of
scientific management and administrative management and both provided the
bases for science and art of management.

Taylor's Scientific Management

Frederick Winslow Taylor well-known as the founder of scientific management
was the first to recognize and emphasis the need for adopting a scientific
approach to the task of managing an enterprise. He tried to diagnose the causes
of low efficiency in industry and came to the conclusion that much of waste
and inefficiency is due to the lack of order and system in the methods of
management. He found that the management was usually ignorant of the
amount ofwork that could be done by a worker in a day as also the best method
of doing the job. As a result, it remained largely at the mercy of the workers
who deliberately shirked work. He therefore, suggested that those responsible
for management should adopt a scientific approach in their work, and make use
of "scientific method" for achieving higher efficiency. The scientific method
consists essentially of
(a) Observation
(b) Measurement
(c) Experimentation and
(d) Inference.
He advocated a thorough planning of the job by the management and
emphasized the necessity of perfect understanding and co-operation between
the management and the workers both for the enlargement of profits and the
use of scientific investigation and knowledge in industrial work. He summed up
his approach in these words:
• Science, not rule of thumb
• Harmony, not discord
• Co-operation, not individualism
• Maximum output, in place of restricted output
• The development of each man to his greatest efficiency and prosperity.
Elements of Scientific Management: The techniques which Taylor regarded
as its essentialelements or features may be classified as under:
1. Scientific Task and Rate-setting, work improvement, etc.
2. Planning the Task.
3. Vocational Selection and Training
4. Standardization (of working conditions, material equipment etc.)
5. Specialization
6. Mental Revolution.
1. Scientific Task and Rate-Setting (work study): Work study may be
defined as the systematic, objective and critical examination of all the factors
governing the operational efficiency of any specified activity in order to effect
improvement.
Work study includes.
(a) Methods Study: The management should try to ensure that the plant is laid
out in the best manner and is equipped with the best tools and machinery. The
possibilities of eliminating or combining certain operations may be studied.
(b) Motion Study: It is a study of the movement, of an operator (or even of a
machine) in performing an operation with the purpose of eliminating useless motions.
(c) Time Study (work measurement): The basic purpose of time study is to
determine the proper time for performing the operation. Such study may be
conducted after the motion study. Both time study and motion study help in
determining the best method of doing a job and the standard time allowed for it.
(d) Fatigue Study: If, a standard task is set without providing for measures to
eliminate fatigue,it may either be beyond the workers or the workers may over
strain themselves to attain it. It isnecessary, therefore, to regulate the working
hours and provide for rest pauses at scientifically determined intervals.
(e) Rate-setting: Taylor recommended the differential piece wage system,
under which workers performing the standard task within prescribed time are
paid a much higher rate per unit than inefficient workers who are not able to
come up to the standard set.
2. Planning the Task: Having set the task which an average worker must
strive to perform to get wages at the higher piece-rate, necessary steps have to
be taken to plan the production thoroughly so that there is no bottlenecks and
the work goes on systematically.

3. Selection and Training: Scientific Management requires a radical change

in the methods and procedures of selecting workers. It is therefore necessary to
entrust the task of selection toa central personnel department. The procedure of
selection will also have to be systematised. Proper attention has also to be
devoted to the training of the workers in the correct methods of work.
4. Standardization: Standardization may be introduced in respect of the following.
(a) Tools and equipment: By standardization is meant the process of bringing
about uniformity. The management must select and store standard tools and
implements which will be nearly the best or the best of their kind.
(b) Speed: There is usually an optimum speed for every machine. If it is
exceeded, it is likely toresult in damage to machinery.
(c) Conditions of Work: To attain standard performance, the maintenance of
standard conditions of ventilation, heating, cooling, humidity, floor space,
safety etc., is very essential.
(d) Materials: The efficiency of a worker depends on the quality of materials
and the method ofhandling materials.
5. Specialization: Scientific management will not be complete without the
introduction of specialization. Under this plan, the two functions of 'planning'
and 'doing' are separated in the organization of the plant. The `functional
foremen' are specialists who join their heads to give thought to the planning of
the performance of operations in the workshop. Taylor suggested eight
functional foremen under his scheme of functional foremanship.
(a) The Route Clerk: To lay down the sequence of operations and
instruct the workersconcerned about it.
(b) The Instruction Card Clerk: To prepare detailed instructions regarding
different aspects ofwork.
(c) The Time and Cost Clerk: To send all information relating to their pay to
the workers and tosecure proper returns of work from them.
(d) The Shop Disciplinarian: To deal with cases of breach of discipline and
absenteeism.
(e) The Gang Boss: To assemble and set up tools and machines and to teach

the workers tomake all their personal motions in the quickest and best way.
(f) The Speed Boss: To ensure that machines are run at their best speeds and
proper tools areused by the workers.
(g) The Repair Boss: To ensure that each worker keeps his machine in
good order andmaintains cleanliness around him and his machines.
(h) The Inspector: To show to the worker how to do the work.

6. Mental Revolution: At present, industry is divided into two groups –

management and labour. The major problem between these two groups is the
division of surplus. The management wants the maximum possible share of the
surplus as profit; the workers want, as large share in the form of wages. Taylor
has in mind the enormous gain that arises from higher productivity. Such gains
can be shared both by the management and workers in the form of increased
profits and increased wages.

Henry Fayol's 14 Principles of Management:

The principles of management are given below:
1. Division of work: Division of work or specialization alone can give
maximum productivity andefficiency. Both technical and managerial activities
can be performed in the best manner only through division of labour and
specialization.
2. Authority and Responsibility: The right to give order is called authority.
The obligation to accomplish is called responsibility. Authority and
Responsibility are the two sides of the management coin. They exist together.
They are complementary and mutually interdependent.
3. Discipline: The objectives, rules and regulations, the policies and
procedures must be honoured by each member of an organization. There must
be clear and fair agreement on the rules and objectives, on the policies and
procedures. There must be penalties (punishment) for non-obedience or
indiscipline. No organization can work smoothly without discipline -
preferablyvoluntary discipline.
4. Unity of Command: In order to avoid any possible confusion and conflict,
each member of an organization must received orders and instructions only
from one superior (boss).
5. Unity of Direction: All members of an organization must work together to
accomplish common objectives.
6. Emphasis on Subordination of Personal Interest to General or Common
Interest: This is also called principle of co-operation. Each shall work for all
and all for each. General or common interest must be supreme in any joint
enterprise.
7. Remuneration: Fair pay with non-financial rewards can act as the best
incentive or motivatorfor good performance. Exploitation of employees in any
manner must be eliminated. Sound scheme of remuneration includes adequate
financial and nonfinancial incentives.
8. Centralization: There must be a good balance between centralization and
decentralization of authority and power. Extreme centralization and
decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or hierarchy of
command linking all members of the organization from the top to the bottom.
Scalar denotes steps.
10. Order: Fayol suggested that there is a place for everything. Order or
system alone can create a sound organization and efficient management.
11. Equity: An organization consists of a group of people involved in joint
effort. Hence, equity (i.e., justice) must be there. Without equity, we cannot
have sustained and adequate joint collaboration.
12. Stability of Tenure: A person needs time to adjust himself with the new
work and demonstrate efficiency in due course. Hence, employees and
managers must have job security. Security of income and employment is a pre-
requisite of sound organization and management.
13. Esprit of Co-operation: Esprit de corps is the foundation of a sound
organization. Union is strength. But unity demands co-operation. Pride, loyalty
and sense of belonging are responsiblefor good performance.
14. Initiative: Creative thinking and capacity to take initiative can give us
sound managerial planning and execution of predetermined plans.

ORGANIZATION AND ENVIRONMENTAL FACTORS

An organization is a group of people intentionally organized to accomplish a
common or set ofgoals.
Types of Business Organizations
When organizing a new business, one of the most important decisions to be
made is choosingthe structure of a business.

a) Sole Proprietorships

The vast majority of small business starts out as sole proprietorships . . . very
dangerous. These firms are owned by one person, usually the individual who
has day-to-day responsibility for running the business. Sole proprietors own all
the assets of the business and the profits generated by it. They also assume
"complete personal" responsibility for all of its liabilities or debts. In the eyes
of the law, you are one in the same with the business.
Merits:
• Easiest and least expensive form of ownership to organize.
• Sole proprietors are in complete control, within the law, to make all decisions.
• Sole proprietors receive all income generated by the business to keep or reinvest.
• Profits from the business flow-through directly to the owner's personal tax return.
• The business is easy to dissolve, if desired.
Demerits:
• Unlimited liability and are legally responsible for all debts against the business.
• Their business and personal assets are 100% at risk.
• Has almost been ability to raise investment funds.
• Are limited to using funds from personal savings or consumer loans.
• Have a hard time attracting high-caliber employees, or those that are
motivated by theopportunity to own a part of the business.
• Employee benefits such as owner's medical insurance premiums are not
directly deductiblefrom business income (partially deductible as an
adjustment to income).

b) Partnerships

In a Partnership, two or more people share ownership of a single business. Like

proprietorships, the law does not distinguish between the business and its
owners. The Partners should have a legal agreement that sets forth how
decisions will be made, profits will be shared, disputes will be resolved, how
future partners will be admitted to the partnership, how partners can be bought
out, or what steps will be taken to dissolve the partnership when needed. Yes,
its hard to think about a "break-up" when the business is just getting started,
but many partnerships split up at crisis times and unless there is a defined
process, there will be even greater problems. They also must decide up front
how much time and capital each will contribute, etc.
Merits:
• Partnerships are relatively easy to establish; however time should be
invested in developingthe partnership agreement.
• With more than one owner, the ability to raise funds may be increased.
• The profits from the business flow directly through to the partners' personal taxes.
• Prospective employees may be attracted to the business if given the
incentive to become apartner.
Demerits:
• Partners are jointly and individually liable for the actions of the other partners.
• Profits must be shared with others.
• Since decisions are shared, disagreements can occur.
• Some employee benefits are not deductible from business income on tax returns.
• The partnerships have a limited life; it may end upon a partner withdrawal or
death.

c) Corporations

A corporation, chartered by the state in which it is headquartered, is considered

by law to be a unique "entity", separate and apart from those who own it. A
corporation can be taxed; it can besued; it can enter into contractual agreements.
The owners of a corporation are its shareholders. The shareholders elect a
board of directors to oversee the major policies and decisions. The corporation
has a life of its own and does not dissolve when ownership changes.

Merits:
• Shareholders have limited liability for the corporation's debts or
judgments against thecorporations.
• Generally, shareholders can only be held accountable for their investment in
stock of the company. (Note however, that officers can be held personally
liable for their actions, such as the failure to withhold and pay employment
taxes.)
• Corporations can raise additional funds through the sale of stock.
• A corporation may deduct the cost of benefits it provides to officers and
employees.
• Can elect S corporation status if certain requirements are met. This
election enablescompany to be taxed similar to a partnership.
Demerits:
• The process of incorporation requires more time and money than
other forms oforganization.
• Corporations are monitored by federal, state and some local agencies, and
as a result mayhave more paperwork to comply with regulations.
• Incorporating may result in higher overall taxes. Dividends paid to
shareholders are notdeductible form business income, thus this income
can be taxed twice.

d) Joint Stock Company:

Limited financial resources & heavy burden of risk involved in both of the
previous forms of organization has led to the formation of joint stock
companies these have limited dilutives.
The capital is raised by selling shares of different values. Persons who
purchase the shares are called shareholder. The managing body known as;
Board of Directors; is responsible for policy making important financial &
technical decisions.
There are two main types of joint stock Companies.
(i) Private limited company.
(ii) Public limited company
(i) Private limited company: This type company can be formed by two or more
persons. Te maximum number of member ship is limited to 50. In this transfer
of shares is limited to members only. The government also does not interfere in
the working of the company.
(ii) Public Limited Company: Its is one whose membership is open to general
public. The minimum number required to form such company is seven, but
there is no upper limit. Such company’s can advertise to offer its share to
genera public through a prospectus. These publiclimited companies are
subjected to greater control & supervision of control.
Merits:
• The liability being limited the shareholder bear no Rick& therefore more
as make personsare encouraged to invest capital.
• Because of large numbers of investors, the risk of loss is divided.
• Joint stock companies are not affected by the death or the retirement of the
shareholders.
Disadvantages:
• It is difficult to preserve secrecy in these companies.
• It requires a large number of legal formalities to be observed.
• Lack of personal interest.
e) Public Corporations:

A public corporation is wholly owned by the Government centre to state. It is

established usually by a Special Act of the parliament. Special statute also
prescribes its management pattern power duties & jurisdictions. Though the
total capital is provided by the Government, they have separate entity & enjoy
independence in matters related to appointments, promotions etc.
Merits:
• These are expected to provide better working conditions to the employees
& supported tobe better managed.
• Quick decisions can be possible, because of absence of bureaucratic control.
• More Hexibility as compared to departmental organization.
• Since the management is in the hands of experienced & capable
directors & managers,these ate managed more efficiently than that of
government departments.
Demerits:
• Any alteration in the power & Constitution of Corporation requires an
amendment in theparticular Act, which is difficult & time consuming.
• Public Corporations possess monopoly & in the absence of
competition, these are notinterested in adopting new techniques & in
making improvement in their working.

f) Government Companies:

A state enterprise can also be organized in the form of a Joint stock company;
A government company is any company in which of the share capital is held by
the central government or partly by central government & party by one to more
state governments. It is managed b the elected board of directors which may
include private individuals. These are accountable for its working to the
 concerned ministry or department & its annual report is required to be placed
ever year on the table of the parliament or state legislatures along with the
comments of the government to concerned department.
Merits:
• It is easy to form.
• The directors of a government company are free to take decisions &
are not bound bycertain rigid rules & regulations.
Demerits:
• Misuse of excessive freedom cannot be ruled out.
• The directors are appointed by the government so they spend more time
in pleasing theirpolitical masters & top government officials, which
results in inefficient management.
ORGANIZATIONAL CULTURE
Organizational culture is a system of shared assumptions, values, and
beliefs, which governs how people behave in organizations. These shared values
have a strong
Organizational culture is composed of seven characteristics that range in
priority from high to low. Every organization has a distinct value for each of
these characteristics, which, when combined, defines the organization's unique
culture. Members of organizations make judgments on the value their
organization places on these characteristics, and then adjust their behavior to
match this perceived set of values. Let's examine each of these seven
characteristics.
Organizational culture includes an organization's expectations, experiences,
philosophy, and values that hold it together, and is expressed in its self-
image, inner workings, interactions with the outside world, and future
expectations. It is based on shared attitudes, beliefs, customs, and written and
unwritten rules that have been developed over time and are considered valid.
Also called corporate culture,
The seven characteristics of organizational culture are:
INNOVATIVE CULTURES
Companies that have innovative cultures are flexible and adaptable, and
experiment with new ideas. These companies are characterized by a flat hierarchy
in which titles and other status distinctions tend to be downplayed For example,
W. L. Gore & Associates Inc. is a company with innovative products such as
GORE-TEX® (the breathable fabric that is windproof and waterproof), Glide
dental floss, and Elixir guitar strings, earning the company the distinction of
being elected as the most innovative company in the United States by
Fast Company magazine in 2004.
AGGRESSIVE CULTURES
Companies with aggressive cultures value competitiveness and
outperformingcompetitors: By emphasizing this, they may fall short in the area of
corporate social responsibility. For example, Microsoft Corporation is often
identified as a company with an aggressive culture. The company has faced a
number of antitrust lawsuits and disputes with competitors over the years.
Recently, Microsoft founder Bill Gates established the Bill & Melinda Gates
foundation and is planning to devote his time to reducing poverty around the
world.
OUTCOME-ORIENTED CULTURES
Outcome-oriented cultures as those that emphasize achievement, results,
and action as important values. A good example of an outcome-oriented
culture may be Best Buy Co. Inc. Having a culture emphasizing sales
performance, Best Buy tallies revenues and other relevant figures daily by
department. Employees are trained and mentored to sell company products
effectively, and they learn how much money their department made every day

STABLE CULTURES
Stable cultures are predictable, rule-oriented, and bureaucratic. These
organizations aim to coordinate and align individual effort for greatest levels of
efficiency. When the environment is stable and certain, these cultures may help
the organization be effective by providing stable and constant levels of output.
These cultures prevent quick action, and as a result may be a misfit to a changing
anddynamic environment.
PEOPLE-ORIENTED CULTURES
People-oriented cultures value fairness, supportiveness, and respect for individual
rights. These organizations truly live the mantra that “people are their greatest
asset.” In addition to having fair procedures and management styles, these
companies create an atmosphere where work is fun and employees do not feel
required to choose between work and other aspects of their lives. In these
organizations, there is a greater emphasis on and expectation of treating people
with respect and dignity
TEAM-ORIENTED CULTURES
Companies with team-oriented cultures are collaborative and emphasize
cooperation among employees. For example, Southwest Airlines Company
facilitates a team-oriented culture by cross-training its employees so that they are
capable of helping each other when needed. The company also places emphasis
on training intact work teams. Employees participate in twice daily meetings
named “morning overview meetings” (MOM) and daily afternoon discussions
(DAD) where they collaborate to understand sources of problems and determine
future courses of action. In Southwest’s selection system, applicants who are not
viewed as team players are not hired as employees. In team-oriented
organizations, members tend to have more positive relationships with their
coworkers and particularly with their managers.
DETAIL-ORIENTED CULTURES
Organizations with detail-oriented cultures are characterized in the OCP
(Organization culture Profile) framework as emphasizing precision and paying
attention to details. Such a culture gives a competitive advantage to companies in
the hospitality industry by helping them differentiate themselves from others. For
example, Four Seasons Hotels Ltd. and the Ritz-Carlton Company LLC are
among hotels who keep records of all customer requests, such as which
newspaper the guest prefers or what type of pillow the customer uses. This
information is put into a computer system and used to provide better service to
returning customers. Any requests hotel employees receive, as well as overhear,
might be entered into the database to serve customers better. Recent guests to
Four Seasons Paris who were celebrating their 21st anniversary were greeted
with a bouquet of 21 roses on their bed. Such clear attention to detail is an
effective way of impressing customers and ensuring repeat visits. McDonald’s
Corporation is another company that specifies in detail how employees should
perform their jobs by including photos of exactly how French fries and
hamburgers should look when prepared properly.
Organization Environment
The organizational environment is the set of forces surrounding an
organization that have the potential to affect the way it operates and its access to
scarce resources. The organization needs to properly understand the environment
for effective management.

CLASSIFICATION OF ENVIRONMENTAL FACTORS

On the basis of the extent of intimacy with the firm, the environmental factors
may be classifiedinto different types namely internal and external.
1) INTERNAL ENVIRONMENTAL FACTORS

The internal environment is the environment that has a direct impact on the
business. The internal factors are generally controllable because the company
has control over these factors.It can alter or modify these factors. The internal
environmental factors are resources, capabilities and culture.
i) Resources:
A good starting point to identify company resources is to look at tangible,
intangible and humanresources.
Tangible resources are the easiest to identify and evaluate: financial resources
and physical assets are identifies and valued in the firm’s financial statements.
Intangible resources are largely invisible, but over time become more
important to the firm thantangible assets because they can be a main source for
a competitive advantage. Such intangible recourses include reputational assets
(brands, image, etc.) and technological assets (proprietary technology and
know-how).

Human resources or human capital are the productive services human beings
offer the firm interms of their skills, knowledge, reasoning, and decision-
making abilities.
ii) Capabilities:
Resources are not productive on their own. The most productive tasks require
that resources collaborate closely together within teams. The term
organizational capabilities are used to refer to a firm’s capacity for undertaking
a particular productive activity. Our interest is not in capabilities per se, but in
capabilities relative to other firms. To identify the firm’s capabilities we will
use the functional classification approach. A functional classification identifies
organizationalcapabilities in relation to each of the principal functional areas.
iii) Culture:
It is the specific collection of values and norms that are shared by people and groups
in anorganization and that helps in achieving the organizational goals.

2) EXTERNAL ENVIRONMENT FACTORS

It refers to the environment that has an indirect influence on the business. The
factors are uncontrollable by the business. The two types of external
environment are micro environment and macro environment.

a) MICRO ENVIRONMENTAL FACTORS

These are external factors close to the company that have a direct impact on the
organizationsprocess. These factors include:
i) Shareholders
Any person or company that owns at least one share (a percentage of
ownership) in a companyis known as shareholder. A shareholder may also be
referred to as a "stockholder". As organization requires greater inward
investment for growth they face increasing pressure to move from private
ownership to public. However this movement unleashes the forces of
shareholder pressure on the strategy of organizations.

ii) Suppliers
An individual or an organization involved in the process of making a product
or service available for use or consumption by a consumer or business user is
known as supplier. Increase in raw material prices will have a knock on affect
on the marketing mix strategy of an organization. Prices may be forced up as a
result. A closer supplier relationship is one way of ensuring competitive and
quality products for an organization.
iii) Distributors
Entity that buys non-competing products or product-lines, warehouses them,
and resells them to retailers or direct to the end users or customers is known as
distributor. Most distributors provide strong manpower and cash support to the
supplier or manufacturer's promotional efforts. They usually also provide a
range of services (such as product information, estimates, technical support,
after-sales services, credit) to their customers. Often getting products to the end
customers can be a major issue for firms. The distributors used will determine
the final priceof the product and how it is presented to the end customer. When
selling via retailers, for example, the retailer has control over where the
products are displayed, how they are pricedand how much they are promoted
in-store. You can also gain a competitive advantage by using changing
distribution channels.

iv) Customers
A person, company, or other entity which buys goods and services produced by
another person,company, or other entity is known as customer. Organizations
survive on the basis of meeting the needs, wants and providing benefits for
their customers. Failure to do so will result in a failed business strategy.

v) Competitors

A company in the same industry or a similar industry which offers a similar

product or service is known as competitor. The presence of one or more
competitors can reduce the prices of goods and services as the companies
attempt to gain a larger market share. Competition also requires companies to
become more efficient in order to reduce costs. Fast-food restaurants
McDonald's and Burger King are competitors, as are Coca-Cola and Pepsi, and
Wal-Mart and Target.

vi) Media
Positive or adverse media attention on an organisations product or service can
in some cases make or break an organisation.. Consumer programmes with a
wider and more direct audience can also have a very powerful and positive
impact, hforcing organisations to change their tactics.

b) MACRO ENVIRONMENTAL FACTORS

An organization's macro environment consists of nonspecific aspects in the

organization's surroundings that have the potential to affect the organization's
strategies. When compared to a firm's task environment, the impact of macro
environmental variables is less direct and the organization has a more limited
impact on these elements of the environment.
The macro environment consists of forces that originate outside of an
organization and generally cannot be altered by actions of the organization. In
other words, a firm may be influenced by changes within this element of its
environment, but cannot itself influence the environment. The curved lines in
Figure 1 indicate the indirect influence of the environment on the organization.
Macro environment includes political, economic, social and technological
factors. A firm considers these as part of its environmental scanning to better
understand the threats and opportunities created by the variables and how
strategic plans need to be adjusted so the firm can obtain and retain competitive
advantage.

i)Political Factors
Political factors include government regulations and legal issues and define both
formal andinformal rules under which the firm must operate. Some examples
include:
• tax policy
• employment laws
• environmental regulations
• trade restrictions and tariffs
• political stability
ii)Economic Factors
Economic factors affect the purchasing power of potential customers and the
firm's cost ofcapital. The following are examples of factors in the
macroeconomy:
• economic growth
• interest rates
• exchange rates
• inflation rate
iii) Social Factors
Social factors include the demographic and cultural aspects of the external
macro environment. These factors affect customer needs and the size of
potential markets. Some social factors include:
• health consciousness

• population growth rate

• age distribution
• career attitudes
• emphasis on safety

iv)Technological Factors
Technological factors can lower barriers to entry, reduce minimum efficient
production levels,and influence outsourcing decisions. Some technological
factors include:
• R&D activity

• automation
• technology incentives
• rate of technological change

TRENDS AND CHALLENGES OF MANAGEMENT IN

GLOBALSCENARIO
The management functions are planning and decision making, organizing.
leading, and controlling — are just as relevant to international managers as to
domestic managers. International managers need to have a clear view of where
they want their firm to be in the future; they have to organize to implement their
plans: they have to motivate those who work lotthem; and they have to develop
appropriate control mechanisms.

a) Planning and Decision Making in a Global Scenario

To effectively plan and make decisions in a global economy, managers must
have a broad- based understanding of both environmental issues and
competitive issues. They need to understand local market conditions and
technological factor that will affect their operations. At the corporate level,
executives need a great deal of information to function effectively. Which
markets are growing? Which markets are shrinking? Which are our domestic
and foreign competitors doing in each market? They must also make a variety
of strategic decisions about their organizations. For example, if a firm wishes to
enter market in France, should it buy a localfirm there, build a plant, or seek a
strategic alliance? Critical issues include understanding environmental
circumstances, the role of goals and planning in a global organization, and how
decision making affects the global organization.

b) Organizing in a Global Scenario

Managers in international businesses must also attend to a variety of organizing issues.
For example, General Electric has operations scattered around the globe.The firm has
made the decision to give local managers a great deal of responsibility for how they run
their business. In contrast, many Japanese firms give managers of their foreign operations
relatively little responsibility. As a result, those managers must frequently travel back to
Japan to present problems or get decisions approved. Managers in an international
business must address the basic issues of organization structure and design, managing
change, and dealing with human resources.

c) Leading in a Global Scenario

We noted earlier some of the cultural factors that affect international organizations.
Individualmanagers must be prepared to deal with these and other factors as they
interact people from different cultural backgrounds .Supervising a group of five
managers, each of whom is from a different state in the United States, is likely to be
much simpler than supervising a group of five managers, each of whom is from a
different culture. Managers must understand how cultural factors affect individuals.
How motivational processes vary across cultures, how the role of leadership
changes in different cultures, how communication varies across cultures, and how
interpersonal and group processes depend on cultural background.

d) Controlling in a Global Scenario

Finally, managers in international organizations must also be concerned with
control. Distances, time zone differences, and cultural factors also play a role in
control. For example, in some cultures, close supervision is seen as being
appropriate, whereas in other cultures, it is not Like- wise, executives in the
United States and Japan may find it difficult to communicate vital information
to one another because of the time zone differences. Basic control issues for the
international manager revolve around operations management productivity,
quality, technology and information systems.