I UNIT

Introduction to management: A business develops in course of time

with complexities. With the
increasing of complexities managing the business concern becomes a
difficult one. The need of existence of management has increased
tremendously. Management is not only essential to business
concerns but also essential to bank, colleges, hospitals, hotels, religious
bodies and etc. every business unit has its own objective. These objectives
can be achieved with the co-operative efforts of several personnel.
Meaning of Management: Management is the art of getting things
done by a group of people with the effective utilization of available
resources.
Definition of management:
Henry Fayol,“To manage is to forecast and plan, to organize, to
compound, to coordinate and to control.”
F.W.Taylor,“The management is the art of knowing what you want
to do and then seeing that it is done in the best and cheapest way.”
Nature / Features or Characteristics of management:
1Art as well as science: Management is both an art and a science. It is an art in the sense of
possessing of managing skill by a person. In another sense management is the science
because of developing certain principles which are applicable in a place where a group of
activities are co-ordinated
2Management is an activity: Management is the process of activity relating to the effective
utilization of available resources for production.
3Management is a continuous process: the process of management mainly consists of
planning, directing and controlling the resources. So, management is a continuous process.
4Management achieving pre-determined objectives: The objectives of an organization are
clearly laid down. Every managerial activity results in the achievement of objectives fixed
well in advance.
5Organized activities: Management is a group of organized activities.
6Management is a factor of production: The factors of production include land, labour,
material, capital and enterprises. These could not realize the organizations goals. The
organization goals are achieved only when these are effectively co-ordinated by the
entrepreneur.
7Management as a system of activity: A system may be defined as a set of component parts
working as a whole.
8Management is a discipline: The boundaries of management are not exact as those of any
other physical sciences. It may be increased by the continuous discovery of many more
aspects of business enterprises.
.
9Decision making: There are a number of decisions taken by the management
every day. The success or failure of an organization depends upon the degree of
right decision taken by the manager
10Leadership Quality: Leadership quality is developed in the persons who are
working in the top level management. According to R.C.davis Management is
the function of executive leadership everywhere.
Importance of Management: Management is must for every enterprise. The existence
of management ensures proper functioning and running of an enterprise.
1)Management meets the challenge of change:
2)Accomplishment of group goals
2)Effective utilization of business
3)Effective function of business
4)Resource development:
5)Sound organization structure:
6)Management directs the organization:
7)Integrates various interests:
8)Stability:
9)Innovation:
10)Co-ordination and team spirit:
11)Tackling problems.
12)A tool for personality development:
Functions of management:
Scholars in the field of management have their own classification functions of
management. Some scholars add few functions and delete some other functions. The
important functions of
management are briefly discussed below
1)Planning:
2)Organizing:
2)Staffing:
3)Directing:.
4)Co-ordinating:
5)Motivating or actuating:
6)Controlling
7)Innovation
8) Representation
9) Decision making:
10)Communication:

Henry Fayol classifies the functions of management as

forecasting, planning, organizing, commanding, coordinating
and controlling.
Luther Gullick classifies the functions of management as:
POSDCoRB
Levels of Management: Level of management refers to the arrangement of
managerial positions in an organization. Management levels determine the
authority relationship in an organization. There are three levels of management
in view of authority and responsibility relationship. They are

Top Level Management(CEO, GM,

BOD, President, Vice- president

Middle Level Management(Departmental

managers, senior manager, plant manager)

Lower/ Supervisory Leel Management(foremen,

section head, officer executive, engineer, supervisor.)
 Top Level Management: At this level, mission goals, corporate strategies,
Policies, Plans and Objectives are formulated. The performance of middle
management is evaluated and controlled by the top management.
Functions of top level management:-
a.To analyze and interpret changes in the external environment of the company.
b.To design long term corporate plans for the entire organization covering all
areas of operation
c.To formulate and approve the master budget and departmental budgets.
d.To design broad organization structure
Middle Level Management: It acts as a link between the top management and the
lower level management. Here, the managers plan, organize, direct, and control for
the activities within their respective departments only.
Functions of middle level management:-
a. To interpret and explain the plans and policies formulated by the top level
management to lower level management.
b. Selecting suitable operative and supervisory Personnel.
c. Assigning duties and responsibilities for timely execution of plans.
d. To establish departmental goals and decide various ways and means for achieving
these goals.
e. Achieving coordination between different departments.
Lower Level Management: Lower level / Supervisory management
is the lowest level in the hierarchy of management.
Functions of lower level management:-
a.To get the things done by the “core group” workers.
b.To issue orders and instructions to the workers regarding the being
performed by them.
c.To prepare the plan for their activities, called “scheduling”.
Scheduling lays down, what is to be one, by whom it will be done,
and how and when it will be done.
d.To assign the work to the workers and seek its completion with the
given period of time and quality specifications.
EVOLUTION OF MANAGEMENT THOUGHT:

This evolution of management thought can be studied in the following

stages:
A.The Classical Theory of Management (Classical Approach): It includes
the following three streams of thought: (i) Bureaucracy, (ii) Scientific
Management; and (iii) Administrative Management
B.The Neo-classical theory of Management: It includes the following two
streams: (i) Human Relations Approach and (ii) Behavioral Sciences
Approach.
C.The Modern Theory of Management: It includes the following three
streams of thought: (i)
Quantitative Approach to Management (Operations Research); (ii)
Systems Approach to Management and (iii) Contingency Approach to
Management.
 Contributors to Management Thought The development of management
thought is the result of contributions made by pioneering management
thinkers and experts from other social sciences such as economics and
psychology.

F.W.Taylors Scientific Management theory: According to F.W.taylor scientific

management consists of a certain philosophy of scientific selection and training
of right workers for the right job, providing adequate working conditions,
providing a system of monetary incentives to efficient workers and assumption
of responsibilities by managers and supervisors.
Principles of scientific management:

F.W.Taylors has given the principles scientific management. They are

1)Science is not rule of thumb:
2)Harmony in group action:
2)Co-operation:
3)Maximum output:
4)Improvement of workers:
Elements or features of scientific management: F.W.Taylors had conducted many
experiments to find out how the workers could be made more efficient. Scientific
management has following features

1)Separation of planning from executive function: F.W.Taylor separated the planning

function from the executive function
2)Scientific task setting:
3)Functional foremanship:
4)Work study: Work study refers to the systematic critical assessment of efficiency
required to the job. It varies from one job to another job.
5)Methods study: the entire process of production is taken into account under this
method.
6)Motion duty:
7)Time study:
8)Fatigue study:
9)Rate setting:
10)Standardization:
11)Scientific selection and planning:
12)Financial incentives: financial incentives can motivate the workers to show their
efficiency.
13)Mental revolution:
14)Economy
Classification of business activities: Henry Fayol classified all the business activities
into 6 functions. They are
1) Technical activities relating to production
2) Commercial activities relating to purchase and selling
3) Financial activities relating to identification and utilization of available funds
4) Accounting activities
5) Security activities relating to the steps taken to protect the property of enterprise and
persons
6) Managerial activities relating to planning, organizing, commanding, coordinating
and controlling

Henry Fayol 14 principles of management

Elements: Henry Fayol made a difference between principles of management and
elements or functions of management. According to him the following are the
elements of management.
Planning, Organizing, Commanding, Co-ordination & Control.
Principles of Management:
1)Division of work:
2)Authority and Responsibility:
3)Discipline:
4)Unity of command:
5)Unity of direction
6)Subordination of individual interest to group interest:
7)Remuneration of personnel:
8)Centralization:
9)Scalar chain:

10)Order:
11)Equity:

12)Stability of tenure of personnel:

13)Initiative

14)Esprit De Corps:
Criticism to Scientific Management
1.Fails to appreciate the social context of work and higher needs of workers.
2.Managers called it unwarranted interference in managerial prerogatives.
Theories of motivation: Management is the art of getting things done by others. Getting work done is a difficult task.
It is related to human behavior. The success of any organization is depends upon the behavior and interest of the
employees.

Definition: Beach defines “Motivation as a willingness to expand energy to achieve a goal or a reward.”
Scott defines “Motivation means a process of stimulating people to action to accomplish desired goals.”

Theories of motivation:

(1) Pro. Douglas McGregor has introduced two theories in his famous book “the human side of enterprise” they
are called ‘X’ theory and ‘Y’ theory.

(A)X – Theory: This theory based on ‘papa knows best’. In other words a manager has through knowledge and
excludes workers form decision process. A manager has authority to take decision the workers should follow
the decision taken by the manager.
Assumptions of theory
o Workers have an aversion to work inherently
o Workers may find a way to postpone the work completion in laziness
o Workers may do the job half heartedly

(B)Y-Theory: Y- Theory is just opposite to X – theory. So X-theory is considered as traditional theory and Y-
theory is considered as modern theory. Y-theory emphasizes the importance of workers in the
accomplishment of enterprise objectives.
Differences of X and Y Theories:

Theory X Theory Y
1. Workers dislike to work by themselves 1. Workers feel that work is as natural as
play

2. Workers are not ready to accept 2.Workers are ready to accept responsibility if
responsibility proper motivation is available them

3. Workers prefer to be directed by others 3.Workers are directed by them selves

4. Workers are un-ambitious 4.Workers are ambitious

5. Workers by nature resist changes and want 5.workers have a high degree of creativity and
security succeed in solving organizational problems

6. Workers lack creativity and fail to solve 6.Workers have a high of creativity and
organizational problems succeed in solving organizational problems

7. It focuses the lower level needs of workers 7.It focuses not only the lower level needs but
i.e. physiological and safety also higher level needs i.e. social, esteem and self-
actualization of workers

8. Strict control is necessary to achieve organizational 8.workers exercise self-control and self- direction to
objectives achieve organizational objectives

9. Authority is not delegated 9.Authority is delegated

10. Autocratic leadership is followed 10.Democratic leadership is followed

 Maslow’s hierarchy of needs theory:
Basically needs are classified into two classes i.e. primary needs and
secondary needs. The primary needs are necessary to survive and for
preservation of life. E.g. food, water, air, sex, shelter etc. secondary needs are
concerned with mind and spirit, e.g., recognition, love, affection etc.

self- actualization needs

Esteem and status need

Beloning and social needs

Safety and security needs

Basic physiological needs

 Herzberg’s theory of needs

In the late 1950s, Herzberg had conducted a study on motivation. The study has developed a
theory of work motivation. It is otherwise called maintenance theory of motivation.
Hygiene theory or two factor theory of motivation. The study reveals that the factors
responsible for job satisfaction are quite different from those responsible for job
dissatisfaction. These two feeling does not observe of each other.

If a factor is responsible for job satisfaction, the absence of such a factor would not mean
job dissatisfaction but it might be called the job satisfaction. This type of factors called
motivation factors. Herzberg identified some motivational factors as I) achievement II)
recognition III) advancement IV) work itself V) possibility of growth and VI) responsibility

Similarly a factor is responsible for job dissatisfaction. The absence of such a factor would
not mean job satisfaction but it might be called no job satisfaction. Herzberg called these
factors as maintenance of hygiene factors. They are I) company policy and administration
II) technical supervision III) inter personal relations with sub-ordinates IV) salary V) job
security VI) personal life VII) working Conditions VIII) status IX) inter personal relations
with supervisors and X) inter personal relations with peers.
LEADERSHIP AND LEADERSHIP STYLES:
Leader:
o One who leads a given group or team of people is called leader. If you can
influence people to perform better in a given organizational setting, that
means you are a leader.
o Leadership is ability to influence people to achieve the given goals in an
organization.
o A true leader is one who shares success with followers and absorbs all
failures.
o A manager has to be a mini-leader he has to inspire is subordinates and
get work done) and leader to be a mega-leader (otherwise he does not
understand the ground realities of functioning)
Leadership Styles: Leader has to ensure that people under his guidance
are comfortable and their good work is recognized.
A good leader has to adopt such a style of working that takes care of
people around him. There are also so e leader who do not care for
people and who care more for the task completion.

Types:
Autocratic leadership:
Democratic leadership:

Free – Rein leadership:.

DECISION MAKING:

Definition: “Decision making is a conscious and human process

involving both individual and social phenomenon based on
factual and valued premises which concludes with a choice of
one behavioral activity among more alternatives”.
Characteristics of Decision Making:
 Decision making is a dynamic process
Decision Making Process:

Identifying Analy Devel Weig Choosi Implementing

The zing oping hting ng the the Decisions
problem the Alter Alter Best
Proble native native Solutio
m Soluti Soluti ns
on ons
PRINCIPLES OF ORGANIZATION:

Meaning of organization: Organization is the detailed arrangement of work and working

conditions in order to perform the assigned activities in an effective manner.

Definition: Haney defines “Organization is a harmonious adjustment of specialized parts

for the accomplishment of some common purpose or purposes.”

Principles of organization: The worker can be completed in time whenever a technique or

a principle is adopted. So the success or failure of an organization depends upon the
principles to be followed in the organization. The following are the some of the important
principles of the organization.
1. Principle of definition:
2. Principle of objective:
3. Principle of specialization or division of work:
4. Principle of co-ordination:
5. Principle of authority:
6. Principle of responsibility:
6. Principle of unity of command:
7. Principle of continuity:
8. Principle of span of control:
10.Principle of leadership facilitation:
11.Principle of flexibility:
12.Principle of simplicity and homogeneity

Design of Organization structure: The main objective of an organization structure is

to ensure that efforts of all the people working in various sections are co-ordinate and
integrated for achieving the task in the most efficient effective way with minimum
consumption of resources i.e. economical ways

1) Formal organization structure 2) Informal organization structure

Comparison between formal and informal
organization:
Basis of comparison Formal Informal

Formation Purpose Planned & deliberated Well-set Spontaneous Social

Structure Focus goals interaction
Nature Leadership Well structured Positions Un structured
Source of power Guidelines for Official Persons
behavior Source of control Superior Delegated Unofficial
Rules procedures Any one
Rewards/Punishment Given by group Group
norms

Sanctions
 Types of organization structure: An organization can be classified on the basis of
authority relationships or on the basis of its departments. The types of organization
based on authority relationships are (a) line organization (b) Line and Staff
organization (c) Functional organization (d) Committee organization (e) Matrix
organization
The types of organization based on its activities or departments (f) Product
organization (g) regional or geographical organization (h) Customer organization
a) Line Organization (also called Military/Scalar Organization)
Line and Staff organization Structure: In the line and staff organization,
line executives and staff (specialists) are combined together. The line
executives are 'doers' whereas staff refers to experts and act as 'thinkers'.
Functional organization:

Committee Organization: Committee is another form of formal group and

can be defined as a body of persons appointed to meet on an organized basis
for the discussion and dealing of matter brought before it. Committee may be
temporary or permanent in nature.
Types of committees: Executive, Standing, Ad hoc, joint, office
Product organization: Here the departments are based on the products
manufactured or services rendered. It is common in case of organizations
specializing in different products or services such as manufacturing, financing,
wholesaling and the like. Product based organizations emerged from the limitations
of the functional organizations. With phenomenal growth in the activities, the
organizations also grew in size and as a result, the functional organizations could
not adopt to the changing requirements of the management.

pres
President
President

Vice President marketing Vice President

Vice President Finance
Production

P
PROIDUCT A
PROIDUCT B
PROIDUCT C
Customer organization: Here all the activities of the enterprise
are grouped on the basis of the profile of its customers. Each
group is managed by one department head. This type of
organization caters to the differing characteristics and needs of its
customers. This type of organizations is designed to cater to the
requirements of clearly defined customer groups.

Geographical, regional or territorial organization: This is a further

specialized type of organization, which is used to operate over wide
geographic areas. Here organization is divided into territories
commonly used for the decentralization of responsibility over certain
areas. This method is popularly used in sales and production functions.
 MODERN TRENDSIN ORGANISATIONAL STRUCTURE DESIGNS:
Organizations in the recent times have been gearing themselves to suit to the
growing demands from their stakeholders in terms of responsiveness,
flexibility, agility, adaptability etc. In this process, they are following organic
structure, which are more agile, flexible and adaptable to the changing
circumstances.
Virtual Organization
The virtual organization is a temporary network of companies that come
together quickly to exploit fast changing opportunities. As virtual
organizing required a strong information technology (IT) platform, The
boundaries that traditionally separate a firm form its suppliers, customers
and even competitors are largely eliminated, temporarily and in respect to
a given transaction or business purpose
Cellular Organization: Organizations structured around the units/cells
that complete the entire assembly process are called cellular
organizations. In the modern organizations, cellular organizations have
been replacing the continuous line or linear production process system. In
cellular organizations, workers manufacture total product or sub-
assemblies in teams (cells)..
Team Structure: A structure in which the entire organization is made up of
work groups or teams is known as team structure. Team structures are both
permanent and temporary in nature as situation demands. Traditional
organizations are characterized by vertical structures and modern
organizations are identified by the horizontal i.e., team structures. ‘We
report to each other’ is the main feature of team structure.
Boundary less Organization: At the name indicates, a boundary less organization
eliminates internal boundaries among subsystems and external boundaries with
external environment. It is a combination of team and network structures with the
addition of temporariness. It is a dynamic organization structure wherein
organizational needs are met through a judicious mix of outsourcing contracts and
alliances as and when needed. The key features of boundary less organization
include knowledge- sharing, absence of hierarchy and bureaucracy,
empowerment voluntary participation of expert members, technology utilization
and temporariness.

Inverted Pyramid: This is an alternative to the traditional chain of command.

This is a structure, which is narrow at the top and wide at the base. It includes
a few levels of management. For instant, sales people and sales support staffs
sit on the top as the key decision makers for all the issues related to sales and
dealing with the customers. Since the sales staffs are in touch with the
customer and aware of the requirements of the customers, they are given all
the freedom to follow their own best judgment at all levels.