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Module #1- Management

Syllabus:
Management: Nature and Functions of Management- Importance, Definition, Management Functions,
Levels of Management, Roles of Manager, Managerial Skills, Management & Administration, Management
as a Science, Art & Profession(Selected topics of Chapter 1, Text 1).Planning: Planning-Nature,
Importance, Types, Steps and Limitations of Planning; Decision Making- Meaning, Types and Steps in
Decision Making (Selected topics from Chapters 4 & 5, Text 1). L1,L2
Importance of Management
• Management is a critical element in the economic growth of a country.
• Management is essential in all organized efforts, be it a business activity or any other activity.
• Management is the dynamic, life-giving element in every organization.
Definition of management
• Management is a function of guidance and leadership control of efforts of a group or individuals in
order to achieve goals/objectives of an organization.
• Management is the art of getting things done through people.
• Management can also be defined as the process consisting of planning, organizing, actuating, and
controlling performed to determine and accomplish the use of people and resources.
• Management systematic way of doing things.
• Putting together 4Ms- Money, Men, Material, and Machines together is management.
• Management is the life-giving element of an organization.
• Management is the creative process which integrates and utilizes various available resources
effectively and efficiently to accomplish the goal of an organization.
• "Management is conduct of affairs of business, moving towards its objective through a continuous

process of improvement and optimization of resources". - Henri Fayol

• "Management is the process of designing and maintaining an environment in which individuals,

working together in groups, efficiently accomplish selected aims". - Harold Koontz

Weinrich

• "Management is the art of getting things done through people". - Mary Parker Follett

• "Management is a process consisting of planning, organizing, actuating and controlling, performed to

determine and accomplish the objectives by use of people and resources"- George R. Terry

Meaning
Managing is one of the most important activities of human life. To accomplish aims that could not be
achieved individually, people started forming groups. Managing has become essential to ensure the
coordination of individual efforts. Management applies to all kinds of organizations and to managers at all
organizational levels. Principles of management are now used not only for managing business but in all
walks of life viz., government, military, social and educational institutions. Essentially, management is same
process in all forms of organization. But it may vary widely in its complexity with size and level of
organization. Management is the life-giving element of any organization.
Management Process 0r Functions

FUNCTIONS OF MANAGEMENT
Though many authors have defined several functions of management, there are six essential and well
accepted functions of management. They are Planning. Organizing. Directing (leading). Controlling.
Innovating and representing.
PLANNING: Planning is an executive function that is referred to as decision making. It involves missions
and objectives and the actions to achieve the requires decision making, that is, choosing future courses of
action from available alternatives. This involves the following:
➢ Setting short and long term goals for organization.
➢ Selecting objectives, strategies and policies for accomplishing the planned goals.
➢ Deciding in advance what to do, how to do, who has to do, when to do and where to do.
➢ Planning bridges the gap from where we are now to where we want be in future.
ORGANIZING: Organizing is a part of management that involves in establishing an intentional structure of
roles for people to fill in an organization. To organize a business well, it is required to provide all the useful
things for its proper functioning. They are raw materials, tools, capital and personnel. The purpose of an
organization structure is to help in creating an environment for human performance. This involves in:
➢ Determination of activities required to achieve goals.
➢ Grouping these activities into department.
➢ Assigning such group of activities to manager.
➢ Forming delegation of Authority.
➢ Making provisions or coordination of activities.
STAFFING: Staffing is considered as an important function which makes provision for man power to fill
different positions. It involves in building the human organization by filling, and keep filling the staff. This
is done by identifying workforce requirements, taking inventory of people available, recruiting new staff,
selecting, placing, promoting, apprising, planning their career, training the staff to accomplish their tasks
effectively and efficiently. This involves in:
➢ Finding the right person for right job.
➢ Selecting the personnel.
➢ Placement, training and developing new skills required for present and future jobs.
➢ Creating new positions.
➢ Apprising the staff and planning their growth and promotions etc
DIRECTING: After planning, organizing, and staffing, the next important function of management is
directing or leading the people towards the defined objectives. Directing involves three sub-functions
namely communication, leadership and motivation.
Communication is the process of passing information and understanding from one person to another.
Leadership is the process by which a manager guides and influences the work of his subordinates.
Motivation means arousing desire in the minds of employees of an organization to perform their best. If
properly motivated, the employees will put their best efforts with dedication, loyalty and carry out the
assigned task effectively.
There are two types of motivations viz., financial and non-financial. Financial motivations are in the form of
salary, bonus, profit-sharing, rewards etc. The common non-financial motivations are job security,
promotions, recognition, praise, felicitation etc.
CONTROLLING: Controlling is measuring and correcting of activities of subordinates to make sure that
the work is going on as per the plans. It measures performance against goals and plans, shows where short
falls or deviations exist and takes necessary corrective actions to achieve the goals. Controlling generally
relates to the measurement of achievement. This involves three elements.
➢ Establishing standards of performance.
➢ Measuring performance and comparing with established standards.
➢ Taking necessary corrective actions to meet the set standards.
INNOVATING: Innovation means creating which may improve a product, process or practice.
REPRESENTING: A manager also required to spend a part of his time in representing his organization
before various outside groups which have some stake in the organization.
Every function has two dimensions: Substantive and procedural. Substantive dimension is what is being
done, procedural process is how it is done.
The above definitions and functions of management only help us identify what is manager does but they tell
us little about how he does.
Roles of Manager

Manager in any organization plays variety of roles responding to a particular situation. The three important
roles played by a manager are Interpersonal roles, Decision roles and Informational roles.
Interpersonal roles: These includes figurehead, leader, and liaison roles:
In figurehead role, the manager will perform some duties that are casual and informal ones like, receiving
and greeting visiting dignitaries, attending to social functions of employees, entertaining customers by
offering parties and lunches etc.
As a leader, managers motivate, direct, and encourage his subordinates. He also reconciles the needs with
the goals of the organization.
In the role of liaison, the manager works like a liaison officer between top management and the subordinate
staff. He also develops contacts with outside people and collects useful information for the wellbeing of the
organization.

Information roles: A manager plays as monitor, spokesman and disseminator.

A manager monitors his environment and collects information through his personal contacts with colleagues
and subordinates.
As a spokesman, he communicates the information/goals of organization to his staff, and the progress of
work to his superiors. He also communicates the performance of company to shareholders and the rules and
responsibilities to his subordinates.
As a disseminator, the manager passes some of the information directly to his subordinates and to his boss.
Decision roles: There are four decision roles played by a manager. They are resource provider, arbitrator,
entrepreneur, and negotiator.
As a resource allocator, the manager divides the work, provides required resources and facilities to carry
out the allocated work and delegates required authority among his subordinates. He decides who must do
what and who gets what.
As a arbitrator, a manager works like a problem solver. He finds solutions of various un-anticipated
problems both within and outside the organization.
As an entrepreneur, a manager continuously looks for new ideas and tries to improve the organization by
going along with changing work environment.
He also acts as a negotiator negotiates with the employees and tries to resolve any internal problems like
trade agreements, strikes and grievances of employees.

LEVELS OF MANAGEMENT
Although all managers perform almost the same functions of management - planning, organizing, directing
and controlling, there are levels among them. These are top management, middle management and first line
or supervisors.
The top management consists of Chairman, Directors, Company Presidents, Vice- Presidents, CEO's. These
are the people who make policies for the company, set goals and targets. They should possess conceptual
and design skills.
Middle management is essentially a vast and diverse group that include finance manager, sales manager,
marketing manager, personnel manager, departmental heads etc. They should possess human skill.
The lower-level managers are the supervisors and foremen. They are basically one step above the workers.
They should possess high technical skills.

MANAGERIAL SKIL
 • A skill is an individual's ability to perform physical or mental tasks with a specified outcome.
• Skill is not necessarily inborn. It can be developed through practice and through translating once
knowledge and experience into action.
• 3 major skills- Conceptual skills, technical skills and Human skills
• Conceptual skills and technical skills required for the better decision making whereas good human
skill required for a better leader.
Conceptual skill:
• It refers to the ability of a manager to take broad and comprehensive view of the organization and its
future
• Ability to think in abstract
• Ability to analyze the forces working in a situation
• Creative and innovative ability and his ability to assess the environment and changes taking place in it.
• Ability to design the goals and action plans to achieve them.
Human skill:
• Assist group members in working cooperatively as a group to achieve common goals
• Adapt your own ideas to those of others
• Create an atmosphere of trust and comfort
• Encourage involvement in planning
• Being sensitive to the needs of others
• Motivating others
Technical skill:
• Should understand the nature of the job that people under him must perform.
• Knowledge and proficiency in any type of process or technique.
• This type of skill and competence is important at the lower levels of management
Definition of Planning
In simple sense whatever we decide in advance for doing any future events, is termed as planning.
For example: If I would want to go to Delhi tomorrow then, I will have to make plan either I will go by bus
or by train. Hence it is clear that planning is done for doing future events not past.
According to managerial language planning may be defined as a forward-looking process. Which is adopted
by a n organization with view to bring certainty in the present events or activities so that, organization may
have more confidence regarding the accuracy of future events; Hence it is clarify that planning is directly
concerned with the forecasting of future events.

Types of planning
 Vision

Mission

Objectives

Strategies

Operational Plans

Standard plans Single -Use plans

(programms and budgets) Business plan

(policies,procedures,methods
and rules)

Vision
• This is the dream that an entrepreneur creates about the direction that his business should pursue in
future.
• Vision is an ongoing process.
• A vision should be brief, focused, clear, and inspirational to an organization’s employees.
• It should be linked to customers’ needs and convey a general strategy for achieving the mission.
Mission
• Unique aim of an organization that sets it apart from others of its type.
• It is an organization’s specialization in some area-service, product, or client, which decided the
organization’s scope of business.
• In addition to describing the scope of business, the firms mission statement may also mention its
cultural values.
• It is not revised every now and then in response to every new turn in the economy. But it may change
overtime to take advantage of new opportunities or respond to new market conditions.
Objectives:
• Objectives are goals or aims that the management wishes the organization to achieve to meet the
mission.
• All the business activities like organizing, staffing, directing and controlling are directed.
• Objectives are not purpose. But are the specific targets to be reached by the organization.
Characteristics of objectives:
• Objectives are multiple in number
• Objectives change over time
• Objectives are either tangible or intangible
• Objectives have a priority
• Objectives are generally arranged in hierarchy
• Objectives sometimes clash with each other
Requirement of sound objectives:
• Objectives must be both clear and acceptable.
• Objectives must support one another
• Objectives must be precise and measurable
• Objectives should always remain valid.
Advantages of objectives
1. They provide a basis for planning and for developing other type of plans such as policies, budgets
and procedures.
2. They act as motivators for individuals and departments of an enterprise by pointing the way to
desired performance.
3. They eliminate haphazard action which may result in undesirable consequences.
4. The facilitate coordinated behavior of various groups which otherwise may pull in different
directions
5. They function as a basis for managerial control by serving as standards against which actual
performance can be measured.
6. They facilitate better management of the enterprise by providing a basis for leading, guiding,
directing ad controlling the activities of people of various departments.
7. They lessen misunderstanding and conflict and facilitate communication among people by
minimizing jurisdictional disputes.
8. They provide legitimacy to organization’s activities.
Strategies
• Strategy is a term originated in military, which brings or predicts a response to a competitive
environment.
• SWOT (Strength, weakness, opportunities, and threats) analysis is must.
• It is a plan that takes SWOT factors into account and provides an optimal match between the firm and
the environment
• Two important activities involved in strategy formulation are environmental appraisal and corporate
appraisal.
Environmental Appraisal:
Components of external environment:
1. Political and legal components.
• Stability of the government and its political philosophy
• Taxation and industrial licensing laws
• Monetary and fiscal policies
• Restriction on capital movement, repatriation of capital, state trading, etc.
2. Economic components:
• Level of economic development and distribution of personal income
• Trend in prices, exchange rates, balance of payments, etc.
• Suppl of labor, raw material, capital, etc.
3. Competitive components:
• Identification of principle competitors
• Analysis of their performance
• Anti-monopoly laws and rules of competition
• Protection of patents, trademarks, brands names and other industrial property rights
4. Social and cultural components
• Literacy levels of population
• Religious and social characteristics
• Extent and rate of urbanization
• Rate of social change
Attributes of External Environment
• Turbulence: that is marked by unpredictable changes and contradictory, unreliable information. The
opposite of a turbulent environment is a stable environment.
• Hostile: That is marked by risk, stress and frustration, arbitrary and harsh laws, severe price
competition threats of nationalization, etc. The opposite of a hostile environment is a benign
environment.
 • Diverse: that is marked by a clientele with variegated needs.
• Restrictive: That is marked by many legal, political, economic and cultural restraints.
• Technically complex: That is marked by the requirement of a high order of technical expertise in
management.

Corporate Appraisal
This involves an analysis of the company’s strengths and weaknesses. A company’s strength may lie in its
outstanding leadership, excellent product design, low-cost manufacturing skill, efficient distribution,
efficient customer service, personal relationship with customers, efficient transportation and logistics,
effective sales promotions, high turnover of inventories and or capital, ability to influence legislation,
ownership of low-cost or scarce raw materials, outstanding research, advertising, and so on.
Any of these strengths that represent unique skills or resources that can determine the company's
competitive edge are called its core competency.
Modes of strategy formulation
Planning mode: It is systematic and rational. The essence of this mode is being different.
Entrepreneurial mode: A proactive bold plan is drawn to seek new opportunities based on intuition. Also
known as ‘inside-out’ mode.
Adaptive mode: Also known as ‘outside-in’ mode is reactive and timid. This mode is generally used to
formulate strategies for solving problems as they come.
Operational plans
These plans ac as means of implementing he organization's strategy. They provide the details of how the
strategy will be accomplished. There are two types of plans
1. Standing plans
2. Single use plans
Standing plans: These plans are designed for situations that recur often enough to justify a standardized
approach for example opening a bank account
The major types of standing plans are
1. Policies
2. Procedures
3. Methods and rules
Polices: A policy is a general guideline for decision-making. It sets up boundaries around decisions
Advantages:
1. Ensures uniformity of action
2. Speed up decision making
3. Easy for superior to delegate more and more authority to his subordinates
4. Gives practical shape to objectives.
Disadvantage: Policies with broad areas of discretion and initiative lead to inconsistent interpretations and
make the very delegation of authority difficult.
Types of policies
1. Classification based on sources:
• Originated policies
• Appealed policies
• Implied policies
• Externally imposed policies
2. Classification based on functions
• On the basis of business functions, policies may be classified into production, sales, finance, personal
policies etc,
• Sales function may have policies related to market, price, packaging, distribution channel, commission
to middlemen, etc.
• The production function may have policies related to the method of production, output, inventory,
research, etc.
• Financial functions may have policies related to capital structure, working capital, internal financing,
dividend payment, etc.
• Personnel function may have policies relating to recruitment, training, working conditions welfare
activities, etc.
 3. Classification based on organizational level
Policies ranges from major company policies through major department policies to minor or derivative
policies applicable to the smallest segment of the organization
Guidelines for the effective policy making
1. Policies should be as far as possible, be stated in writing.
2. Policies should make their purpose clear, define the appropriate methods, action and responsibilities
and delineate the limits of freedom of action permitted to those whose actions are to be guided by
them.
3. To ensure successful implementation of policies the top managers and the subordinates who are
supposed to implement them must participate in their formulation. Participation is the best assurance
of loyalty to a policy.
4. A policy must strike a reasonable balance between stability and flexibility.
5. Different policies in the organization should not pull in different directions and should support one
another. They must be internally consistent.
6. Policies should not be detrimental to the interest of society. They must conform to the canons of
ethical behavior which prevail in society.
7. Policies must be comprehensive to cover as many contingencies as possible.
8. Policies should be periodically reviewed I order to see whether they are to be modified, changed or
completely abandoned and new ones put in their place.
Procedures
• Policies are carried out by means of more detailed guidelines called procedures.
• A procedure provides a detailed set of instructions for performing a sequence of actions involved in
doing small piece of work.
• Example, the procedure for purchasing raw material may be (i) requisition from the storekeeper to the
purchasing department. (ii) calling tender for purchase of materials. (iii) placing orders with the
suppliers who are selected. (iv) inspecting the materials purchased by the inspecting department.
Difference between policy and procedure:
1. Policies are general guidelines to both thinking and action of people at higher levels. Procedures are
general guides to action only usually for people at lower levels.
2. Policies help in fulfilling the objectives of the enterprise. Procedures show us the way to implement
policies.
3. Policies are generally broad and allow some latitude in decision making. Procedures are specific and
do not allow latitude.
4. Policies are often established without any study or analysis. Procedures are always established after
thorough study and analysis of work.
Advantages and limitations of Procedures
Advantages:
1. They indicate standard way of performing task
2. Ensures high level of uniformity.
3. Facilitate executive control overperformance.
4. Supervision becomes more routine and discipline is externalised
5. Enable employee to improve their efficient by providing them with knowledge about the entire range
of work.
Limitations:
1. By prescribing one standard way of performing a task, they limit the scope for innovation or
improvement of work performance.
2. By cutting across department lines and extending into various other departments they sometimes
result into so much duplication, overlapping and conflict that the actual work does not get done
properly and recourses are wasted
Methods
• A method is a prescribed way in which one step of a procedure is to be performed.
• Example, the specific technique to be used in screening the applications or conducting a written testis
a method.
• Method helps in increasing the effectiveness and usefulness of the procedure.
Rules
 • Detailed and recorded instructions that a specific action must or must not be performed in a given
situation.
• Objective of this is to avoid repeated reference to higher levels for authorisation of routine matters
which occur frequently.
• Brings predictability.
• Allow simple screening of violation and legitimize punishment when violated.
Single Use Plans
These are developed to achieve a specific end, when that end is achieved the plan is dissolved. The major
types of these plans are programmes and budgets.
Programmes: Programs are precise plans which need to be made a discharge a non routine non repetitive
task. Examples, program to open a branch office. Organising an even.
Budgets: It is a “financial and or quantitative statement prepared prior to a definite period of time, of the
policy to be pursued during that period, for the purpose of obtaining a given objective.
Examples- Sales budget, production budget, cash budget, revenue and expense budget.

Business Plans: It is an important document prepared by an entrepreneur as a start-up strategy to prove to

private investors, customers, suppliers and distributors that he is in a position to articulate and manage the
diverse aspects of his business.
Characteristics of goo business plan:
1. It must provide reader full information on all topics they may be interested in.
2. It must have an objective tone that is not written like a glowing advertising copy
3. It must not be overcritical of past failures or mistakes, if any.
4. It should not be full of technical details; these may be put in the appendix

Steps in planning
1. Establishing verifiable goals or set of goals to be achieved
2. Establishing planning premises
• Internal and external premises
• Tangible and intangible premises
• Controllable and non controllable premises
3. Deciding the planning period
• Lead time in development and commercialisation of a new product
• Time required to recover capital investments or the pay-back period
• Length of commitments already made.
4. Finding alternative courses of action
5. Evaluating and selecting a course of action
6. Developing derivative plans
7. Establishing and Deploying action plans
8. Measuring and controlling the progress.

Difference Between Strategic Planning And Tactical planning

Strategic Planning Tactical Planning

1 It deals with the long-term concept of the It deals with the short-term allocation of
organization, which is based on its vision, resources for implementing strategy.
mission, and objectives.
2 Its emphasis is on doing the right things, Its emphasis is on doing things rightly, that is
that is effectiveness efficiency.
3 It is done by top-level corporate managers It is done by lower-level managers.
(including the planning staff)
4 Its success depends on the judgement, Its success depends on staff work and
 experience, intuition, and well-guided mathematical models
discussions of the top management team
5 It is more prone to unanticipated factors It has greater element of certainty.
that may erupt to change the situation

Steps of Strategic Planning Process

1. Evaluate and improve last year’s strategic plan process
2. Reaffirm the organisations vision, mission, values, and objectives
3. Review organization's operational performance for the prior year
4. Evaluate the external environment to prepare for each environmental element
5. Conduct SWOT analysis based upon the issues identified in steps 1,3 and 4 and forecast the results
of continuing the existing strategy.
6. Identify, evaluate, and select alternative approaches if a change in the existing strategy appears
necessary.
7. Deploy the modified plan. Communicate it to all departmental heads and stakeholders.
8. Provide for updates and tracking to be conducted throughout the year.
Limitations of Planning
1. Planning is an expensive and time-consuming process.
2. Planning sometimes restricts the organisation to the most rational and risk-free opportunities
3. Scope of planning is said to be limited in the case of organisations with rapidly changing situations.
4. Establishment of advance plans tends to make administration inflexible.
5. There is the difficulty of formulating accurate premises.
6. Planning may sometimes face people’s resistance to it
Making Planning Effective
• Extent of Detail
• Coordination
• Communication
• Participation
• Proper Climate

DECISION MAKING
• Defined as "the process of choosing among alternatives".
• Decision-making occurs at many stages of planning process.
• In planning, through decision-making, objectives and goals are prepared.
• In organizing, the managers decide upon the choice of structure, type of organization, work allocation,
delegation of authority and responsibility etc.
• In directing managers decide the course of action, the instructions to be given, providing directions
etc.
• In controlling the managers decide on fixing the standards, how to control, what to control.
Types of Decisions
1. Programmed and Non-Programmed Decisions
2. Major and Minor Decisions
• Degree of Futurity of Decision
• Impact of the Decision on other Functional Areas
• Qualitative Factors that Enter the Decision
• Recurrence of Decisions
 3. Routine and Strategic Decisions
4. Sequential and Bear-by-the-Tail Decisions
5. Individual and Group Decisions
Advantages:
• Increased acceptance by those affected
• Easier coordination
• Easier communication
• More information processed
• Group cohesion
Disadvantages:
• Group decisions take longer
• Groups can be indecisive
• Groups can compromise
• Groups can be dominated
• Groups may have prior communication to a particular solution.
6. Simple and Complex Decisions
• Mechanistic and routine decisions
• Judgmental decisions
• Analytical decisions
• Adaptive decisions
7. Heuristics and Intuitive Decisions
Rational Decision-making Process
Step 1: Recognizing the problems
Step 2: Deciding priorities among problems
Step 3: Diagnosing the problems
Step 4: Developing alternative solutions or courses of actions
Step 5: Measuring and comparing the consequences of alternative solutions
Step 6: Converting the decision into effective action
Step 7: Follow-up
21EC61-TIME Module #1-
Management Dr Rekha K R