CHAPTER ONE:

FUNDAMENTALS OF MANA6EMENT
Introduction
From the beginning of the civilization and from the time people began to live in
groups, the practice of management had begun. As people started forming groups
to achieve their goals, even be it say for hunting, they quickly realized that
managing is necessary to ensure proper coordination of all the individuals in the
group. Today if you look at the society you would realize that the society
stands on group effort and hence the importance of management. Ever since
people begun forming groups to accomplish aims, they could not achieve them as
they intended as managing individuals has been important to ensure the
coordination of individual efforts. As society has come to rely increasingly on
group efforts and as many organized groups have become large, the task of
managers has been rising in importance.

Management is a stimulating course for it deals with seeking, testing, and reaching
objectives. Even in the ancient time, although it was not formalized people planned
their work, organized their activities, assigned workers to those positions, led their
workers, and checked whether they have achieved their planned actions or not and
these activities were prevalent and apparent. This is to say management had
existed in the past, exists today and will continue to exist even with increasing
importance as the world is changing rapidly in every aspect. Had it not been for
the utilization of management principles and practices, the marvelous
accomplishments like the obelisk of Axum, the temple of Lalibela, the pyramids of
Egypt, the Great Wall of China, and many others would not have been possible. It
is also possible to see how much management is essential for successful
accomplishment of individual as well as organizational goals just by looking at
what takes place in our vicinity.
We are all managers of our lives and the practice of management is found in every
face of the human activities. It is not unique to business organizations but is
common to all kinds of organizations with certain objective to be achieved and
resources to be deployed. Be the organization is a school, a church, government
unit, armed forces, charity organization, house hold, etc., management is crucial
for it enables an organization to achieve its objectives efficiently and effectively.
Management Key Concepts
Organizations: A group of people working together in a structured and coordinated fashion to
achieve a set of goals.
Goal: A desired future condition that the organization seeks to achieve.
Management: The process of using organizational resources to achieve the organizations goals by...
Planning, Organizing, staffing, Leading, and Controlling.
Organizational Performance: Measures how efficiently and effectively managers use resources to
satisfy customers and achieve goals.
Efficiency: A measure of how well resources is used to achieve a goal. It is getting high output or
the same amount of output at the same amount of input or lower input, respectively.
Maximizing the organization9s productivity by wise utilization of scarce
resources.
It is spending less & acquiring more by minimizing cost
It is concerned with cost reduction
It is doing things right
Usually, managers must try to minimize the input of resources to attain the same goal. Technical
efficiency = Output quality / Input quantity
Effectiveness: A measure of the appropriateness of the goals chosen (are these the right goals?),
and the degree to which they are achieved.
It is providing the right product for the right person or customer.
Determine the success of the organization b/c it is doing the right
Management is the process of working with and through others.
Organizations are more effective when managers choose the correct goals and then achieve
them.
Effectiveness = Enterprise objectives/Input Quantity
Definition of Management
There is no single, comprehensive and universally accepted definition of
management. This holds true due to the following major reasons among others:
Different scholars view management from different perspectives.
It has many areas of applications. It is applied in profit, not for profit, private, government,
social and business organizations.
Management as a discipline is recent in origin and hence there are a number of theories being
added to the field.
It is so broad that it is difficult to encompass all its aspects in a single definition
It has undergone changes because of the developments in behavioral science and quantitative
techniques.
There are different approaches to management, definitions change as the environment changes.
The environment of an organization changes due to changes in the political, social, economic,
ethical and others factors.
Yet, a definition of management is necessary to improve the practice of
management. The following are among the most widely accepted definitions of
management:
Management is the art of getting things done through and with people in a formally organized
group.
It is the art of knowing what you want to do in the best and cheapest way
It is a distinct process consisting of activities of planning, organizing, staffing, leading and controlling
performance to determine and accomplish stated objectives with the use of human and non -
human resources.
It can also be defined as the art of securing maximum results with a minimum of efforts so as to
secure maximum prosperity and happiness for both the employer and employees and give the
public the best possible service.
 For the sake of convenience, we can define management as a distinct process
consisting of managerial functions so as to design and maintain conducive
environment in order to achieve common group goals in organization.
NB Finally: the definitions are not contradicted or mutually exclusive.
Management is the synthesis of all the definitions given by different theorists.
Significance of Management
Management plays a unique role modern society. Peter F. Drucker has
summarised the essence of management as “under developed countries are under
managed, it denotes the multidimensional significance of management. The
significance of management can be broadly.
1. Advantages to the organization.
2. Advantages to the society.
Advantages to the Organisation:
(i) Determination of Objectives:
The success of various operations of an organisation mainly depends on the
identification of its objectives. Objectives are identified and laid down by the
management. They should be the writing and communicated to all others in the
management.
(ii) Achieving of objectives:
It is the management which directs the group effort towards the achievement of
various objectives. It brings the human and non- human resources together.
(iii) Meeting challenges:
All the policy decisions of an enterprise are taken by the management. It keeps in
touch with the current environment and predicts what is going to happen in future.
Through better planning and control, management steers a concern to meet the
demands of the changing environment.
(iv) Provides innovation:
Management infuses an enterprise with new ideals, imaginations and vision.
(v) Smooth running of business:
Management helps in smooth running of business through better planning and
control.
Advantages to the Society:
(i) Optimum utilisation of Resources:
It is the management which makes optimum utilisation of various resources such
as land, labour, capital and enterprise. “No ideology, no ism, no political theory can
win greater output with less efforts, only sound management”, says Urwick and Brech.
(ii) Social Benefits:
Management raises the standard of living of the people by providing good quality
products at the lowest prices. It also promotes peace and prosperity in the society
through optimum use of scarce resources.
(iii) Role in national economic development:
“Management is the crucial factor in economic and social development”, says Peter
F.Druker. The development of a nation mainly depends on the quality of management
of its resources. It is all the truer in a developing country like India, were
productivity is low and the resources are limited.
(iv) Employment:
The expansion and diversification activities of the managers in organisations create
more employment to the society. This is very essential for our country.
Characteristics of Management
Management is a group activity:
It is a group activity. Nobody can satisfy all his desires himself. Therefore, he unites
which his fellow- beings and works in an organized group to achieve what he cannot
achieve individually. Massie has rightly called management as a “Co-operative group
“.
Management is Goal - oriented:
According to Theo Haiman “Effective management is always management by
objectives." Group efforts are directed towards the achievements of some
predetermined goals. Management is concerned with establishment and
accomplishment of these objectives.
Management is a factor of Production:
Management is not an end in itself. It is a means to achieve the group objectives. It is a
factor of production that is required the co-ordinate with the other factors of
production for the accomplishment of predetermined goals and objectives.
It is a Universal Character:
Management is essential in all types of concerns. It somewhere there is some human
activity, management is must there. The basic principles of management are
universal. These can be applied in all types of concerns i.e. business, social, religious,
cultural, sports, educational an international technology.
Management is needed at all levels of the enterprise:
On the basis of the nature of work or target and the scope of authority, management is
needed at all levels of the organisations e.g., top level, middle level and supervisor
level.
It is a distinct function:
Management is a distinct function performed to fix and achieve stated objectives by the
use of manpower and other factors of production. Different from the activities,
techniques and procedures, the process of management consists of such functions as
planning, organizing, staffing, directing, coordinating, motivating and controlling.
 It is a Social Process:
Management is taken as a social process. It has a social responsibility to make
reasonable use of scarce resources keeping in view the benefit of the community as a
whole.
System of Authority:
Authority is the power to compel men to work in a specific manner. Management cannot
work in the absence of authority. There is a chain of authority and responsibility
among people working at different levels of the organization. There cannot be an
efficient management without well-defined lives of command a superior subordinate
relationship at every level of decision making.
Management is a coordinating force
Orderly arrangement of activities to avoid duplication and overlapping.
Integrates human and physical resources.
Management is intangible
Management cannot be touched and felt.
It does not have physical presence (It is an unseen force).
Management is multi-disciplinary
Management has received rich contributionfrom various disciplines like
psychology, sociology, anthropology etc.
Management is about creating synergy (Synergy means “the
whole is greater than the sum of its parts”).
Management is dynamic
Management is an ongoing process; it continues to operate as long as there is organized
action for the achievement of group goals.
Management is a creative activity
Management provides creative ideas and new imagination
Management is decision making
Management of an organization continuously takes decisions which decides the fate of
the organization.
Management is a profession
Individuals can be trained and turned to become a management professional.
Managerial Functions: An Overview
Management functions are the activities that managers are supposed to perform as
result of the position held in the organization. Regardless of the type of firm, all
managers have certain basic functions-planning, organizing, staffing, leading and
controlling. The scope and nature of these functions vary from one management
level to another and from firm to firm. The order in which these functions are
performed is rarely as orderly as shown below even though all managers need
 to be concerned with them. Below, these functions are briefly described. Later,
each of them will be discussed in greater detail in a separate chapter.
Planning: is the process of selecting mission and objectives and the
course of action to attain them. It is a decision-making process that
determines what to do, how to do it, why it is done, when it is to be done,
by whom it is to be done and with what resources. It serves as a bridge
that connects the present with the future as in planning what should be
done in the future is determined today.
Organizing: is the process of distributing the work among the group
members and establishing the relationships that are needed to ensure
smooth accomplishment of jobs. It involves identification of activities to
be carried out, grouping these activities into working units, assignment
of responsibilities to each unit with corresponding authority.
Staffing: is the process of ensuring that employees are recruited,
selected, trained, and developed, and rewarded for successful
accomplishment of goals. It is a continuous and vital function of
management which involves filling and keeping filled positions in a
given organizational structure.
Leading/Directing: is about motivating individuals and groups to exert
their effort towards organizational goals. In short, it is concerned with
influencing people to work hard. Leading encompasses three essential
elements: motivation, leadership and communication.
Controlling: is the process of setting standards, measuring actual
performance results, comparing actual versus plan, identifying deviations
and finally taking remedial actions if the deviation between actual and
plan is significant. The main objective is to ensure that events conform to
plans and if not, to bring them back to the normal track.
Levels of Management and Types of Managers
Management Levels
We can classify managers either on the basis of their levels in the organization or by the
range of organizational activities for which they are responsible- so called functional
and general managers. Although all managers may perform the same basic duties
and play similar roles, the nature and scope of their activities differ from level to level.
Here level refers to hierarchical arrangements of managerial positions in an
organization. They are steps between subordinates and management organized to
 achieve organizational goals. The number of managerial levels in an organization
depends on the size of the organization. The larger the size, the more will be the
number of levels and the smaller the organization in size, the fewer will be its levels.
In most organizations, however, there are three distinct levels as depicted in the figure
below.
Figure1.1: Levels of Management

Top Level

Middle Level

First Line/lower level

Top Level Managers: this level is composed of a comparatively small

number of executives and they are responsible to the overall
management of the organization. They establish operating policies and
guide the organization9s interactions with its environment. Typical
titles include chief executive officers (CEOs), president, senior vice
president, general manager and the like. The major duties of top-level
managers are:
Establishing broad objectives
Designing major strategies and polices for the achievement of long- t e r m
objectives
Providing effective organizational structure that ensures integration
Providing overall leadership and direction
Making overall control of the organization
Dealing with external parties such as the government, community, businesses by
representing the organization
Analyzing the changes in the external environment and responding to them.
Note that as one moves from the lower level to the higher level, the number of managers
become smaller and smaller and this is the reason why the level of management have
such a pyramidal shape.
 Middle Level Managers: these are managers who direct the activities of
lower-level managers and sometimes extend to supervision of operating
employees. The middle managers are known in many organizations as
the department managers, plant managers, or directors of operations.
Middle level managers include all managers above the supervisory level
but below the level where overall company policy is determined and
they have authority over other managers. The following are specific
functions of middle level managers:
Acting as intermediary between top and first line managers
Translating long term plans into medium term plans
Developing specific targets in their areas of responsibility
Coordinating inputs, outputs and productivity of operating level managers
Developing specific schedules to guide action and facilitate control
First Line /Lower-Level Managers: are managers who are responsible
for the work of operating employees only and do not supervise other
managers. They are the lowest level of management in the
organizational structure. Typical titles in this level include office
managers, section chief, superintendents, foremen, chief clerks, supervisors
and the like. First line managers, often called supervisors, are mainly
concerned with:
Planning of day-to-day activities
Assigning operating employees to specific tasks
Keeping a watch on workers9 performance
Sending reports and statements to superiors
Maintaining close and personal contact with workers
Issuing instructions at the work place, following up, motivating and evaluating workers.
In the above discussion we noted that all managers perform the management functions
of planning, organizing, staffing, leading and controlling. However, the amount of
time and effort devoted to each function varies depending on the manager9s level.
For example, front line managers usually spend less time on long term planning than
top level managers, but they spend much more time and effort in leading their
subordinates. At higher level, less time is spent on leading. The amount of time and
effort devoted to controlling are fairly equal at all levels of management. Moreover,
top level and middle level exercise staffing function more frequently than lower-level
managers do.
Types of Managers
Managers are also classified based on the scope of the activity they manage in to
 functional and general managers.
A, Functional Managers
Functional managers supervise with specialized skills in a single area of operations,
such as accounting, personnel, finance, marketing and production.
B, General Managers
General Managers are responsible for the overall operations of more complex unit, such
as accompanier division .6eneral managers hold functional managements
accountable for their areas and usually coordinate two or more departments.
Who are managers?
Manager - someone whoseprimary responsibility is to carry
out the management process.
Specifically, a manager is someone who plans, makes decisions, organizes, leads, and
controls human, financial, physical, and information resources.
Managers are those who are responsible for achieving the organizational goals in an
effective and efficient manner through proper scarce resource utilization
A good manager is
The one who feel sense of responsibility, belongingness, accountability…
Who take initiative (innovator) for new things or discovery.
Who effectively & efficiently brings factors of production together
Managerial Roles and Skills
A) Managerial Roles
There are diverse activities that managers are expected to perform at
various levels of the organization. Many people consider managerial
functions and managerial roles are synonyms. But there are basic
differences between the two.
Managerial functions are broad areas of activities that represent the
ends for which management is practiced. They are purposes that tell
about what managers actually perform. They simply indicate the
objectives of managers when they do their work. There must be the
means to successfully accomplish managerial functions and these means
are managerial roles. They are categories of actual managerial behavior.
Managerial roles represent specific tasks that managers undertake to
ultimately accomplish the various functions of management. They are
organized set of activities belonging to an identified job that give more
realism and systematize managerial functions. One of the most
frequently cited studies of managerial roles was conducted by Henry
Mintizberg. He stated that managers perform ten different but closely
related roles and he categorized them into three broad groups.
Interpersonal Roles: the three interpersonal roles are figurehead, leader
and liaison roles. These roles grow from the managers formal authority
and focus on interpersonal relationships. These roles require interaction
with others in regular basis.
Figurehead Role: this role is played by managers who are required to
perform duties of ceremonial and symbolic in nature. It is the most basic
and the simplest of all managerial roles. A president who greets a
touring dignitary, a mayor who presents a key of the city to a local hero,
the supervisor who attends the wedding of a machine operator, a sales
manager who takes an important customer to lunch, and a manager who
presents certificates to outperforming employees all are performing
ceremonial duties important to the organization9s image and success.
While these duties may not seem important, they are expected of
managers as they signify management9s concern for employees, customers
and to the society at large.
Leadership Role: the leadership role involves responsibility for directing
and coordinating the activities of subordinates in order to accomplish
organizational objectives. Some aspects of the leadership role have to do
with staffing-hiring, training, disciplining and promoting. Others aspects
involve motivating subordinate to meet the organizations goals. Still other
aspects relate to creating a vision that a company’s employees identify
with.
Liaison Role: this role refers to dealing with people outside the
organization such as clients, government officials, customers and
suppliers. It also refers to dealing with managers in other departments,
staff specialists, and other departments employees. In the liaison role, the
manager seeks support from people who can affect the organizations
success.
Informational Role: effective managers build networks of contacts for
sharing information. Because of these contacts, managers emerge as the
nerve center system of their organization. Many contacts made while
performing figurehead and liaison roles give managers access to a great
deal of important information. The following three roles describe the
informational aspects of managerial work:
Monitor Role: this role involves seeking out, receiving and screening
information. Just as a radar unit scans the environment, managers scan
their environment for information that may affect their organization.
Since much of the information received is oral-gossip, hearsay, formal
meetings-managers must evaluate and decide whether to use this
information.
Disseminator Role: here the manager shares information with
subordinates and other pertinent members. Sometimes the manager
may pass along special or 8privileged9 information to certain
subordinates who would not originally have access to it and who can be
trusted not to let it go further. In practice, passing information along
subordinates is often difficult and time consuming. Therefore, a manager
must decide which and how much information will be useful.
Spokesperson Role: in the spokesperson role managers transmit
information to others, especially those outside the organization. The
manager is a person who speaks for his or her work unit/organization
or to people outside the work unit. Here the manager represents the unit
to other people.
Decisional Role: managers use information to make decisions about
when and how to commit their organization to new objectives and
actions. Decisional roles are perhaps the most important of the three
categories of roles. Managers are the core of the organizations decision
making system as they play the following four decisional roles:
Entrepreneurial Role: this role involves designing and initiating planned
changes in order to improve the organization9s position. Managers play
this role when they initiate new projects, launch a survey, test a new
market, or enter into new business.
Disturbance Handler Role: this role is played by managers when they
deal with problems and changes beyond their immediate control.
Typical problems include labor strikes, bankruptcy of major suppliers,
or breaking of contracts by customers. Sometimes disturbances may arise
because a poor manager ignores the situation until it becomes a crisis.
However, even good managers cannot possibly anticipate all the
consequences of their decisions or control the actions of others.
Resource Allocator Role: this role is about choosing among competing
demands for money, equipment, personnel, and other9s demand on
manager9s time. What portion of the budget should be earmarked for
advertising and what portion for improving an existing product line?
Should the firm add a second shift or pay overtime to handle new
orders? Whether to automate certain plants or close others requires
performing such a role.
Negotiator Role: closely linked tothe resource allocator role is the
negotiator role. In this role managers meet and discuss their differences
with individuals or groups for the purpose of reaching an agreement.
Negotiations are an integral part of a manager9s job. They are especially
tough when a manager must deal with others like unions and political
action groups who do not share the manager9s objectives.
Managerial Skills
Regardless of the level of management, managers ought to possess and
seek to further develop many critical skills. Skill is an ability or
proficiency in performing particular task. Management skills are learned
and developed. 6ood management practices can also be learned and
applied. Management success depends both on a fundamental
understanding of the principles of management and on the application of
technical, human and conceptual skills. Successful managers are indeed
eclectic in that they must possess and be skilled in the three skills.
Technical Skill: is the ability to use specific knowledge, techniques, and
resources in performing works. It is knowledge and proficiency in
activities involving methods, processes, and procedures. Thus, it
involves working with tools and specific machines.
Normally technical skills are more important at lower level of management and its
importance decreases as we go up the ladder. This holds true because supervisory
managers must train their subordinates in the proper use of work-related tools,
machines and equipment9s. This usually includes specialized knowledge and the
ability to perform with that specialty
Human skill: is the ability to work with people. It is cooperative effort,
team work and creation of an environment in which people feel secured
 and free to express their opinions. It is also the ability to resolve conflict.
6enerally, human skill is the skill to motivate and create enthusiasm in
the minds of followers. Since managers must accomplish much of their
work through the efforts of other people, their ability to work with,
motivate, counsel and understand others is most important. Therefore,
this skill is equally essential at all levels of management.
Conceptual skill: is the ability to see the <big picture=, to recognize
significant element in a situation and to understand the relationship
among elements. These skills are the abilities needed to view the
organization from a broad perspective and to see the interrelationships
among its components. Conceptual skills are important in strategic
planning. Therefore, they are more important to top level executives
than to middle managers and supervisors. To conceptualize requires
imagination, broad knowledge, and the mental capacity to conceive
abstract ideas.

The relationship between management levels and skills of managers is illustrated in

the figure below.

Top Level
conceptual skill
Middle level

Lower level Human Skill

Figure 1.2Technical
managerialskill
levels vs. skills required

Universality of management
Although the type, objectives, problems and other organizational
constraints, and nature of different organizations vary widely, the
functions performed by each manager are nearly the same. This means,
to successfully attain the objectives of any organization, managers must
plan, organize, staff, lead, and control. These are the basic managerial
 functions.
To be more specific, management is regarded as a universal activity
because of the following factors:
In all kinds of organizations, the basic managerial functions are used to make individuals
contribute to group objectives. Management thus, applies to any type of organization.
From small to large and complex
In profit making and non-profit making
In manufacturing and service giving
In all political systems, socialist, capitalist, mixed, etc.
Management is important for any organization or entity regardless of objective(s) for which it is
established to reach the stated goals or objectives.
Any person who holds managerial position in an organization performs the five functions of
management. The first level, middle level, and top level managers perform the same functions.
What varies from level to level is that the various management levels require different amounts
of time for each function, and the points of emphasis in each function are different.
The principles of management are universal. They are applicable to any kind of organization
wherever there is the coordinated effort of human beings. The type of enterprise is not
significant. The managerial principles are also transferable from department to department.
Therefore, since at higher levels of management the operating non-
managerial component of the job is fewer and the job is more purely
managerial, there is great possibility of transferability of management
from organization to organization and from department to department.
Is Management an art, a science or a
profession?
Basically, management is an art, a science as well as a profession.
The question whether management is science or art has been an issue of debate for
a long period of time. Science can be defined as a systematized body of knowledge
derived from observation, study, and experimentation carried out in order to
determine the nature and principles of the subject under investigation. It is
universally true and applied throughout the globe. Besides, it exploits
mathematical models.
Since management has a structured body of knowledge with its own distinct
concepts, theories, and principles that are developed with reference to the general
truths underlying its practice, it is a science.
As science, management is a systematized body of knowledge representing a core
of principles or fundamental truth that tends to be true in most management
situations. These systematized bodies of knowledge of management help the
practicing manager make decisions rationally and objectively, rather than using
rule of thumb, intuition as some used to do in the past. Management science is not
as comprehensive or accurate as physical sciences such as physics and
 mathematics. This is true because management deals with human beings having an
ever changing, unpredictable and more complex behaviors. Hence, the application
of management principles alone may not yield the desired result. Therefore,
managers also need artistic skills to accomplish organizational objectives in the
best way. That is, they have to use judgment in addition to the principles of
management.
Art is a system of doing a particular work in a way at a given time, place and
condition tactfully, wisely and creatively. It enables one to make decisions when
there is insufficient data and information or when there is a limit to use secondary
sources of information. Art is characterized by using common sense, personal
feelings, beliefs and impulses. It tries to make adjustments based on the
possibilities through trial-and-error method. Management is one of the most
creative arts as it requires a vast knowledge and innovative skills to deal with new
events. They should be able to make decisions even when there is shortage of
information. This leads us to the conclusion that the art of management begins from
where the science of management stops.
If science teaches one to know, art teaches one to do. Managers have to know and do things
effectively and efficiently to be successful. So, management is indeed a unique scientific and
artistic combination in practice. In this context, science and art are not mutually exclusive, but
they are complementary.
Management is a profession. To consider a given field is a profession, it must fulfill
the following criteria:
Specialized knowledge
Competent application
Community application
Social responsibility
Self - control
So, management is a profession because it fulfills the above criteria.