Principles of Management Department of IT

UNIT I NOTES

21IT7304- PRINCIPLES OF MANAGEMENT

UNIT I INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS

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

Managerial roles and skills-Evolution of Management-Scientific, human relations, system and
contingency approaches-Types of Business organization-Sole proprietorship, partnership,
company-Public and private sector enterprises-Organization culture and Environment-Current
trends and issues in Management

1. Definition of Management

Management is a set of principles relating to the functions of planning, organizing, directing, and
controlling, and the applications of these principles in harnessing physical, financial, human and
informational resources efficiently and effectively to achieve organizational goals.

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.

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.

Staffing/Leading

It is the function of manning the organization structure and keeping it manned. Staffing has assumed

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greater importance in the recent years due to advancement of technology, increase in size of business,
complexity of human behavior etc. The main purpose of 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 to the structure‖.
Staffing involves:
• Manpower Planning (estimating man power in terms of searching, choose the person and giving
the right place).
• Recruitment, selection & placement.
• Training & development.
• Remuneration.
• Performance appraisal.
• Promotions & transfer

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 has following elements:
• Supervision
• Motivation
• Leadership
• Communication

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 being accomplished‖.
Therefore controlling has following steps:
 Establishment of standard performance.
 Measurement of actual performance.
 Comparison of actual performance with the standards and finding out deviation if any.
 Corrective action.

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2. 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 behaviour 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.

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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 behaviour. 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), programed
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.

3. Manager Vs Entrepreneur

S.No. Criteria Entrepreneur Manager

1. Motive The main motive of an But, the main motive of a
entrepreneur is to start a venture manager is to render his services
by setting up an enterprise. He in an enterprise already set up by
understands the venture for his someone else i.e., entrepreneur.
personal gratification.
2. Status An entrepreneur is the owner of 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 enterprise assumes all risks bear any risk involved in the
and uncertainty involved in enterprise.
running the 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 which is 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 produce goods to simply to execute the plans
meet the changing demands of the prepared by the entrepreneur.
customers. Hence, he acts as an Thus, a manager simply translates

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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 distinct qualifications
high achievement motive, origi- in terms of sound knowledge in
nality in thinking, foresight, risk - management theory and practice
bearing ability and so on.

4. Types of managers

Managers are mostly typecast according to the different types of management styles, personality,
function and involvement. The role of a manager, on a general note, is to get things done by others by
making optimum use of available resources, exercising authority over and taking responsibility for all
such resources that are allocated to be under his/her supervision.
Based on organizational functions, the following manager types in a standard commercial
organization.

1. Purchase Manager who is responsible for procuring raw materials in a manufacturing company.
2. Production Manager who is responsible for managing the manufacturing process.
3. IT Manager who is responsible for supervising all computing and IT communication related issues.
4. Marketing Manager who is responsible for supervising the promotion and advertising of the
company's products/services.
5. Sales Manager who looks after the sales department and sets targets for sales personnel and
appraises their performance on the basis of the extent of target achievement.
6. Finance Manager who is responsible for the financial management of the organization.
7. Human Resources Manager who is responsible for the HR department and oversees all human
resource management functions like recruitment, payroll, attendance, employee exit, etc. besides
displaying all basic management skills.
8. Product Development Manager who is authorized with the management of the technical division of
new product design and product innovation.
Other than these, a standard company may have a general manager and an operational
manager, depending upon the type and scale of its operations.Software development and
testing companies also have two types of project managers
1. Functional project managers who are deeply involved with every technical aspect of the
project
2. Activity or resource managers who manage the operational and people part of the project,
leaving the technical aspects to his subordinate IT professionals.
In most companies these days, we can see another school of managers called case managers.
These case managers are chiefly vested with the responsibility of attending to employees'
medical well-being There are, broadly, two types of case managers –
1. Medical case managers who are responsible for getting medical aid for emergency medical
contingencies of the employees and
2. Liaison case managers who act as the mediator between the medical professionals and the
employer organization.

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Types of Managers based on management sytles

There can be the following sorts of managers based upon the four most prominent types of
management styles. Each subheading underlines different aspects of management styles and techniques.

The Authoritarian Manager is one who is the sole decision maker for his management unit and
prefers his subordinates to perform their tasks exactly as outlined by him. In a way, this type of manager
makes work easier for the employee as the latter knows exactly what is expected of him/her and the way
in which the task is to be performed. The thinking part is left to the boss while the doing part lies with the
subordinate. This type of manager displays management skills of strong leadership and direction but
may lack the skill for delegation.

The Democratic Manager is that person who believes in majority consensus and takes any decision
only after consulting his/her subordinates. This type of manager displays participative management style
by allowing his subordinates' participation in the decision-making process, giving them a sense of
belonging and deeper involvement in the organizational fabric.

The Paternalistic manager is the one who acts like a parent figure to his subordinates and makes
sure to regularly bond with his subordinates to listen to their professional issues and lend a helping
hand to ease their operational difficulties. A paternalistic manager encourages his subordinates to work
as a family and be supportive of the collective effort for the bigger organizational well-being.

The Laissez Faire Manager communicates the tasks to be performed by his subordinates and sets
targets and deadlines for the completion of such tasks. Thereafter he leaves the method to the
subordinates. As long as the employees complete the task in line with the organizational standards and
within the specific deadline, it doesn't matter what methods are employed by them to do so.
The Problem-Solving Manager is task driven and focused on achieving goals. These problem-
solvers are constantly putting out fires and leading their teams. The paradox here is this: It is often the
manager who creates the very problems and situations that they work so hard to avoid. Continually
providing solutions often results in the lackluster team performance they are working so diligently to
eliminate.
The pitchfork manager - People who manage by pitchfork lead their teams with a heavy and often
controlling hand: demanding progress, forcing accountability, prodding and pushing for results through
the use of threats and fear tactics. This style of tough, ruthless management is painful for employees who
are pushed to avoid consequences rather than pulled toward a desired goal.
The pontificating manager - These managers will readily admit they don‘t follow any particular
type of management strategy. Instead, they shoot from the hip, making it up as they go along and often
generating sporadic, inconsistent results. Because of this, they often find themselves in situations they are
unprepared for. Interestingly, the Pontificating Manager thrives on situations like this.
The presumptuous manager - Presumptuous Managers focus more on themselves than anything
else. Their personal production, recognition, sales quotas, and bonuses take precedence over their people.
As you can imagine, these managers experience more attrition, turnover, and employee problems than
any other type of manager. Presumptuous Managers are typically assertive and confident individuals;
however, they are too often driven by their egos to look good and outperform the rest of the team.
Presumptuous Managers breed unhealthy competition rather than an environment of collaboration.

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The perfect manager - Perfect Managers are open to change and innovation, and
committed to improving and evolving as sales managers. But in their search for the latest and
greatest approach, Perfect Managers (like Pontificating Managers) never get to experience the
benefit of consistency. This manager is a talking spec sheet. Their emphasis on acquiring more
facts, figures, features, and benefits overshadows their ability to recognize the critical need for
soft skills training around the areas of presenting, listening, questioning, prospecting, and the
importance of following an organized, strategic selling system. Perfect Managers rely on their
vast amount of product knowledge and experience when managing and developing their
salespeople. Because of this great imbalance, these managers often fall short on developing
interpersonal skills that would make them more human than machine.
The passive manager - Also referred to as Parenting Managers or Pleasing Managers,
Passive Managers have one ultimate goal: to make people happy. While this is certainly an
admirable trait, it can quickly become a barrier to effective leadership. You can spot a Passive
Manager by looking at their team and assessing the number of people who should have been
fired long ago. Because all that Passive Managers want to do is please, they are timid in their
management approach. These managers will do anything to avoid confrontation and struggle
with holding their people accountable for failures or shortcomings.
The proactive manager - The Proactive Manager encompasses all the good qualities that
the other types of managers possess, yet without their pitfalls. Here are the characteristics this
ideal manager embodies, which you should strive to develop yourself. The Proactive Manager
possesses:

 The drive to support others and spearhead solutions like the Problem-Solving Manager
 The persistence, edge, and genuine authenticity of the Pitchfork Manager
 The enthusiasm, passion, charm, and presence of the Pontificating Manager
 The confidence of the Presumptuous Manager
 The knowledge, sales acumen, efficiency, focus, and passion of the Perfect Manager

The Proactive Manager is the ultimate manager and coach, and a testimonial to the skills and
coaching competencies every manager needs to develop in order to build a winning team.

5. Managerial roles and skills

Decisional Roles

Decisional roles require managers to plan strategy and utilize resources. There are four specific
roles that are decisional. The entrepreneur role requires the manager to assign resources to develop
innovative goods and services, or to expand a business. Most of these roles will be held by top-level
managers, although middle managers may be given some ability to make such decisions. The disturbance
handler corrects unanticipated problems facing the organization from the internal or external
environment. Managers at all levels may take this role. For example, first-line managers may correct a
problem halting the assembly line or a middle level manager may attempt to address the aftermath of a
store robbery. Top managers are more likely to deal with major crises, such as requiring a recall of

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defective products. The third decisional role, that of resource allocator, involves determining which work
units will get which resources. Top managers are likely to make large, overall budget decisions, while
middle managers may make more specific allocations. In some organizations, supervisory managers are
responsible for determine allocation of salary raises to employees. Finally, the negotiator works with
others, such as suppliers, distributors, or labor unions, to reach agreements regarding products and
services. First-level managers may negotiate with employees on issues of salary increases or overtime
hours, or they may work with other supervisory managers when needed resources must be shared.
Middle managers also negotiate with other managers and are likely to work to secure preferred prices
from suppliers and distributors. Top managers negotiate on larger issues, such as labor contracts, or even
on mergers and acquisitions of other companies.

Interpersonal Roles

Interpersonal roles require managers to direct and supervise employees and the organization. The
figurehead is typically a top of middle manager. This manager may communicate future organizational
goals or ethical guidelines to employees at company meetings. A leader acts as an example for other
employees to follow, gives commands and directions to subordinates, makes decisions, and mobilizes
employee support. Managers must be leaders at all levels of the organization; often lower-level managers
look to top management for this leadership example. In the role of liaison, a manger must coordinate the
work of others in different work units, establish alliances between others, and work to share resources.
This role is particularly critical for middle managers, who must often compete with other managers for
important resources, yet must maintain successful working relationships with them for long time periods.

Informational Roles

Informational roles are those in which managers obtain and transmit information. These roles
have changed dramatically as technology has improved. The monitor evaluates the
performance of others and takes corrective action to improve that performance. Monitors also watch for
changes in the environment and within the company that may affect individual and organizational
performance. Monitoring occurs at all levels of management, although managers at higher levels of the
organization are more likely to monitor external threats to the environment than are middle or first-line
managers. The role of disseminator requires that managers inform employees of changes that affect them
and the organization. They also communicate the company's vision and purpose. Managers at each level
disseminate information to those below them, and much information of this nature trickles
from the top down. Finally, a spokesperson communicates with the external environment,
from advertising the company's goods and services, to informing the community about the direction of
the organization. The spokesperson for major announcements, such as a change in strategic direction, is
likely to be a top manager. But, other, more routine information may be provided by a manager at any
level of a company. For example, a middle manager may give a press release to a local newspaper, or a
supervisor manager may give a presentation at a community meeting.

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Managerical skills

Managers at every level in the management hierarchy must exercise three basic types of skills:
technical, human, and conceptual. All managers must acquire these skills in varying proportions,
although the importance of each category of skill changes at different management levels

1 Technical skills

 Technical skills refer to the ability and knowledge in using the equipment, techniques and
procedure involved in performing specific tasks.
 These skills require specialized knowledge and proficiency in the mechanics of a particular.
 Technical skills lose relative importance at higher levels of the management hierarchy, but most
top executives started out as technical experts.

2 Human skills

 Human skills refer to the ability of a manager to work effectively with other people both as
individual and as members of a group.
 Human skills are concerned with understanding of people.
 These are required to win cooperation of others and to build effective work teams.

3 Conceptual skills.

 Conceptual skills involve the ability to see the whole organization and the interrelationships
between its parts.
 These skills refer to the ability to visualize the entire picture or to consider a situation in its
totality.
 These skills help the managers to analyze the environment and to identify the opportunities.
 Conceptual skills are especially important for top-level managers, who must develop long-range
plans for the future direction of their organization.

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 Evolution of Management

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
marvellous results of good management practices. The origin of management as a discipline was
developed in the late 19th century. Overtime, management thinkers have sought ways to organize and
classify the voluminous information about management that has been collected and disseminated. The
different approaches of management are

 Classical approach,
 Behavioural approach,
 Quantitative approach,
 Systems approach,
 Contingency approach.

1 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.
2 The Behavioural Approach
The behavioural 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 behaviour. Thus, the behavioural approach focused on trying to
understand the factors that affect human behaviour at work.
3 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.
(ii) Production and Operations Management.

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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.
4 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
5 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 the classical 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.

 Scientific, human relations, system and contingency approaches

1. Scientific Method

The evolution of modern management began in the closing decades of the nineteenth century, after the
industrial revolution had swept through Europe, Canada, and the United States. In the new economic
climate, managers of all types of organizations—political, educational, and economic—were increasingly
trying to find better ways to satisfy customers‘ needs. Many major economic, technical, and cultural
changes were taking place at this time. The introduction of steam power and the development of
sophisticated machinery and equipment changed the way in which goods were produced, particularly in
the weaving and clothing industries. Small workshops run by skilled workers who produced hand-
manufactured products (a system called crafts production) were being replaced by large factories in
which sophisticated machines controlled by hundreds or even thousands of unskilled or semiskilled
workers made products. Owners and managers of the new factories found themselves unprepared for the
challenges accompanying the change from small-scale crafts production to large-scale mechanized
manufacturing. Many of the managers and supervisors had only a technical orientation, and were
unprepared for the social problems that occur when people work together in large groups (as in a factory
or shop system). Managers began to search for new techniques to manage their organizations‘ resources,

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and soon they began to focus on ways to increase the efficiency of the worker–task mix

Fredrick w Taylor (1986-1915) rested his philosophy on four basic principles.

 The development of a true science of management so that the best method for performing
each task could be determined.

 The Scientific selection of workers so that the each worker would be given responsibility
for the task for which he or she was best suited
 The scientific education and development of workers.
 Intimate friendly cooperation between management and labor.

The scientific management schools

 Scientific management theory arose in part from the need to increase productivity.
 In the United States especially, skilled labor was in short supply at the beginning of the
twentieth century.
 The only way to expand the productivity was to raise the efficiency of workers.
 Therefore ,Fredrick W.Taylor, Henry Gantt, and Frank and Lillian Gilberth devised the
body of principles known as Scientific management theory

Contributions of scientific management theory

 The modern assembly line pours out finished products faster than Taylor could ever
imagine.
 This production ―Miracle‖ is just one legacy of scientific management.
 In addition its efficiency techniques have been applied to many tasks in non- industrial
organizations ranging from fat food service to the training of surgeons
Limitations of scientific management theory
 Although Taylor's method led to dramatic increase in productivity and higher pay in
number of instance.
 Workers and unions began to oppose his approach because they feared that working
harder or faster would exhaust whatever work was available Causing layoffs.
 Moreover, Taylor‘s system clearly meant that time was of the essence.
 His critics objected to the speed up condition that placed undue pressure on employees to
perform at faster and faster levels.
 The emphasis on productivity and by extension profitability led some managers to
exploit both the workers and customers.
 As a result more workers joined unions and thus reinforced a pattern of suspicious and
mistrust that shaded labor relations for decades.

Henry L. Gannt (1861-1919) worked with Taylor on several projects but when he went out on
his own as a consulting industrial engineer, Gannt began to reconsider tailors insensitive
systems.
 Abandoning the differential rate system as having too little motivational impact Gannet
came up with new idea.

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 Every worker who finished days assigned work load win 50 percent bonus.
 Then he added a second motivation the supervisor would earn a bonus for each worker
who reached the daily standard.
 Plus an extra bonus if all the workers reached it.
 This Gantt reasoned would supervisor to train their workers to do a better job.
 Every workers progress was rated publicly and recorded an individual bar charts
 Mark as black on days the worker made the standard in red when he or she fell below it.
 Going beyond this Gantt originated a charting system for production was translated into
eight languages and used throughout the world.
 Starting in 1920 s it was use in Japan Spain and soviet union it also formed that the basis
of two charting device which were developed to assist

Henri Fayol (1841-1925) is generally hailed as the founder of the classical management school –
not because he was the first to investigate managerial behavior but because he was the first to
systematize it.

The principles of management are given below:

1. Division of work: Division of work or specialization alone can give maximum productivity and
efficiency. 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 - preferably
voluntary 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 motivator for
good performance. Exploitation of employees in any manner must be eliminated. Sound scheme
of remuneration includes adequate financial and nonfinancial incentives.

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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 responsible
for good performance.
14. Initiative: Creative thinking and capacity to take initiative can give us sound managerial
planning and execution of predetermined plans.
2. The Behavioral School (Human Relation):
 The behavioral school emerged partly because the classical approach did not archive
sufficient production efficiency and workplace harmony.
 To ‗managers‘ frustration,
 People did not always follow predicted or expected patterns of behavior.
 Thus there was increased interest in helping managers deal more effectively with a
people side of their organizations.
 Several Theorists tried to strengthen with a people side of their organization theory with
an insight of sociology and psychology.
 The human Relations movement
 A human relation is frequently used as a general term to describe the ways in which
managers interact with their employees.
 When ―employee management‖ simulate more and better work ,the organization has a
more and better work, the organization has effective human relations
 When morale and efficiency deteriorate, its human relations are said to be ineffective.
 The human relations movement arose from early attempts to systematically discover the
social and psychological factors that would create effective Human reaction.

3. The Contigency Approach

The contingency approach sometimes called (situation approach) was developed by
the managers, consultants and researchers who tried to apply the concepts of the major
schools to the real life

 When methods highly effective in one situation failed to work in other situation.

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 They sought an explanation.

 Advocates Of the contingency approach had a logical answer to such question.
Results differ because situation differs. Techniques that work in one case will not
work in other.
 According to the contagious technique the manager‘s job is to find which
technique will in a particular situation, under particular circumstances and at a
particular time.
 Best contributes to attainments of management goals, where workers need to
encourage increasing productivity.
 For example a classical theorist may prescribe a new work simplification scheme.
 The behavioral scientist may instead seek to create a psychologically motivating
climate and recommend.
 some approach like job enrichment the combination of tasks that are different in
scope and responsibility and allow the worker greater autonomy in making
decisions but the manager trained in the contiguous approach will ask
 Which ties the recourse are limited, work simplification would be the best solution,
 However skilled workers driven by pride in their abilities. a job enrichment
program might be more effective.
 The contingency approach represents an important turn in management theory, but
it portals each set of organization relationship in its unique circumstances.

4. System Approach
The system approach to management views the organizations as a unified, purposeful system
composed of integral parts
 This approach gives managers a way of looking at the organization as a hole and as a
part of the larger external environment.
 Systems theory tells us that the activity of any segment of an organization affects, in
varying degree the activity of every other segment.
 Production managers in a manufacturing plant, for example, prefer long uninterrupted
production runs of standardized products in order to maintain maximum efficiency and
low costs.

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 Marketing managers on the other hand who want to offer customers quick delivery of a
wide range of products would like a flexible manufacturing schedule that can fill special
order on short notice.
 Systems oriented production managers make scheduling decisions only after they have
identified the impact of these decisions on other department and on the entire
organization.
 The point of system approach is that managers cannot wholly with in the traditional
organization chart.
 They must mesh their department with the whole enterprise.
 To do that they have to communicate not only with other employees and departments,
but frequently with representative of other organization as well.
 Clearly, systems managers grasp the importance of the webs of business relationship to
their efforts.

8. Types of Business organization

Sole proprietorship, partnership, company, Public and private sector enterprises

Types of Business Organizations

When organizing a new business, one of the most important decisions to be made is choosing the
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 the
opportunity to own a part of the business.

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 Employee benefits such as owner's medical insurance premiums are not directly deductible from
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 developing the
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 a
partner.
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 be sued; 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 the
corporations.
 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 enables
company to be taxed similar to a partnership.
Demerits:
 The process of incorporation requires more time and money than other forms of organization.

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 Corporations are monitored by federal, state and some local agencies, and as a result may have
more paperwork to comply with regulations.
 Incorporating may result in higher overall taxes. Dividends paid to shareholders are not
deductible 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.
 Private limited company.
 Public limited company
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.
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 public limited companies are subjected to
greater control & supervision of control.
Merits:
 The liability being limited the shareholder bear no Rick& therefore more as make persons are
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 to be
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 the

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particular Act, which is difficult & time consuming.

 Public Corporations possess monopoly & in the absence of competition, these are not interested
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 by
certain 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 their political
masters & top government officials, which results in inefficient management.

9. Organization culture and Environment

Organizational culture is a system of shared assumptions, values, and beliefs, which governs how
people behave in organizations. These shared values have a strong influence on the people in the
organization and dictate how they dress, act, and perform their jobs. Every organization develops and
maintains a unique culture, which provides guidelines and boundaries for the behavior of the members of
the organization. Let's explore what elements make up an organization's culture.

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:

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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 outperforming competitors:
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 and dynamic 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

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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.

10. Current trends and issues in Management

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 lot
them; 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 local
firm there, build a plant, or seek a strategic alliance? Critical issues include understanding
environmental

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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. Individual
managers 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.

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