UNIT 1

INTRODUCTION TO MANAGEMENT AND ORGANIZATION

PRINCIPLES :
Underlying factors that form foundation of success
MANAGEMENT :
All business of an organizational activities to accomplish desired goals using available resources
DEFINITION OF MANAGEMENT :
According to Harold Koontz, ―Management is an art of getting things done through and with the
people in formally organized groups. It is an art of creating an environment in which people can perform
and individuals and can co-operate towards attainment of group goals‖.
Management involves coordinating and overseeing the work activities of others so that their
activities are completed efficiently and effectively.
Management is the coordination and administration of tasks to achieve a goal. Such administration
activities include setting the organization's strategy and coordinating the efforts of staff to accomplish
these objectives through the application of available resources.
EFFECTIVENESS AND EFFICIENCY IN MANAGEMENT :
Effectiveness – To achieve Goal Attainment
High goal attainment is to achieve high effectiveness

Efficiency - Means Resource Usage

Low resource waste is to achieve high efficiency
Usually, Management strives low resource waste and high goal attainment
PURPOSE OF STUDYING MANAGEMENT :
⮚ Universality of Management
⮚ Reality of Work
⮚ Rewards and Challenges of being a Manager
UNIVERSAL NEED FOR MANAGEMENT :
 NATURE OF MANAGEMENT :
⮚ Multidisciplinary in Nature
⮚ Continuous Process
⮚ Universal activity
⮚ Science as well as an Art
⮚ Its dynamic
⮚ Profession
⮚ Group activity
⮚ Obtaining wealthy results
⮚ Skills and experience obtained through people involvement
⮚ System of authority
⮚ Intangible
⮚ Good leadership

CHARACTERISTICS OF MANAGEMENT :
1. Management as Process :
➢ Planning - What to do, How to do, When to do, Who has to do, Future course of action
➢ Organising - Structure
➢ Staffing - Human resource function, Recruitment, Selection, Training, Performance
Appraisal
➢ Directing - Motivate, Leadership, Communication
2. Management as People :
➢Man is all throughput function of management
 3. Management as Discipline :
➢ Engineering, Arts, Sciences, Commerce, Law, Medicine etc.
4. Management as Profession :
➢ Not only strong theoretical base but also knowledge of practicing
5. Management as Science :
➢ Systematic body, Scientific Engineering, Caused effect atmosphere, Validity and
Reliability
➢ Body of systemised knowledge can be discovered, verified and utilised
6. Management is relative not absolute
7. Management is universal
The development of science depends on
1. Thinking
2. Discovering
3. Verifying
4. Predicting
5. Measuring
6. Expressing
NATURE OF MANAGEMENT :
1. Multidisciplinary - Draw concepts from psychology,sociology,statistics, anthropology etc.
2. Dynamic Nature of Principles - As and when political, economic and social changes take
place, new kinds of problems arise. Old principles are altered and new principles are propounded.
3. Relative not Absolute - Applied according to the need of hour
4. Management as Profession - Existence of Knowledge , Acquisition of Knowledge
5. Management is Science and Art - Science means Knowledge , Art means applying, creativity,
Ethical codes
6. Universality of Management - Management is the process of creating an environment in which
individuals working together aim to achieve organizational objectives
MANAGEMENT - SCIENCE OR ART
Science - Absorbing mentally
Art - Continuous practice
Science Vs Art
 S.NO. SCIENCE ART

1. Learning practice involves assimilation Learning practice involves

of principles continuous practice

2. Logical consistency,systematic Common sense is VagueCommon

explanation, critical evaluation and sense ignores the need for
experimental analysis explanation Common sense fails to
test conclusion

3. Systemized knowledge, accumulated Attention is inconsistency

and accepted with reference
to the understanding of general truth
concerning particular phenomenon

4. WHY HOW

Management as Science
➢ Management approximate internal consistency as science
➢ In Science, concepts have to be defined clearly in terms of procedure involved in measurement
➢ In Science, Observation must be controlled Whereas in Management, identifying factors that must be
controlled
➢ Scientific statements are testable and capable of repetitions whereas in Management, though results are
not similar but applications are universal
Management as Art
➢ Meaning of Art is related with bringing desired results
➢ Arts deals with applying of Knowledge
➢ It does not involves Know-How & Skills like music, painting , sculpture etc
➢ process of management is directed to achieve concrete results as arts
➢ Creativity is a major dimension of art and management
➢ Management is personalised . Success is related with personality apart from quality of knowledge
Management Both Science and Art
➢ Science and Art are complementary fields , not mutually exclusive
➢ Science is acquiring Knowledge Whereas Arts is application of Knowledge
➢ To be a successful manager, a person requires the knowledge of management principles and also the
skills of how the knowledge can be utilised
➢ Balance between Science and Art in management is needed. Neither should be overweight
or slighted
MANAGER MEANING:
A manager is someone whose primary activities are part of the management process. To be more
explicit, a manager is someone who plans and makes decisions, organises, leads, controls all the four
resources of an organisation — human, financial, physical and information.
MANAGER Vs. ENTREPRENEUR
The main difference between Entrepreneur and Manager is their role in the organization. An
entrepreneur is the owner of the company whereas a Manager is the employee of the company.
Entrepreneur is a risk taker, they take financial risk for their enterprise. The entrepreneur has a vision and
focuses on achievements and profit.

DIFFERENCE BETWEEN MANAGER AND ENTREPRENEUR

ENTREPRENEUR MANAGER
Entrepreneur is visionary and bears all Manager works for salary, does not
financial risks have to Bear any risks
Focuses on starting and expanding the Focuses on daily smooth functioning
business ideas of the business
Key motivation for entrepreneur is Managers motivation comes from the
achievements power that comes with their position
Reward for all the efforts is profit, he Remuneration is the salary he draws
earns From the enterprise from the company
Entrepreneur can be informal and casual Manager‘s approach to every problem
is very formal

LEVELS OF MANAGERS
Nonmanagerial employees:
Organizational members who worked directly on a job or a task and had no one reporting to them.
 First-line Managers:
Managers at the lowest level of the organization who manage the work of non managerial
employees who are involved with the production or creation of the organizations products.
Often called as Supervisors but may also be called Line Managers, Office Managers or even
Foremen.
Middle managers:
Managers between the first-line level and the top level of the organization who manage the work of first-
line managers.Often called as Department Head, Project Leader, Plant Manager or Division Manager.
Top Managers:
Managers at or near the top level of the organization who are responsible for making organization-wide
decisions and establishing the goals and plans that affect the entire organization.Have titles such as
Executive Vice President, President, Managing Director, Chief Operating Officer, Chief Executive
Officer or Chairman of the Board.
FUNCTIONS OF MANAGER
The list of function of a manager is a big one and can hardly be made exhaustive.
Yet, in a nutshell, it may be said that a manager —
(a) Talks to employees,
(b) Gives directions to supervisors,
(c) Dictates letters,
(d) Establishes production goals,
(e) Reads communications, reports, etc.,
(f) Attends committee meetings,
(g) Makes decisions about new projects,
(h) Plans what he will do about new building,
(i) Decides whom to promote, and so on.
The activities thus listed and professionally undertaken by a manager are either physical or mental in
nature. The physical activities came under the broad concept of communication. The manager is either
communicating something in writing, over the telephone, by gesture, etc., or he is receiving a
communication from others — written or verbal. These activities can be observed directly.Certainly,
mental activities are not directly observable. However, one knows through his communication that he
thinks and makes decisions. Decision-making is basically a mental activity and belief about it must be
created among the persons concerned.
To quote C. S. George, Jr. ―The ultimate objective of these managerial acts is to create an environment in
which individuals will willingly participate in order to achieve objectives. In fact, this is the total job of a
manager- to create an environment conducive to the performance of acts of other individuals (1) to
achieve a collective goal (commonly called the firm‘s goal), and (2) to achieve one or more of the goals
of the participating individuals.‖
In other words, what is demanded of a manager is that he creates a work-atmosphere that will encourage
and enthuse people to lend their efforts and participate in activity in the undertaking. In fact, if such an
environment is not created, employees will be reluctant to join him in accomplishing the desired tasks.
ROLES OF MANAGER
Interpersonal Roles
Managerial roles that involve people (subordinates and persons outside the organization) and other
duties that are ceremonial and symbolic in nature.
Figurehead – symbolic head; obliged to perform a number of routine duties of a legal or social nature.
Eg., Greeting visitors, signing legal documents.
Leader – Responsible for the motivation of subordinates; responsible for staffing, training and
associated duties. Eg., Performing virtually all activities that involve subordinates.
Liaison – Maintains self-developed network of outside contacts and informers who provide
favours and information. Eg., Acknowledging mail; doing external board work, performing other
activities that involve outsiders.
Informational Roles- Managerial roles that involve receiving, collecting and disseminating
information.
Monitor – Seeks and receives wide variety of internal and external information to develop
thorough understanding of organization and environment. Eg., Reading periodicals and reports;
maintaining personal contacts.
Disseminator – Transmits information received from outsiders or from subordinates to members
of the organization. Eg., Holding informational meetings, making phone calls to relay information.
Spokesperson – Transmits information to outsiders on organisation‟s plans, policies, actions,
results, etc. Eg., Holding board meetings, giving information to the media.
Decisional roles- Managerial roles that revolve around making choices.
Entrepreneur – Searches organization and its environment for opportunities and
initiates―improvement projects‖ to bring about changes. Eg., Organising strategy and review sessions to
develop new programs.
 Disturbance Handler – Responsible for the allocation of organizational resources of all kinds –
making or approving all significant organizational decisions. Eg., Scheduling, requesting authorization,
performing any activity that involves budgeting and the programming of subordinates‟ work.
Negotiator – Responsible for representing the organization at major negotiations.
Eg.,Participating in union contract negotiations.
SKILLS OF MANAGER
The manager must possess the following 3 types of skills, they are as follows:

1. Technical Skills – Knowledge of and proficiency in a specialized field. Eg., Engineering, Computers,
Accounting or Manufacturing.

2. Human Skills – The ability to work well with other people individually and in a group. Eg., Managers
with good human skills know how to communicate, motivate, lead and inspire enthusiasm and trust.
3. Conceptual Skills
● The ability to think and to conceptualise about abstract and complex situations.
● Managers must be able to see the organization as a whole, understand the relationships among various
subunits and visualize how the organization fits into its broader environment.
MANAGER
―Someone who coordinates and oversees the work of other people so that organizational goals can be
accomplished‖. – Robbins & Coulter
TYPES OF MANAGERS
1. PROBLEM SOLVING MANAGER
e manager will give much importance to solve the issues of the organization continually
2. PITCHFORK MANAGER
manager will use threat and fear tactics to get things done. Demanding progress, forcing accountability,
pushing for results are his styles of work.
3. PONTIFICATING MANAGER
manager never follows any particular type of strategy. He/she just goes along with the situations. He is good
at talking to any person and makes them comfortable. But he needs to master his listening skills. He is
inconsistent in nature.
4. PRESUMPTUOUS MANAGER
 This type manager puts his need above his team needs. He is driven by his ego to look good and
outperforms the rest of the team. He breeds unhealthy competition rather than an environment of
collaboration.
5. PERFECT MANAGER
This manager is open to change, innovation and personal growth with the underlying commitment to
continually improve. They keep on searching for best strategy. So they too are inconsistent like
pontificating managers. They do not concentrate in developing interpersonal skills.
6. PASSIVE / PARENTING/PLEASING MANAGER
This manager tends to develop close relationship with their team and co-workers to a new level. The goal
of this manager is to make his people happy; but this trait will become a barrier if not managed properly.
But usually this manger is viewed as incompetent, inconsistent and clueless and lack needed respect from
his own employees.
7. PROACTIVE MANAGER
This manager encompasses all good qualities that other managers possess. He is the ultimate manager
and coach and a testimonial to the additional skills and coaching competencies that every manager needs
to develop in order to build a world- class team.
8. CONTROL FREAK MANAGER
This manager needs to have everything that is going on in the palm of his hand. He doesn‘t like any
subordinate making any decision without first consulting his opinion. He tends to hoard information. He
may assign the employees to work on a task without giving complete information.
9. BLAME FIXING MANAGER /BLAME FIXER
This manager makes everyone else responsible for fixing their problems. He takes no responsibility for
his own employees, department or results. But he will be the first to take credit for something which went
well.
10. SOFT HEART MANAGER
This manager gives an impression that he is the sweetest and wonderful boss in the world. But actually he
will not be so. He is actually spineless. He will tell the employees exactly what employee wants to hear
then turn around and do the exact opposite.
11. TEAM BUILDING MANAGER/ TEAM BUILDER
This type of manger is competent at what he does, knows how to be open and he solicits ideas and
creativity from his employees. He is a pleasure to work with. He knows how to make the tough decision
 but does that in a respectful and professional ways. So, he is the kind of manager that everyone wants to
work for.
12. THE AUTOCRAT MANAGER
This manager does not care about his employees. Nothing or none can satisfy him. He thinks only he is
competent in the organization. He is impossible to get along with and is convinced.
13. THE POLITICIAN MANAGER
This person is charismatic. He always has something positive to say. But problem is that there is rarely
any truth in it. This person has no real competence. They got there by schmoozing the right people. He
depends on some competent people to make him look good but makes him a scapegoat when the
employee gets tired of being used.
ROLES OF MANAGER
Managerial Roles: Refers to specific categories of managerial behavior.
Henry Mintzberg‘s 10 Managerial Roles
Interpersonal Roles
Managerial roles those involve people (subordinates and persons outside the organization) and other
duties that are ceremonial and symbolic in nature.
Figurehead – symbolic head; obliged to perform a number of routine duties of a legal or social nature.
Eg., Greeting visitors, signing legal documents.
Leader – Responsible for the motivation of subordinates; responsible for staffing, training and associated
duties. Eg., Performing virtually all activities that involve subordinates.
Liaison – Maintains self-developed network of outside contacts and informers who provide favours and
information. Eg., Acknowledging mail; doing external board work, performing other activities that
involve outsiders.
Informational Roles
Managerial roles those involve receiving, collecting and disseminating information.
Monitor – Seeks and receives wide variety of internal and external information to develop thorough
understanding of organization and environment. Eg., Reading periodicals and reports; maintaining
personal contacts.
Disseminator – Transmits information received from outsiders or from subordinates to members of the
organization. Eg., Holding informational meetings, making phone calls to relay information.
Spokesperson – Transmits information to outsiders on organization‘s plans, policies, actions, results, etc.
Eg., Holding board meetings, giving information to the media.
Decisional Roles
Managerial roles those revolve around making choices.
Entrepreneur – Searches organization and its environment for opportunities and initiates ―improvement
projects‖ to bring about changes. Eg., Organising strategy and review sessions to develop new programs.
Disturbance Handler – Responsible for the allocation of organizational resources of all kinds – making
or approving all significant organizational decisions. Eg., Scheduling, requesting authorization,
performing any activity that involves budgeting and the programming of subordinates‟ work.
Negotiator – Responsible for representing the organization at major negotiations. Eg.,
Participating in Trade Union or contract negotiations.
LEVELS OF MANAGERS
Top-Level Managers
As you would expect, top-level managers (or top managers) are the ―bosses‖ of the organization. They
have titles such as Chief Executive Officer (CEO), Chief Operations Officer (COO), Chief Marketing
Officer (CMO), Chief Technology Officer (CTO), and Chief Financial Officer (CFO). A new executive
position known as the Chief Compliance Officer (CCO) is showing up on many organizational charts in
response to the demands of the government to comply with complex rules and regulations. Depending on
the size and type of organization, executive vice presidents and division heads would also be part of the
top management team. The relative importance of these positions varies according to the type of
organization they head. For example, in a pharmaceutical firm, the CCO may report directly to the CEO
or to the board of directors.
Top managers are ultimately responsible for the long-term success of the organization. They set long-
term goals and define strategies to achieve them. They pay careful attention to the external environment
of the organization: the economy, proposals for laws that would affect profits, stakeholder demands, and
consumer and public relations. They will make the decisions that affect the whole company such as
financial investments, mergers and acquisitions, partnerships and strategic alliances, and changes to the
brand or product line of the organization.
Middle Managers
Middle managers have titles like department head, director, and chief supervisor. They are links between
the top managers and the first-line managers and have one or two levels below them. Middle managers
receive broad strategic plans from top managers and turn them into operational blueprints with specific
objectives and programs for first-line managers. They also encourage, support, and foster talented
employees within the organization. An important function of middle managers is providing leadership,
 both in implementing top manager directives and in enabling first-line managers to support teams and
effectively report both positive performances and obstacles to meeting objectives.
First-Line Managers
First-line managers are the entry level of management, the individuals ―on the line‖ and in the closest
contact with the workers. They are directly responsible for making sure that organizational objectives and
plans are implemented effectively. They may be called assistant managers, shift managers, foremen,
section chiefs, or office managers. First-line managers are focused almost exclusively on the internal
issues of the organization and are the first to see problems with the operation of the business, such as
untrained labour, poor quality materials, machinery breakdowns, or new procedures that slow down
production. It is essential that they communicate regularly with middle management.
SKILLS OF MANAGERS/ MANAGERIAL SKILLS
Managers need certain skills to perform the duties and activities with being a manager.
1. Technical Skills – Knowledge of and proficiency in a specialized field. Eg., Engineering, Computers,
Accounting or Manufacturing.
Technical skills must be possessed by managers to accomplish organizational tasks. These are not meant
for working on machines, but can be used for sales and marketing. Basically, a technical skill is the
capability to do assigned job. Technical skills assist the senior and middle level managers to use different
machines and tools. It also helps them to use various procedures and techniques. The low-level managers
must be proficient with such technical skills to give high performance because they must have to perform
task in field. A technical skill is the aptitude in the performance of particular tasks, in particular skills
involving methods, specialised techniques and equipment involved in specific functions, for example
manufacturing and engineering. Technical skills also include specific knowledge, logical ability and the
proficient use of tools and techniques to crack business issues.
2. Human Skills – The ability to work well with other people individually and in a group. Eg., Managers
with good human skills know how to communicate, motivate, lead and inspire enthusiasm and trust.
Understanding about human skills is important for managers to extract work from employees. The most
significant role for managers is to effectively manage people in organization and to give best output.
Human relations skills are also called Interpersonal skills. It is a capability to work with individuals. It
assists the managers to comprehend, converse and work with others. It also helps the managers to lead,
encourage and develop team strength. Human relations skills are necessary by all managers at all levels
of management. All managers have to work together. These skills will allow managers to become leaders,
to inspire employees to do best and complete task successfully. Some of human relation skills include
 Sensitivity to others, treating people fairly, Listening intently, Communicating warmth, Establishing
rapport, Understanding human behaviour, Empathy, Tactfulness, Cooperative team member, Avoiding
stereotyping people, Feeling comfortable with different kinds of people, Fun person to work with,
Treating others as equals, Dealing effectively with conflict, Helping clarify misunderstandings, Creating
an environment of social interaction.
3. Conceptual Skills
These skills are ability to think and to conceptualize about abstract and complex situations.
Managers must be able to see the organization as a whole, understand the relationships among various
subunits and visualize how the organization fits into its broader environment.
Conceptual skills are talent or understanding of managers for abstract thinking to assess whole situation
and identify different states and to foresee the future state of the business. Conceptual skills is the ability
of a manager to envisage the organisation as whole, distinguish interrelationships and be aware of how
the organisation fits into the civilization, community and the world . Conceptual skills exploit the ability
of a human to form concepts. Such skills include thinking creatively; formulating abstractions, analysing
complex situations, and solving problems. Such skills assist management team to understand the major
causes of the problems and not the symptoms. Mangers that have mastery over these skills are in a
position to solve the problems and enhance productivity of organisation. It also helps the manager to
establish goals for organisation and devise plan for every situation. The conceptual skills are needed by
the senior management because they are involved in planning, organising and problem solving tasks. In
the business filed, these skills are necessary for managements to operate business successfully.
Conceptual skills are used in planning and dealing with ideas and abstractions. Such abilities enable
manager to make good decision which is a characteristic of all managers.

SKILLS NEEDED FOR DIFFERENT LEVELS OF MANAGERS

 EVOLUTION OF MANAGEMENT THOUGHTS
1. HENRY FAYOL’S CONTRIBUTION – ADMINISTRATIVE MANAGEMENT
Henry Fayol is a French Mining Engineer in Comambault, it is a largest Mining and Metallurgical group
in France. In 1916 he released a book titled General and Industrial Management in French, in which he
advocated 14 principles of management. Later in 1949, the book was translated in English in United
States.
Henry Fayol's contribution is called as Administrative Management/Operational Management. He is
called as Father of Modern Operational Management.
He was the one who introduced the term administration.
14 PRINCIPLES OF MANAGEMENT
1. Division of Work
Whole work is divided to various individuals involved in the same job. It was first practised in pin
industry. It helps in specialisation, it increase ability, accuracy, output, perfection etc. It also reduces
waste of time. It can be applied both to technical & managerial jobs. Simple scenario where division of
work can be introduced Covering a book with brown sheet. The different task involved like cutting the
sheet according to required size, folding brown sheet, pasting labels, writing name etc., can be allocated
to different individuals. It can save time and increase expertise.
Example from planet: Bee hive, Where Drones, Workers and Queen bee divides the work among
themselves accordingly.
2. Authority & Responsibility
Authority can be classified into official and personal. Official authority is vested with position and
personal authority is from of intelligence and personality. Responsibility arises out of experience,
 morality in executing the assigned task. In order to discharge the responsibility there should be authority
and vice versa. Both should go hand in hand.
3. Discipline
According to Koontz, Discipline is defined as the respect for agreements which are directed at achieving
obedience, application, energy and the outward marks of respect. Discipline can be classified into Self
imposed discipline and Command discipline. Self imposed discipline is inbuilt and command discipline is
followed to avoid potential problems in an organization.
4. Unit of Command
In order to avoid problem of conflict, one individual should get instruction from one superior. One
individual should get one order from one boss. Eg: Lion and its pride.
5. Unity of Direction
Reporting relationship should be to only one. Job assigned to one person. Every individual or every group
should do each group of activities with same objectives. Grouping of activities makes the activity as ONE
activity and thus helps in better coordination. There should be single and same instruction for same task.
Eg: Herd of Elephant getting instruction while moving from one place to another.
6. Subordination of Individual Interest to Group Interest
Group interest is also called as Organizational interest. Individual interest and group interest should be
reconciled. Neither individual interest should dominate organizational interest nor should organizational
interest dominate individual interest. In case of conflict group interest should be placed above individual
interest. Factors like ambition, laziness, weakness influences both individual interest and group interest.
Mutual agreement should be established employers and employees. To conclude always individual
interest subordinate to group interest.
7. Remuneration of Personnel
Remuneration should be fair and reliable. It should be paid without any delay. The primary factor for
satisfaction is remuneration. Wages should be paid on the basis of work done; same wages should be paid
same work without any demarcation. Fayol was also in favour of non-financial benefits though these
were possible only in the case of large scale organization.
8. Centralization
Centralization is the process by which decision are made at each and every unit independently. It
increases the role of subordinates. Freedom is given to make employees in executing the task.
Centralization is affected by factors like; Capacity of subordinates, Dispersal of operations etc. The
concept of centralization and decentralization is the question of proportion, in small firms, centralization
 is the natural order, but in large firms, series of intermediaries is required. Share of authority and
initiative left to intermediaries depends on the personal character of the manager, his moral worth, the
reliability of his subordinates and also on the conditions of the business.
Eg: Group of Zebras drinking water and suddenly crocodile attacks, they run in different directions.
9. Scalar Chain
Scalar chain is chain of superiors ranging from ultimate to lowest. It tells about line of authority.
Communication and authority should flow through order. Scalar chain takes time to communicate. In
normal circumstances it has to be adhered strictly, it can be short circuited only in special circumstances.
This concept is called Gang plank. Gang plank prevent scalar chain from bogging down action. The
person who leads gang plank is called as Gang Boss.
Eg: Communication happens among Elephants.

10. Orders
Principle of order is relating to arrangement of things and people. Order means right place for everything.
It applies to both material and men. Material order there should be a place for everything and everything
should be in its place. In social order there should be the right man in the right place. Material and
personnel should be placed in right place. Human Resources should be placed according to qualification
and ability.
Eg: Child puzzle block
11. Equity
Equity refers to combination of justice and kindness with fairness in treatment. Every employee starting
from CEO to gatekeepers should be treated equally. Equity in treatment and behaviour is liked by
everyone and it brings loyalty in the organization. The application of equity requires good sense,
experience and good nature for soliciting loyalty and devotions from subordinates.
12. Stability of tenure of personnel
 Stability of tenure of personnel deals with security of job. There should not be any unnecessary turnover.
It makes employee loyal whereas insecurity results in turnover and thus increases administrative
expenses.
Eg: Dog in home.
13. Initiative
Initiative should be within limits of authority and discipline. It increases zeal and energy. It gives room to
express their views and opinion without hesitation. It gives keenest satisfaction. One who initiates will
acquire experience and intelligence.
Eg: Child taking cake in birthday function
14. Esprit de Corps
Esprit de Corps is French phrase which means Union is Strength. Any misunderstanding or difference or
distrust should be solved and corrective actions should be implemented immediately. Erring employees
should most be corrected by oral direction, written explanations complicates matter. There should not be
any practice of divide and rule policy. It is an extension of unit of command for establishing team work.

2. F W TAYLOR’S CONTRIBUTION – SCIENTIFIC MANAGEMENT

Fredrick Winslow Taylor is known as father of scientific management. He advocated application of
scientific method rather than traditional methods. He strongly believed that this will yield more
productivity with minimized human energy and other resources.
Definition
Scientific management is concerned with knowing exactly what you want to do and then seeing that they
are done in best and cheapest way.
Principles:
1. Science not rule of thumb: Management is science; it will not work as rule of thumb. Fair work,
standardization in work, differential piece rate for payment etc are basic elements of scientific
management, these parameters should be measured exactly not based on estimates.
2. Harmony in group action: In organisation mutual give and take policy should be followed. There
should be peace and friendship in every part of organization and it should be imbibed among every
individual. It was emphasized that attempts should be made to obtain harmony in group action rather than
discord. Group harmony suggests that there should be mutual give and take situation and proper
understanding so that group as a whole contributes to the maximum.
3. Cooperation: Irrespective of size and nature of organization there should be mutual understanding,
cooperation, confidence among workers and every unit. It will enhance the goodwill of organization.
Cooperation rather than individualism.
4. Maximum Output: In order to increase the output quantity, division of work should be followed.
Standard materials, proper tools and working conditions have to be used in an organization in order to
increase productivity.
5. Improvement of workers: To improve the condition of workers scientific selection and systematic
training should be imparted. All workers should be developed to the fullest extent possible.
Features of Scientific Management:
1. Separation of planning from execution function: Function of planning and execution should be
divided, supervisor only plan and worker only work. The person who supervises is called as Gang boss.
Supervisor or Gang boss merely supervise the work of others.
2. Scientific task setting: Allotment of work on basis of capacity. The task should be allocated based on
skill set, qualification, interest and experience.
3. Functional foremanship: The concept of functional foremanship based on specialist in functional areas.
The person concerned with planning are route clerk, instruction card clerk, time and clerk and
disciplinarian and execution part lies with speed boss, inspector, maintenance foreman and gang boss.
4. Work study: Work study is defined as systematic critical assessment of efficiency required to perform
the job.
5. Methods study: Motion study is used to decrease distance and increase handling efficiency. It increases
efficient transportation, storage etc.
6. Motion study: A study relating to the movement of the machine operator and his machine while
performing the job is called as motion study.
7. Time study: It refers to act of measuring the time required to perform a job.
8. Fatigue study: A study relating to fixing the working hours with rest periods to enable the workers to
recoup the energy lost while performing the job is called as fatigue study.
9. Rate setting: The payment for work is based on differential piece rate system. It helps to motivate
workers to be more productive.
10. Standardisation: Task should be standardized and fixed in advance based on scientific analysis.
Standardization should be established in the terms of tools, period of work, amount of work, working
condition, cost of production etc.
11. Scientific selection and training: Selection and training should be based on physical strength, education,
experience and aptitude of an individual. The worker should be allocated suitable work physically,
mentally and technically.
12. Financial Incentives: When there is increase in effort there should be increase in pay. Financial
incentives should be based on differential piece rate system. Worker will earn higher wages by enhancing
the effort. Taylor applied the concept of differential piece rate system, which motivates employees.
Wages should be based on individual performance and not on position.
13. Mental revolution: It refers to change in thinking by both on the part of management and workers. There
should be mutual cooperation between them. For this cooperation there should be mental change in both
parties from conflict to cooperation.
14. Economy: Resources should be more productive and it should be used to fullest possible extent. Cost
should be controlled and wastage has to be eliminated. In order to apply scientific management, both
technical aspects and economy should be given importance.
3. GEORGE ELTON MAYO – HUMAN RELATION MANAGEMENT
George Elton Mayo gave importance to matter of human relation emphasising about desires, attitudes and
feelings of the workers. The experiment conducted to analysed human relation is named as Hawthrone
plant of Western Electric Company at Chicago from 1924 – 1932. It was carried out by Prof. G Elton
Mayo, F J Roethlisberger and their colleagues.
Hawthrone plant was manufacturing telephone system bell. Nearly 30000 employees worked in this
experiment, object of the experiment was to find out the behaviour & attitude of employees under better
working conditions. Despite job satisfaction production was not up to expectations. So the management
requested National Academy of Science to investigate the reason for dissatisfaction of employees and
decrease in productivity.
Elton Mayo and his team conducted the research in 4 phases: They are:
A. Illumination Experiment (1924 – 1927)
It is conducted to determine the effects of lighting on productivity. This experiment was conducted for
almost 30 months. The experiment reveals that production decreased only when lighting fall below
normal level, production doesn‘t increase when lighting increase above normal level. An informal social
relation among the group members is reason for increase in productivity.
B. Relay Assembly Test Room Experiment (1927 - 1928)
 This phase aimed at determining the effect of change in working condition and productivity. Variation of
rest: 2 five minutes rest introduced: One in the morning and one in the evening. Later it was increased to
10 minutes. Due to this productivity increased
Then free snacks and coffee or soup were given during 10 minutes interval, this also increased
productivity by 30%.
The next manipulation was done on working hours and working days, Saturday is given off and half an
hour cut in working hours every day. It also increases productivity.
At this stage they withdrew all benefits and facilities and still productivity increases. It also leads to
decrease in absenteeism, supervision and increases morale, sense of responsibility and discipline. It also
enhanced closed and friendly relationship prevailed between supervisor and workers. The above changes
were introduced over the period of 2 years but method of payment was not changed. Productivity
increased not because of physical factors but because of socio-psychological factors such as feeling of
being important, recognition, attention, complete communication, participation, small size of informal
cohesive work group and non directive supervision.
C. Mass Interviewing Programme (1928 - 1930)
This phase of experiment was conducted to determine employees‘ attitude towards company, supervision,
insurance plans, promotion and wages. Nearly twenty thousand were interviewed from September 1928
to February 1929. Initially direct questions were given, but not able to find the grass root of problem, so
the questions were changed to non-directive interview questions. This interview brought limelight to
many valuable insights about employees‘ attitude towards the company; they are as follows:
a) Supervisor knew what was expected by worker.
b) Male workers are more economically oriented.
c) Complaint is symptom of personal disturbances in work place.
d) Problem occurs due to emotional attitude.
e) Satisfaction comes from social status and expected social rewards.
f) Personal situation is arising out of sentiments, desires and interests.
g) Morale can be boosted by paying attention by management.
h) Social demand is influenced by gaining experience both inside and outside the work place.
) Individual behaviour influences group behaviour.
Elton Mayo concluded this phase saying that workers activated by logic of sentiments but management is
concerned with logic of cost and efficiency.
D. Bank Wiring Observation (1931 - 1932)
 This phase aimed at analysing group bonus effect on group output. The group consists of 14 male
workers, out of 14 workers, 9 wiremen, 3 soldiers and 2 inspectors. However failed to achieve target
because of following reason:
a) Unemployment problem.
b) Unduly high standard.
c) Protection of slow worker.
d) Satisfaction of management.
Bank wiring experiment arrived at following conclusion:
a) Informal relationship decides human behaviour.
b) Counselling helps to resolve conflicts.
c) Standard output fixed because of social pressure.
d) Output increase not only because of group incentive.
e) Existence of informal relationship is common.
Overall findings of Hawthrone Experiment
a) Social factor responsible for deciding level of output.
b) Group behaviour influence individual behaviour.
c) No direct relationship between productivity and working conditions.
d) Workers not merely motivated by money.
e) Conflict between management and workers is common, because objective of both are different.
f) Leadership is important for group behaviour and attitude.
g) Workers prefer amicable relationship than money.
h) Friendliness and genuineness of supervisor contributes to productivity.
) Communication helps for better mutual understanding.
) Complaints and criticism by worker are symptoms of dissatisfaction.
Criticism of Hawthrone Experiment
a) Management always believe they are logical and workers are emotional. This is not true always.
b) Class partitions were derecognised.
c) Workers not selected scientifically.
d) Lack of universal application of findings.
e) Impact of social factors on employee behaviour is ignored.
f) Not considered labour laws and trade union activities.
g) Major assumption was workers are convinced to accept the goals of management.
h) Excessive undue important to observation.
) Out of 30000 workers only 6 girls were selected.
) Not discover any new points, it highlights only known facts.
4. SYSTEM APPROACH
System approach draws maximum attention in present era. It focuses on analysing important phenomena
in management. The basic idea of system approach is any object must rely on method of analysis
involves simultaneous variations of mutually dependent variables.
Features of System approach
Assemblage of things connected or inter-related, so as to form complex unity; composed of parts and sub-
parts.
● System is basically combination of parts. Each part has sub parts.
● Parts and sub parts are mutually related, either directly or indirectly.
● It is not mere totality, the arrangement matters a lot. Sum of parts arranged not equal to whole, when
correctly arranged it is more than whole.
● System has identifiable boundary however boundary is not visible. Boundary helps and maintains proper
relationship between system and environment.
● Boundary can be classified as Closed system and Open system.
● System transforms input into output. Four aspects of system are input, mediator, output and environment.
Input: Raw Materials, Money & Capital, Human Resource, Information and Knowledge, Customer
Service Support organization. Mediator is Conversion Process: Transforms input and add value through
machinery, computers and human skills. Output: Finished goods, Services, Dividends, Salary, Value for
Stakeholders. Environment: Customers, Shareholders, Suppliers, Distributors, Government and
Competitors, political, economical, social, technological, legal, ethical etc
● System is adaptive: Adaption is necessary for survival and growth.
● System is dynamic: It always aims at equilibrium.
● System is probabilistic: Not by predetermined results.
● System is multi-level and multi-dimensional:
● System is Multi-variate: System is result of so many variables.
● System is an integrated approach.
Limitations of System Approach
● Abstract approach: It fails to spell out clear relationship.
● Lack of Universality: It involves large and complex parameters, which may not be applied universal
tools.
5. CONTINGENCY APPROACH OR SITUATIONAL APPROACH
It is an extension of system approach. The basic idea behind contingency approach is there cannot be a
particular management action which will be suitable for all situations. The gap in system approach is it
doesn‘t spell out precise relationship between organization and environment. Contingency approach tries
to bridge the gap. Contingency approach suggests inter relationship between variables. It considers not
only situation but also influence of given solution or behaviour pattern.
Features:
● Management action is consistent.
● Organizational action based on behaviour of action outside of the system.
● Organization – environment relationship cannot be universal.
● It covers structural behaviour.
● It predicts outcome of disturbances in organizational equilibrium.
● Major contribution towards contingency approach given by sociologist and psychologist.
● It is entirely situational.
● Suggest suitable alternatives based on external and internal environment.
● No absolute action, it has to modify or adjust actions subject to environmental forces.
Limitations:
● Inadequate Literature: Action based on situation, no past study can be applied always for new problem.
● Complex: Action based on situation, determination of action involves larger number of variables.
● Difficult empirical testing: Too many factors, so testing becomes difficult.
● Reactive not proactive: It is reactive in nature, so managers are responsible to manage the environment to
avoid undesirable aspects of management.
BUSINESS :
A business (also called a company, enterprise or firm) is a legally recognized organization designed to
provide goods and/or services to consumers.
Functionality of Business:
➢ Analyze business means How to organize business to protect ourselves and stakeholders
➢ Individuals doing business without sharing profit/losses with others implies sole proprietor
➢ Advantages of sole proprietor is profit as well as risk
➢ In case of large businesses, more than one person involved in running a business , sharing profits or
 losses equally . This is in the case of partnership
➢ The partners have several joint liabilities as well as unlimited liability. It involves at a greater risk
➢ Joint Stock Company - Business projects with huge capital requirements are undertaken
➢ Joint stock company may be public or private limited company
Factors affecting the choice of form of business organization:
➢ Easy to start and easy to close
➢ Division of labor
➢ Help to mobilize large amount of resources
➢ Provide for minimum personal liability
➢ Secrecy should be safeguarded
➢ Should be simple to transfer the ownership
➢ Always better to have ownership, management and control in the hands of one or small
group of
persons for effective coordination and monitoring
➢ Continuity should be taken care of with the death of one or two members, the business should not
come to an end
➢ Provision for quick decision making , personal contact with customers and flexibility
➢ Taxation also should be investor friendly
DIFFERENT TYPES OF BUSINESS ORGANIZATIONS :
1. Sole proprietorship or sole trader
2. Partnership
3. Joint Stock company
4. Private limited company
5. Public Limited company
6. Co-operative Organization
7. Public Enterprises(or) State Enterprises
8. Public Corporation
9. Government Company
SOLE PROPRIETORSHIP :
It is a type of business entity which is owned and run by one individual
 Advantages of a Sole Proprietorship
It is easy to form and close the business
It is easy for decision making
It has full control of business activities
It promotes self-employment of individual
It has liberal legal formalities to start the business
It is easy to expand or reduce the size of the business
It is easy to access by consumers.
It is easy to maintain healthy relations with employees.
Disadvantages of Sole proprietorships
Limited resources
Short life
Lack of communication
Risk of entire loss
Uncertainty
PARTNERSHIP :
➢ A business owned by two or more people
Features of Partnership :
Agreement
Multiplicity of person
Lawful business
Sharing of profits
Contractual relations
Mutual Agency
Unlimited Liability
Registration
Common Management
Utmost good faith
Rights of Partner :
 Right to express his option
Right of Participation
Right of access to books
Right to share profits
Right to get interest on the capital
Right of indemnity

Kinds of Partners
• Active Partner
• Sleeping or dormant partner
• Normal partner
• Partner in profit only
• Partner by estoppel
• Sub-partner
• Secret Partner
• Minor as a partner
Advantages of a partnership :
Easy to form
Registration is not compulsory
Larger financial resources
Greater managerial talent
Promptness in decision making
The risk of business is shared by more persons
More possibility of growth and expansion of the business
Close supervision is possible for this business. It reduces wastages.
There can be any change in Managerial setup capital and scale of operation.
Prediction of minority interests is in this type of business.
Easy dissolution
 Disadvantages of a partnership :
1. Unlimited liability increases the dissolution of firm
2. Lack of Harmony among partners
3. Difficulties in expansion and modernization
4. Limitation on transfer of share
5. Limited resources
COMPANY :
➢ Public (Common man ) can participate in the business activities of the corporate with least
amount of investment
➢ Voluntary association of persons recognized by law, having a distinct name,common seal, formed to
carry on business for profit, with capital divisible into transferable shares, limited liability, corporate
body and perpetual succession
➢ People contribute to the share capital known as shareholders and employ it for a common purpose
➢ The proportion of capital to which each member is entitled his share
➢ Members may come, members may go but continues for ever and ever
Prospectus :
➢ It is a notice , circular, advertisement or any other document inviting offers from public for
the subscription of shares or debentures of the body corporate
➢ It contains the name and address of the company which is registered, nature of the business,
main objectives, number and types of shares issued, list of prompters, list of directors, details of bankers,
brokers and auditors and the minimum subscription to be received, opening and closing date of offer etc.
➢ Prospectus is not issued for a public limited company, then ―Statement in Lieu of
Prospectus‖ but in the private company, issue of prospectus is prohibited
Why Favored?
➢ It is the most favored form of business organization in which, promoters wish to take up large
business ventures with huge capital outlay
➢ Mobilize large resources
➢ Has separate legal existence
➢ Shareholders have limited liability and shares can be transferred
➢ Liquidity of investments in the shares is taken care of by listing the shares of the company on
stock exchange
➢ Facilitates growth and expansion
 ➢ Vast scope to involve professional managers
➢ Inculcates the habit of savings and investments

Challenges
➢ Ownership, management and control are diversified
➢ Decision making is delayed due to rigities in the system, for instance, the general body has to
approve the proposals in annual general body meeting or extraordinary general body meetings , strategic
decisions can not be taken. The formation of the company is a long-drawn process
➢ It is very difficult to form and close also
➢ Closing of Joint stock company is called winding up
➢ Joint stock company is mostly criticized to promote monopoly or oligarchy in management as the
controls are vested in the Board of Directors who provide the strategic direction to the company

Public and Private Limited Companies :

S.N Public Company Private Company

o.

1. Minimum capital is Rs 5,00,000 Minimum capital is Rs. 1,00,000

2. Number of members : minimum 7 and Number of members : minimum 7

no limit on maximum number maximum 200

3. Name of the company should end with Name of the company should end with
‗public limited‘ ‗private limited‘

4. Issue of securities : issue of shares Issue of securities : prohibited from the

from public through prospectus issue of prospectus
by way of rights/bonus issue through Raise capital by way of rights issue or
private placement bonus issue through private statement

5. Listing: shares are listed on recognised shares of the private company are not
 stock exchanges listed

6. Quorum: Minimum number of Quorum inly two

members are required to conduct
proceeding of meetings
Quorum is 5 if members upto 1000
15 if members > 1000 < 5000
30 if members > 5000

7. Acceptance of public deposits: Accept Not in private company

public deposits

Company

Company means group of persons coming together for the attainment of a common goal, social and
economic
growth
The Companies Act 1956
Definition:
A "company is an incorporated association which is created by law, having a separate entity with a
perpetual succession and a common seal. Two more features division of capital into transferable shares
and limited liability of the members added to the definition given by Prof. Haney.
Characteristics
1. Separate legal entity
2. Common Seal
3. Perpetual succession
4. Unlimited member
5. Limited liability ie limited by shares and limited by guarantee
6. Free transfer of share
7. Capacity to sue
 PARTNERSHIP COMPANY

Formed in the year 1932 In the year 1956

Registration not compulsory Registration compulsory

Personally liable Not liable

Unlimited Limited

Management by partners Management by directors

No transfer of shares Free transfer of share

Partner is agent of firm Shareholder is not an agent

Can do with mutual consent Can do with memorandum of association

format

can dissolve anytime dissolve only by company act provision

Minimum two members Minimum two in private and seven in public

10 in banking 50 & unlimited

20 in non-banking

Insolvency of partners affects firm Does not affect firm

Advantages
➢ Limited liability
➢ Large capital
➢ Division of work
➢ not affected by death
Disadvantages
➢ Lack of personal information
➢ Huge legal formalities
 ➢ Difficult to preserve secrets

Classification of Companies
1. Based on Incorporation
a) Statutory - Created by special act of RBI, LIC etc.
b) Registered - registered under company act 1956
2. Based on Liabilities
a) Company with limited liability
1) Limited by shares - Fully paid shared value
2) Limited by guarantee - fixed amount. Usually, company not for profit. Only for promotion of
arts,culture, sports etc.
b) Unlimited Company - Similar to partnership
3. On basis of control
a) Holding company
Control over another company
b) Subsidiary Company
Controlled by holding
1) Composition of directors - 4 out of 7 directors belongs to company limited
2) Holding majority of shared
3) Subsidiary of another subsidiary company
4. On the basis of Ownership
1) Government company - Government company, semi government , Both
2) Non-Government company
3) Foreign company - Incorporated outside the State . Minimu 50% paid up capital by citizen of
the country
5. Based on the number of members - Private company and Public company

PRIVATE COMPANY or CLOSED PUBLIC COMPANY

CORPORATION
 Minimum paid upto 1,00,000 upto 5,00,000

Minimum 2 members Minimum 7

Maximum <= 50 Unlimited

>= 2 directors >=3 directors

Minimum members for meeting Minimum 5 members for meeting

Not needed Must file with registrar

Restricted transfer of shares Free transfer of shares

Enjoy special privileges No such privileges

Allotment by minimum subscription Not like that

No need to keep index of members Keep index of members

ORGANIZATION AND ITS ENVIRONMENT

The word Organization is derived from a Greek word Organon which means Organ.
Definition of Organization: Organization is an entity where group of people comes together to achieve
common goal and acts within a boundary and linked to an environment that is mutually interdependent. –
Gareth Jones.
Definition of Organizational Environment: The set of forces and conditions that operate beyond the
boundaries of organization but have an ability to affect process of acquiring and applying resources in the
process of value creation. – Cummings.
Organizational environment is defines as all elements that exist outside the boundary of the organization
and have the potential to affect all or part of the organization.
Why to study Organizational Environment? Environment is Uncertain, Dynamic, Turbulent, Reactive
and Relatively Changing.

ORGANIZATIONAL ENVIRONMENT/FACTORS:
 Internal Environment
Financial resources
Human resources
Research & Development
Philosophy of Management
Corporate Image
Physical Resources
Vision and Mission of Organization
External Environment
A. Micro Factors
Customers
Suppliers
Regulators
Strategic Partners
Competitors
B. Macro Factors
Political and Legal Factors
Economic Factors
Social and Cultural Factors
Technological Factors
Demographic Factors
Geographical Ecological and Natural Factors
Ethical Factors

Internal Environment:
Sometimes also referred as Specific Environment and directly affects an organization. Financial
Resources (stock markets, banks, savings and loans, private investors), Human Resources (Labor
market, employment agencies, universities, training schools, employees in other companies,
unionization), Research & Development, Philosophy of Top Management, Corporate Image,
Physical Resources (Suppliers, manufacturers, real estate, services), Vision and Mission of an
Organization.
Owners: Owners are people who invested in the company and have property rights and claims on the
organization. Owners can be an individual or group of person who started the company; or who bought a
share of the company in the share market. They have the right to change the company‘s policy at any
time.
Board of Directors: The board of directors is the governing body of the company who are elected by
stockholders, and they are given the responsibility for overseeing a firm‘s top managers such as the
general manager.
Employees: Employees or the workforce, the most important element of an organization‘s internal
environment, who performs the tasks of the administration. Individual employees and also the labour
unions they join are important parts of the internal environment.
External Environment: It is also referred as General Environment and indirectly affects and
organization. It can be further classified into
Micro environment and
Macro environment.
Micro environmental factors are
Customers: ―Satisfaction of customer‖- the primary goal of every organization. The customer is who
pays money for the organization‘s product or services. They are the peoples who hand them the profit
that the companies are targeting. Managers should pay close attention to the customers‘ dimension of the
task environment because its customers purchase that keeps a company alive and sound.
Suppliers: Suppliers are the providers of production or service materials. Dealing with suppliers is an
important task of management. A good relationship between the organization and the suppliers is
important for an organization to keep a steady follow of quality input materials.
Regulators: Regulators are units in the task environment that have the authority to control, regulate or
influence an organization‘s policies and practices. Government agencies are the main player in the
environment and interest groups are created by its members to attempt to influence organizations as well
as government. Trade unions and chamber of commerce are the common examples of an interest group.
Strategic Partners: They are the organization and individuals with whom the organization is to an
agreement or understanding for the benefit of the organization. These strategic partners in some way
influence the organization‘s activities in various ways. Strategic partners can be Distributors and Trade
Unions.
Competitors: Policies of the organization are often influenced by the competitors.
Competitive marketplace companies are always trying to stay and go further ahead of the competitors. In
the current world economy, the competition and competitors in all respects have increased tremendously.
The positive effect of this is that the customers always have options and the overall quality of products
goes high.
Macro Environmental factors are:
Legal and Political Factors:
Political and legal environment is the background of laws and regulation within which the business firms
should conduct their affairs.
Even in capitalist countries, the Government controls and influences the business policies in many ways.
In the Indian context, the Government‘s role and influence on business policy are multifarious. In this
environment, Government interacts with business at three levels — local, state and center and exerts
varying amounts of influence over business. The Government plays a number of roles as a regulator or
controller, coordinator, caretaker and guardian, and supplier. Besides, it also acts as a competitor and as a
customer.
There is also a comprehensive labor legislation, which force employers to pay minimum wages to
workers in specific industries and statutory bonus payment is very liberal in approach. The control of big
business is exercised through MRTP Act. The Foreign Exchange Management Act (FEMA) brings
Foreign Companies and multinationals operating in India under control. Import and export activities are
regulated and restricted by periodical Import and Export Policies announced by the Central
Above all, tax laws and policies play a decisive role in business policy. Certain policies of the
Government even expose the business community to a lot of tension and pressure. All these facts clearly
reveal that Government has an upper hand in all the business policies in India.
Economic Factors:
Ability to buy (Price, Income, Savings, Tax etc.) and Willingness to buy (Expectation, Interest,
Preference), Capitalistic economy, Social economy, mixed economy (Public, Private, Mixed and Co-
operative), communist), Economic policy (Industrial policy, FEMA, EXIM, Export promotion, MRTP,
Company Act, New Economic policy), Economic Condition (Supply of natural resources, foreign capital,
consumption, size of market, monetary structure, capital creation, rate of interest).

Cultural and Social Factors:

Of the various environments stated, the social and cultural environment has the greatest impact on the
policies and performance of all business firms. This environment poses a serious challenge to the
business, and the business managers while formulating business strategies and policies should give due
weight to this pivotal factor.
Social Factors are things that affect someone's lifestyle. These could include wealth, religion, buying
habits, education level, family size and structure and population density. Change in lifestyle, growing
consumerism, concern for pollution, social problems, Lifestyles, Emphasis on safety, Religion and
beliefs, Health consciousness Sex distribution, Average disposable income level, Social classes, Family
size and structure ,Minorities, Attitudes toward saving and investing.

Social environment is concerned with the environment of society as a whole — of which everyone
involved. Cultural environment is an aggregate of all sub-cultures each with distinct concepts, beliefs and
faith. Adjusting with the social and cultural development, of course, will enable the firm to reap a rich
harvest. Profit is the ultimate object of all business endeavors. Besides, it is the indicator of the efficiency
of the business firm. But now the situation is changing.
Technological Factors:
The existence of 3D technology, Computer calculation speed/power, The ability of computers to create
truly ‗random‘ numbers, Engine efficiency, Internet connectivity, Wireless charging, Automation,
Security in cryptography, Change in production system, change in life style and standard of living,
change in consumption pattern etc.
Demographic Factors:
Increase/decrease in the population‘s birth rate ,Changes in the average family size,An overall
increase/decrease in the population size, Impact of a fast-growing population on the natural
resources/food, Geographical shifts in population, Changing household patterns, Increasing diversity,
Population Size, Changing age structure of population, Better educated, more white collar, more
professional population.
Geographical and Ecological or Natural Factors:
Geographical conditions exert influence on the decisions as to the type of industries and business to be
carried on in a region. This is because the people of a particular geographical region will have similar
tastes, preferences and requirements.
The geographical situation, the physical feature, the climate, rainfall, humidity, the vegetation etc. decide
the type of living in a particular region. Hence those industries, which could cater to the needs of the
people, could develop.
 Generally, goods, which are largely preferred by people in one region, may not be liked in another region.
For instance, tastes, likes etc. as to consumption of goods in the people of South India may not be similar
to that of in North India. Even in South India, people in different states may not have similar tastes, likes
etc.
In India, cotton textile industries are located in Mumbai and Coimbatore regions due to favourable
climate. Jute industry is located at Kolkata due to the favourable geographical and climatic conditions to
grow the raw material. The particular type of industry develops, only where its raw materials are
available.
Ecological factors consist of natural resources like farmland, fisheries, forests, and minerals like coal,
metals, oils etc., energy, air and water. The supply of the resources is very much limited. A decade ago,
we were all under an impression that natural resources like air and water are not exhaustible and their
supply is unlimited. But now the situation is changed and we came to know that such resources are also
very much limited in supply.
Ecological factors consist of natural resources like farmland, fisheries, forests and minerals like coal,
metals, oils etc., energy, air and water. The supply of the resources is very much limited. A decade ago,
we were all under an impression that natural resources like air and water are not exhaustible and their
supply is unlimited. But now the situation is changed and we came to know that such resources are also
very much limited in supply.
Ethical Factors:
Responsible to society, Proper role in civic affairs, Law abiding, Fair and square deal, No false
information, No misleading communication, Fair reasonable wages, Recognition of TU, Avoid
adulteration, No spurious product, Good working condition, Avoid Duplication, Avoid Exploitation, No
Bribe, No corruption, No Injurious product, No Deceptive advertisement.
ORGANIZATIONAL CULTURE
WRITTEN OR UNWRITTEN FEELING PART OF ORGANZIATION
CULTURE IS SET OF IMPORTANT UNDERSTANDINGS THAT MEMBERS OF AN
COMMUNITY SHARE IN COMMON
INTRODUCTION AND MEANING:
⮚ A set of shared values and norms that control organizational member‘s interactions with each other and
with people outside the organization.
⮚ Organizational Culture also called as Corporate Culture.
⮚ It is a belief system shared by an Organizational members – Spender.
⮚ It defines way of life.
⮚ The way the things are done in and around the organization.
⮚ Values and behaviour to social and psychological environment of an organization.
⮚ It also includes expectations, experiences, philosophy, self-image, inner workings and interactions within
and outside the organization.
⮚ It is based on shared attitudes beliefs, customs and either written or unwritten rules.
⮚ It covers the way the organization conducts its business, treat employees, customers and community,
extent of decision making freedom, flow of power and information and guidelines for customer care.
⮚ It has two components Observable Symbols and Underlying Values, Observable Symbols includes
Stories, Slogans, Behaviour, Dress, Physical Setting, Ceremonies etc. Underlying values assumptions,
beliefs and thought processes.
DEFINITION:
Organizational Culture is a set of shared mental assumptions that guides interpretation and action in an
organization by defining appropriate behaviour for various situations
– Ravasi and Schutz
Culture is set of value, norms, guiding beliefs and understandings that is shared by members of an
organization and taught to new members as the correct way to think feel and behave
– Jones
Organizational Culture is set of shared enduring beliefs communicated through variety of symbolic media
to create meaning to people‘s work lives – Caldwell.
FEATURES/ROLES OF CULTURE
Unites employees, Enable to differentiate one organization from another, Generate Commitment,
Important for task, Must be shared, Must be learned, Can be symbolic, taken for granted, varies across
time and place, Individual autonomy (degree of responsibility, freedom, opportunities that individual
have), Structure (Rules, regulations, amount of supervision and control), Identity (members identification
with organization), Conflict tolerance (open about tolerance), Risk tolerance or Risk orientation
(encourage to be innovative, looking for improvement), Process orientation (expected to be accurate and
gives attention to details), Achievement orientation (focus on outcome or results), Fairness orientation
(treat employee with dignity and respect), Collaboration orientation (positive relationship with co-
workers), Competitive orientation (outperforming competitors and being aggressive), Stability
Orientation (Rule oriented, consistent and predictable), Support (degree of assistance required),
Performance reward (reward for performance by adhering to culture).
 TYPES OF CULTURE:
1. Work Hard, Play Hard Culture – Rapid Feedback and Low Risk, Eg: Food Industry.
2. Tough Guy Macho Culture – Rapid Feedback and High Risk, Eg: Medical surgery.
3. Process Culture – Slow Feedback and Low Risk, Eg: Insurance.
4. Bet the company Culture – Slow Feedback and High Risk.
5. Power Culture – Power radiates from one or few central figure, Quick decision making.
6. Role Culture – Based on role
7. Task Culture – Appropriate behaviour for specific task.
8. Person Culture – Linking like-minded people.
9. Clan Culture – Culture followed by local community.
10. Adhocracy Culture – Focus on Creativity.
11. Market Culture – Based on Geographical location.
12. Hierarchy Culture – Based on Position.
13. Constructive Culture – Encourage to interact with people, Humanistic, Affiliate, Encouraging.
14. Passive Culture - Without threatening own security, It seeks for approval, dependency and conventional
approach.
15. Aggressive Culture – Forceful approach, It works on power, perfectionism and oppositional.
16. Tribal Culture - Tradition exist in tribe.
17. Entrepreneurial Culture or Entrepreneurial Organizational Culture (EOC) – Deals with problems of
survival and prosperity, environmental uncertainty, competitors threats, value creation through innovation
and change, freedom to grow, emphasis on future.
18. Personal Culture - Based on personality, custom or practices by specific personality.
19. Normative Culture – Stress on Procedure.
20. Academy Culture – Focus on employees skills.
21. Collaborate Culture – People oriented, succeeded by working together.
22. Baseball Culture – Free Agent, Considerable amount of risk attached.
23. Club Culture – Stay for long time.
24. Fortress Culture – Massive Change.
25. Macho Culture – Big Reward.
26. Pragmatic Culture – Satisfying the wish of clients.
27. Control Culture – Succeeded by Control. It is company oriented.
28. Competence Culture – Succeeded by being the best. It is possibility and company oriented.
29. Cultivation Culture – Succeeded by group of people who fulfils vision. It is combination of possibility
and people oriented.
30. Dominant Culture – Majority.
31. Sub Culture – Minority.
32. Mechanistic Culture –
33. Organic Culture –
34. Authoritarian Culture – Culture based on authority and power.
35. Participative Culture – Top to bottom and bottom to top communication.
36. Material Culture – Man made Eg; Clothes.
37. Non-Material Culture – Intangible – Ceremonies.
38. Network Culture – Based on trust and friendship.
39. Mercenary Culture – Sense of purpose and excitement.
40. Fragmented Culture – Work for Organization and not for friendship.
41. Communal Culture – Combination of Network and Mercenary.
42. Professional Culture – Also called as Horizontal Sub Culture – for specific professional group.
43. Institutional Culture – Also called as Vertical Sub Culture – for specific Department.
44. Hard Culture – Task Oriented.
45. Soft Culture – Relationship Oriented.
46. Formal Culture – Culture followed by organization and department
47. Informal Culture – Among friends
48. Strong Culture
49. Weak Culture
STRONG CULTURE VS WEAK CULTURE
S.No STRONG CULTURE WEAK CULTURE
1 Better Alignment with Vision, Mission and Poor
Goals
2 High employee motivation Low
3 Consistent Varies
4 Values widely shared Lack of Sharing
5 Stable network Broken down
6 Implicit norms Formal rules
7 Stable Structure Feeble
8 High Employee Commitment Low
9 Sense of being special Sense of being ordinary
10 Pride in uniqueness Shame and blame past sins
11 Rapid growth Ceased growth
12 Heroism No signs
13 Sense of rebellion Sense of conformity
14 Secrecy is high Less
15 Product quality is high Low
16 Innovation is high Low
17 Shared feeling of success Blame others on failure
18 Have stories about heroes NO such stories
19 Strong connection between values and Little Connection
behaviour
20 Increase team cohesiveness Cohesiveness is missing
S.No MECHANISTIC CULTURE ORGANIC CULTURE
A Individual specialisation Joint
B Employee work separately Work together
C Simple Integrating mechanism Complex
D Hierarchy of authority well defined Not
E Centralised Decision Making Decentralised
F Communication is Vertical Lateral
G No delegation Authority to control is delegated
H Standardization Mutual Adjustment
I Operating procedure Unpredictable
J Authority Face to face contact
K Written Communication Verbal Communication
L Status out of size Status out of brilliance
M Network of position corresponding to task Correspondence to people
N Instruction must be followed Task is important than instructions
O Communication and control through May not adhere to hierarchical routes
 hierarchical routes
P Low Differentiation High
Q More emphasis on task More emphasis on goals
R Problem solving by top Encourages all employees
S Management is better capable of Decision All employees are capable
making
T No empowerment of employees Employee empowerment
U Division of labour by functional specialisation Division of labour by teams
V Selection and promotion based upon technical Selection and promotion based upon
competence managerial competence
W Bureaucratic atmosphere Collegial atmosphere
X Rigid boundary Flexible boundary
Y Rigid Departmentation Flexible Departmentation
Z Clear chain of command Based on demand

CURRENT TRENDS AND ISSUES IN MANAGEMENT

Based on responses from the reputed faculty researchers, we take a look at five areas or trends which are
emerging as the key influencers of business and management in the 21st century and are also likely to
spawn a good share of research in the domain.
Globalization
The melting of barriers among nations and their increasing interconnectedness, accelerated by
technology, has led to a change in the world order that has had a profound impact on global business. The
emergence of nations such as India and China has replaced the era of unquestioned dominance of the
Western countries or any one particular region, paving the way for a flattened business arena where
developments in one part of the other are certain to have a spiraling impact. Perhaps the best evidence of
this is the recent financial crisis.
A recent 335-page study by the AACSB, the leading accreditation agency for business schools around the
world, highlights the implications of this and asserts that rising expectations from business and society
for graduates with global competencies, coupled with the increasing complexity and global
connectedness of higher education, command the attention of business schools around the world.

Technology
If the current wave of globalization has been the driving force behind the most far-reaching and powerful
changes in business, then information technology has indisputably been the facilitator. Drawing attention
to the fact that four out of the top five companies in Businessweek's annual list of most innovative
companies are technology-driven businesses, Professor Teresa Amabile writes in Working Knowledge,
Customers are courted and supply chains are managed via websites, social media, and email; marketing,
manufacturing, and distribution processes are managed by sophisticated real-time information systems;
colleagues working 12 time zones apart can see and hear each other as they work at their desks-or in
airport lounges on opposite sides of the planet.

Sustainability and Corporate Social Responsibility

For business to be sustainable, and even profitable, our planet has to be sustainable - this realization has
hit businesses perhaps the hardest in recent times. HBS Dean Nitin Nohria feels that in the coming
decade, we are likely to see a lot of focus directed towards applying management principles to solutions
of complex social issues such as environmental sustainability, energy security, access to healthcare etc.
This will also underline the need for increased interdisciplinary interaction and influence on business
management.
One evidence of this growing engagement with issues of society and sustainability is the increase in
number of companies who have intensified their CSR focus and the innovative ways in which they have
engaged themselves, points out professor of marketing, Michael Norton. Shifting steadily from corporate
philanthropy to more direct and effective engagement, companies have devised new models of extending
a social footprint. Drawing attention to the Pepsi Refresh project, Norton has highlighted how the
company encouraged users to submit projects with social impact-from cleaning up a river to saving
animals-and allowed other users to vote on which projects Pepsi should fund.
The Study of Psychology
Speaking of interdisciplinary influences on business, the study of human psychology - probing into
cognition, motivation, behavior and performance - has become a key pillar of organizational
management. From employee management to customer satisfaction and social engagement, satisfaction
of business objectives requires effective analysis of both individual and institutional psychology. A good
amount of research is therefore likely to be focused on how psychological theory and research can be
integrated into business academics and management practice; Professor Amabile feels that with more
evolved tools and access to ever-growing information databases, managers will have the power to
substantially improve both the practice of business and the welfare of society.
Business Ecosystems
Professor Carlyss Y. Baldwin feels that one of the most notable trends in management has been the rise
of business ecosystems - defined as groups of firms which together provide complex products and related
services to meet end-to- end requirements of users across the value chain. The integration between media,
technology and telecommunication firms would be an apt contemporary example.
Video Marketing
The well-known social media influencer and online company developer - Gary Vaynerchuk, often states,
―the most powerful tool of content marketing strategy in the present scenario is video.‖ Over 55% of
online viewers are habitual of watching at least one marketing video a day, delivering it a higher ROI in
comparison to other forms of advertisement. Sharing and liking videos across several social media
platforms, websites, portals or any other medium boost traffic and improves engagement.
Remote Workers
According to a survey performed by a career listing site - 85% of millennials choose to work remotely as
a full-time employee. Advanced digital technology is giving rise to the evolution of telecommuting which
is encouraging the trend of working remotely.
This management trend is favourable for businesses as well as their employees and families. Working
remotely keeps employees close to their families while reducing commuting costs and boosting
productivity. Advanced technologies like cloud, skype, zoho, and other collaborative or data mobility
solutions offer the added convenience of effective communication and collaboration between companies
and their remotely working staff.
Team Brand Ambassadors
Influencer marketing is the most effective form of marketing these days. Recruiting influencers to share
and promote a product is a valid option for every brand. But a smart manager thinks another way round.
Instead of hiring an outsider influencer, an ideal manager would rather focus on using the present
workforces to advocate for the brand.
Motivate employees to share and promote in-house products and services on their social media accounts.
This will give them a sense of belonging to the organization and will also work as an effective and free
PR for the brand.
Rising Income
With rising living and health care costs, wages of employees are also expected to be increased to meet the
inflation. Employers need to revise their compensation plans to retain their existing employees and to
attract new talent in the market.
There are various Indian states which are passing laws to mandatorily improve minimum salary standard.
Along with increased basic salaries, workforces should get added benefits like telecommuting options
and other bonuses.
Customer-focused Organizations
The basic step to a successful business strategy is to recognize the need and demands of its target
audiences. With a huge variety of analytical tools available in the market, an organization can determine
the behaviour and buying preferences of its consumers. Such solutions help an enterprise to derive
insightful reports and use them to act accordingly for profitable outcomes.
Artificial Intelligence
Businesses are identifying the significance of artificial intelligence and are embracing it to enhance their
consumer experience. In this innovative age, Call Centres are transforming their communication concept
by harnessing artificial answering services to deliver utmost customer satisfaction. Several applications of
AI technology are even capable of learning and adapting to situations without human involvement.

Outside Consultants
Team leaders must admit that they cannot answer every question every time. This acknowledgment opens
doors to the opportunities to seek expert advice and consultation from outside. Consultants and experts
from outside the organization may bring new ideas, information, perception, and knowledge on different
topics. They work closely with employees and teams and conduct assessments to draft effective strategies
for beneficial results. It also helps in developing better communication, organization skills and
collaboration in teams.
 Continuing Education
Continuous education is paramount to learn and practice innovations and the latest management trends.
Change is the only constant and one must adopt it to sustain in the market. With the invention of
advanced technologies like blockchain, AI, cloud computing and more, employees must learn and evolve
with new technologies.
Work-Life Balance
This is something that has been acknowledged after years of negligence. Today, managers understand the
importance of maintaining work-life balance and plan appropriately to make it happen. Not just time-off
or vacations, rather it can be achieved by allowing work from home opportunities, organizing
engagement activities during breaks, offsite meetings and more. Such initiatives keep employees
motivated and productive while eliminating employee burnout.
Training Millennials
By 2020 almost 46% of the working population would be millennials. It is extremely important to frame
out training modules to prepare these young minds to take responsibilities and participate actively in
tasks. Such training sessions also help them groom their skills and grow.
Miscellaneous trends are:
1. Globalization
2. Changing workforce and diversity
3. Growth of Management Education
4. Increase Standard of living and disposable income
5. Integration of IT
6. Knowledge Management
7. Corporate Social Responsibility
8. Cross functional Integration
9. Outside and In-innovation
10. Leveraging social media
11. E-business
12. Integrating psychological theory

ISSUES
1. Deciding what is critical and what to ignore
2. Facing risky situation
3. Empowering staff
4. Focus on learning
5. Identifying and retaining talents
6. Generate excitement
7. Expanding business origin
8. Identifying challenges
9. Fixing mistakes
10. Promoting trust & transparency
11. Communication distortion
12. Identifying resource for succession
13. Poor communication between various sections.
14. Constant change (moving the goal posts).
15. Too much to do; not enough time to do it.
16. Difficult people who don't do what you want them to do.
17. Poor morale. (This leads to poor motivation and therefore poor productivity).