BUSINESS MANAGEMENT

& ETHICS
UNIT - 1
INTRODUCTION
• An Organisation is a set of people working together to achieve common goals.
• No Organisation can run successfully unless there is someone to manage its activities.
• Management is a must to accomplish desired goals through group action.
• It is essential to convert the disorganized resources of men, machines, materials and methods into
a useful and effective enterprise.
• Management is the function of getting things done through people and directing the efforts of
individuals towards a common objective.
• Thus, it is the management which makes the people realise the objectives of the group and direct
their efforts towards the achievement of these objectives.
MEANING AND DEFINITION OF MANAGEMENT

The term “Management” has been used in different senses.

Management is the art of maximizing efficiency, as a social process, a method of getting things
done through others a plan of action and its direction by a co-operative group moving towards a
common goal. Effective utilization of available resources to achieve same objective is management.
Management is a comprehensive function of Planning, Organising, Forecasting Coordinating,
Leading, Controlling, Motivating the efforts of others to achieve specific objectives.
Management can precisely be called the rule – making and rule – enforcing body.
 Meaning of
Management

Management is
what a manager
does.

It is an art of It is the art and Deep Co-ordination

science of decision of human resources
taking work done making and and factors of
with others. leadership. production.
DEFINITIONS
According to F.W. Tylor “ Management is the art of knowing what you want to do in the best
and cheapest way “.
According to Henry Fayol “ To manage is to forecast and plan, to organize, to command, to co-
ordinate, and to control.”
According to Rose Moore “ Management means decision-making.”
NATURE AND SCOPE OF MANAGEMENT
1. MULTIDISCIPLINARY – Though management has developed as a separate discipline but it
draws knowledge and concepts from disciplines such as sociology, psychology, economics,
statistics, operations research etc. Management integrates ideas and concepts from these
disciplines and uses them for improving the efficiency of the Organisation.
2. MANAGEMENT IS A GROUP ACTIVITY – Management is an essential part of a group
activity. As no individual can satisfy all his desires himself, he unites with his fellow-beings and
works in an organized group to achieve what he cannot achieve individually. Management
makes the people realise the objective of the group and directs their efforts towards the
achievement of these objectives.
3. MANAGEMENT IS GOAL – ORIENTED – Management aims to achieve economic and
social objectives. It exists to achieve some definite goals or objectives. Group efforts in
management are always directed towards the achievement of some pre-determined goals. It is
concerned with the establishment and accomplishment of these objectives.
4. MANAGEMENT IS A FACTOR OF PRODUCTION – Management is not an end in itself but
a means to achieve the group objectives. Just as land, labor and capital are factors of production and
are essential for the production of goods and services, management is a factor of production that is
required to co – ordinate the other factors of production for the accomplishment of pre- determined
goals.
5. MANAGEMENT IS UIVERSAL IN CHARACTER – Management is applicable in all types of
organisations. Wherever there is human activity, there is management. The basic principles of
management are of universal application and can be applied in all organisations whether they are
business, social, religious, cultural, sports, educational, politics or military.
6. MANAGEMENT IS A SOCIAL PROCESS – Management consists of getting things done
through others. This involves dealing with people. The efforts of the human beings have to be
directed, co – ordinated and regulated by management in order to achieve the desired results. It is in
this sense that management is regarded as a social process.
7. MANAGEMENT IS A SYSTEM OF AUTHORITY – Since management is a process of
directing men to perform a task, authority to accomplish the work from others is implied in the very
concept of management. Authority is power to get the work done from others and to compel them to
work in a certain manner. Management cannot perform in the absence of authority. In real sense,
management is a rule – making and rule – enforcing body.
8. MANAGEMENT IS A DYNAMIC FUNCTION – Management is a dynamic function and it
has to be performed continuously. It is constantly engaged in the molding of the enterprise in an ever
changing business environment. In real sense, it is never- ending function.
9. MANAGEMENT IS AN ART AS WELL AS A SCIENCE – Management is a science because
it has developed certain principles which are of universal application. But the results of management
depend upon the personal skill of managers and in this sense management is an art. The art of the
manager is essential to make the best use of management science. Thus, management is both science
and art.
10. MANAGEMENT IS A PROFESSION – In the present days, management is recognized as a
profession. It has a systematic and specialized body of knowledge consisting of principles, a
technique and laws and can be taught as a separate discipline or subject. This has also divorced
ownership from management. Now with the advent of large – scale business, the management is
entrusted in the hands of professional managers.
MANAGEMENT FUNCTIONS
FUNCTIONS OF MANAGEMENT
1. 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.
2. 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.
3. STAFFING - It is the function of manning the organization structure and keeping it manned. Staffing has
assumed 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 in 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.
4. 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
5. 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
MANAGERIAL SKILLS
Skills are defined widely as overt responses and controlled stimulation. It can be categorized as
either generic or technical, or entry – level or advanced. There are four general types of skills:
1. Technical: It relates to concepts, methods, and tools specific to an organisation.
2. Supervisory: It enables one to effectively supervise others.
3. Interpersonal: It enables people to communicate and interact effectively.
4. General Business: It helps in business and support infrastructure.
LEVELS OF MANAGEMENT
An Organisation may have various levels of management. The term ‘level’ involves persons
arranged in the series. The number of levels of management in an organisation depend upon its size,
technology and the range of production.
Broadly speaking, there are 2 levels of management. They are Administrative Management and
the Operative Management.
Administrative Management - Performs thinking function. i.e., Policy determination,
Planning production,
Fixation of standards.
Operative Management – Performs doing functions. i.e., Use of various factors of production,
Implementation of policies,
Directing operations.
 Modern school designates the levels of management as under:
1. Top Management
2. Middle Order Management
3. Lower Level Management
4. Supervisory Management
J. Batty has suggested five levels of management. These levels are:
1. Top Management – President (Board of Directors)
Managing Director
General Manager
2. Top Middle Management – Departmental Heads i.e.
General Sales Department
Purchase Department
Materials Department
Production Department
Finance Department
3. Middle Order Management – Regional Managers
Departmental Superintendents
General Accountant
Cost Accountant
4. Supervisory Management – Foreman
First Supervisor
Second Supervisor
5. Operating Staff – Labour, Assistants etc.
FUNCTIONS – LEVELS OF MANAGEMENT
1. TOP MANAGEMENT
a) Determining the objectives or goals of the enterprise.
b) Framing policies and making plans to achieve the objectives laid.
c) Setting up an organizational framework.
d) Assembling the resources of money, men, materials, machines and methods.
e) Exercising effective control.
f) Providing overall leadership.
2. MIDDLE MANAGEMENT
a) Interpreting the policies framed by top management.
b) Preparing the organizational set up in their respective departments.
c) Selecting suitable operative and supervisory personnel.
d) Assigning duties and responsibilities for timely execution of the plans.
e) Compiling and issuing instructions to the supervisors under their control.
f) Motivating personnel to achieve higher productivity.
g) Co-ordinating with other departments so as to ensure a smooth running of the entire organisation.
h) Collecting information and reports on performance.
i) Reporting to top management.
j) Making recommendations to top management for the better implementation of plans and policies.
3. LOWER OR OPERATING MANAGEMENT
a) To plan day to day work within the goals prescribed by the higher management.
b) To issue orders and instructions for executing the work.
c) To arrange materials and equipment for the work force.
d) Providing on the job training to workers.
e) To supervise and control the work of workers and maintain personal contact with them.
f) To advise and guide workers about the work procedures and solving their problems.
g) To communicate the problems of workers to higher levels of management if these are not
solved at lower level.
h) To maintain proper discipline in the section and good relations among workers.
ROLES AND SKILLS OF MANAGERS
CONTRIBUTIONS BY HENRY FAYOL
Henry Fayol (1841 – 1925) started his career as a junior engineer in a coal mine company in France and
became its general manager in 1880. He wrote a book on General and Industrial Management in 1961 which was
published in English in 1949. This book is considered to be one of the best classics in management. His contribution
may be classified under three categories: Classification of business activities, Functions of Management, Principles
of Management.
Classification of Business Activities
Henry Fayol observed that management was an activity common to all human undertakings, whether in the
home, business or government. He divided all activities of a business enterprise into six categories:
i) Technical activities (Production)
ii) Commercial activities (Buying, selling and Exchange)
iii) Financial activities (search for and optimum use of capital)
iv) Security activities (protection of property and persons)
v) Accounting activities (including statistics)
vi) Managerial
Functions of Management
i) Planning (to foresee and provide means for the future)
ii) Organising (provides everything useful to its functioning, raw material, tools, capital,
personnel)
iii) Co- ordinating (binding together, harmonizing all activity)
iv) Commanding (lead the personnel in a better way)
v) Controlling (ensuring everything goes as per plans)
General Principles of Management
1. Division of work (Specialization) – Division of work implies division of the total task in order
to lighten the total burden and promote specialization in such a way that one person does only
one thing rather than doing every thing himself. In the words of Fayol, “The worker always on
the same part, the manager always concerned with the same matters, will acquire an ability,
sureness and accuracy which increase their output.”
Fayol has opined (hold) that this principle of division of work and specialization should be
applied to all kinds of work-technical as well as managerial.
2. Authority – Fayol viewed that people seek authority and fear responsibility. Authority without
responsibility leads to irresponsible behaviour while responsibility without authority makes a
person ineffective.
3. Discipline – Discipline means obedience. In the words of Fayol, “discipline is in essence
obedience, application, energy, behaviour and outward marks of respect observed in accordance
with the standing agreements between the firm and its employees.”
4. Unity of Command – This principle states that one person should receive orders from only one
supervisor, in other words, one person should be accountable to only one boss. Fayol states. “an
employee should receive orders from one superior only, as soon as two superiors will execute
authority over the same personnel, uneasiness makes itself felt, the disorder increases.”
If the principle of unity of command is not observed, the authority is undermined, discipline
weakened, loyalty divided and confusion and delays are caused.
5. Unity of Direction – The principle of unity of direction implies that there should be “one head
and one plan for a group of activities having the same objective.” An organisation or group having
different plans and more than one head cannot achieve the desired results. Fayol observed, “without
unity of direction, unity of action, co-ordination of strength and focusing of effort cannot be
achieved.”
6. Subordination of Individual Interest to General Interest – It is an essential function of
management to make people realise the objectives of the group and direct their efforts towards the
achievement of these objectives. Fayol was of the opinion that the interest of one employee or a
group of employees should not prevail the interest of the enterprise as a whole. When the individual
interest and common interest differ, it is the duty of the management to reconcile them. In order to
achieve this, managers must set a good example and must be firm but reasonable in dealing with
subordinates.
7. Remuneration – Fayol was of the view that the remuneration paid to the workers should always
be just and fair and should afford maximum satisfaction to both employees and the employer. The
rate of wages depends upon a number of factors such as the cost of living, the demand for Labour,
general economic conditions, the current state of business and the value of the employee.
8. Centralisation – Centralisation means concentration of authority in the hand of few, i.e., top
management. Everything which goes to increase the importance of subordinates role is decentralization
and everything which goes to reduce it is centralisation. Fayol was of the opinion that centralisation and
decentralization is simple question of proportion and this proportion of finding the optimum degree
should be decided keeping in view the circumstances of the particular case.
9. Scalar Chain – Scalar Chain refers to the chain of superiors ranging from the ultimate authority to
the lowest ranks. Fayol felt that a hierarchic channel called the scalar chain is necessary to ensure unity
of command and effective communication. Communication should follow through the established chain
of command.
10. Order – The principle of order implies right man in the right job and right material in the right
place. Fayol was of the opinion that there must be material and social order in an enterprise. Material
order means “a proper place for everything and everything in its right place.” In the same manner, social
order implies “a place for everyone and everyone in his appointed place.” Right man in right job and
right material in the right place would ensure effective utilisation of the available resources in an
organisation.
11. Equity – Equity means justice and kindliness. Fayol was of the opinion that to encourage
workers to fulfil their duties with devotion and loyalty, management should deal with employees
with equity-based on kindliness and justice. There should neither be nepotism nor favoritism and all
should be given just and fair means.
12. Stability in the tenure of personnel – Stability in the tenure of personnel is very essential
because it takes time to get used to a job. Fayol was of the view that instability of tenure of personnel
is both the cause and effect of bad management. To secure loyalty of workers, it is very essential to
provide security of service to the workmen. A very high rate of labour turnover or change of
personnel increases costs of selection and training and creates a bad name for the organisation.
13. Initiative – Initiative implies the power of thinking out a plan and ensuring its successful
implementation. The manager should encourage or inspire the confidence of his subordinates so that
they show initiative. For this, Fayol suggests that the manager should sacrifice his own vanity.
Initiative is a powerful motivation of human behaviour and a source of strength for the organisation.
14. Esprit de corps – (A feeling of pride and mutual loyalty shared by the members of a group.)
This principle implies that there should be co-operation and team-work among the members of
an organisation. The manager must always make a constant effort to ensure harmony, cohesiveness
and esprit de corps among his subordinates to ensure unity and high morale which is very essential
for the success of an enterprise. Fayol suggested to discard two temptations for this
(i) To divide and rule,
(ii) Abuse of written communication.
Divide and Rule policy is a self-defeating policy and oral directions and instructions given to
subordinates make for harmony, speed and clarity.
Managerial Qualities
Fayol considered the qualities required by managers to be physical health, vigour, mental,
moral, educational, technical and experience. He was of the opinion that managerial ability should be
acquired as technical ability, first in school and later in the workshop.
Universality
Fayol advocated the universality of management concepts and principles. He said that
managerial functions and principles are applicable to private as well as government organisations.
The basic aim of every group activity is to get the desired results through integrated human effort.
All organisations have to use scare resources in a best possible way. Theoretical knowledge of
management is transferable from one organisation to another and from one country to the other. So,
Fayol’s principles of management have universal applicability.
A Critical Evaluation
Fayol successfully advocated the need for a theory of management. He was the first person to
look at management as a separate body of knowledge like any other subject. He considered the
principles and functions of management as quite universal that had applicability to all forms of group
activity. Fayol is regarded as the original proponent of some basic principles of management. He laid
down 14 principles which are useful for running a business.
Fayol’s critics say that his theory is based on his personal experiences in an enterprise. Like any
other scientific study, facts and observations have not been presented. Administrative theory has not
been supported by empirical studies. Some principles given by Fayol are also contradictory in
nature, the principle of unity of command is incompatible with division of work. This theory also
does not pay adequate attention to workers. Despite of its criticism Fayol’s contribution has been
unique and original.
CONTRIBUTIONS BY FW TAYLOR
Frederick Winslow Taylor is known as the Father of Scientific Management. He investigated the
effective use of human resources in the industrial organisation, particularly at the shop level. He tried
to find out the reasons for slow pace of work and suggested methods for improving it. Some other
thinkers such as Frank Gilbreth and Henry Gantt also supported what Taylor had advocated. He
wrote a number of books, notable among them are; Shop Management, Principles of Scientific
Management, Piece-rate System (the worker is paid per unit of creation).
Scientific Management can be studied in two parts, Principles of Scientific Management and
Elements of Scientific Management.
Principles of Scientific Management
1. Replacement of Rule of Thumb – Every work should be planned properly before it is carried
out. Taylor suggested work study to eliminate unnecessary operations, standardization of tools
and equipment, scientific selection of employees to encourage employees for better
performance.
2. Co-operation – To encourage a combined effort not only among workers but also between
workers and management.
3. Development of Workers – Job training for workers to enable them to understand the work
methods well.
4. Maximum Output – The whole philosophy of scientific management advocated increased
production and productivity.
5. Distribution of Work – The work and responsibility should be distributed between workers and
management.
Elements of Scientific Management
1. Work Study – Work study is related to analyzing the work to be performed by eliminating
unnecessary operations and finding out the quicker way of doing it.
2. Standardization of Tools and Equipment – the best way of doing the work. Proper tools and
equipment are essential for increasing the speed of work.
3. Scientific Selection, Placement and Training – The speed and quality of work is linked to the
type of persons selected for taking up various jobs. Workers should be given training to make them
suitable for the jobs. Orientation training should also be imparted to prepare them for new
challenges.
4. Introduction of Functional Foremanship – Workers should be freed from the burden of
planning and designing.
5. Introducing Costing System – To present costs for cost and preparation of budgets.
To enable estimation of costs and preparation of budgets.
To increase efficiency and reduce wastage.
To help channelize production on right lines.
6. Mental Revolution – Taylor’s basic idea was to bring basic change in the mental attitude of
workers and the management towards each other. Mutual understanding and co-operation between
management and workers was an essential aspect advocated by Taylor. So mental revolution on the
part of workers and management was essential to improve the working of an organisation.
APPLICATION OF SCIENTIFIC MANAGEMENT
APPROACH
1. The efforts to be utilized to the maximum, no room for wastages.
2. Establishment of performance standards.
3. Fitting workers to particular tasks and training them further to utilize their abilities.
4. Greater specialization of activities with proper design of jobs, time and motion standards.
5. Use of monetary and other incentives for increasing the productivity of workers.
OPPOSITION OF SCIENTIFIC MANAGEMENT
1. Taylor’s emphasis of extreme specialization is unrealistic. His expectation of efficiency was not possible
in an average worker. The standards set for workers under time and motion studies were too high. The
workers would be deprived of incentives under the garb of low efficiency.
2. The incentives to workers were not commensurate with the increase in productivity.
3. Taylor ignored human element in his approach. His emphasis on efficiency at all costs turned workers
into mere machines. His philosophy lacked motivation for workers.
4. This approach ignores or excludes the average worker, because of tough competition to be more efficient
and productive.
5. Specialization makes the work repetitive and monotonous. There is no room for initiative and fresh
thinking.
6. It separates the worker from the manager. Management is given the prerogative to manage and worker
has the duty to work.
7. Taylor concentrated more on problems of factory management and did not touch upon the general
management like planning, coordinating, controlling etc.
CONTRIBUTIONS BY PETER F. DRUCKER
Among contemporary management thinkers, Peter F. Drucker has made the most outstanding
contributions and he outshines all others. He was born in Vienna in 1909 and has varied experience.
He served as a newspaper correspondent, an economist, a management consultant in different
countries, a teacher of various disciplines and was a Professor of Philosophy and Politics, Professor
of Management and Professor of Social Sciences. He is thus a combination of versatile professor, a
leading management consultant and a great management thinker.
However, the following are some of his most important contributions.
1. Nature of Management.
2. Organisation.
3. Functions of Management.
4. Management of Objectives.
5. Futurity and Organizational Changes.
CONTIBUTIONS OF MC GREGOR
McGregor was a social psychologist and professor at Massachusetts Institute of Technology, U.S.A.
He was a leading expert on personal relations. His famous works included: The Professional Manager,
Leadership and Motivation, The Human Side of Enterprise.
McGregor is known for the development of a theory on Motivation. He named it as Theory X and
Theory Y. Theory X represents the traditional and narrow view of human nature. Theory X assumes that
the average worker is lazy and dislikes work. He is unambitious, avoids responsibility and prefers to be
led. He does not bother about the organizational objectives as he should be directed to achieve these
goals . This theory explains many of the observable features of human behavior.
There were instances where productivity increased in the absence of control and coercion.
McGregor gave Theory Y as an answer to such situations. As per this theory people are not lazy by
nature as Theory X supposes them to be but the treatment in the organisation makes them so. The work
to people is as normal as play and rest. They will exercise self-control and self-direction. People are
ready to accept responsibility under proper conditions. This represents a modern and dynamic nature of
workers. An organisation designed on the basis of Theory Y will assume decentralization, participation
of leadership and two-way communication.
CONTRIBUTION OF ELTON MAYO
Elton Mayo born as George Elton Mayo on December 26, 1880, Australia. In the year 1926, he
became the professor of industrial research at Harvard University. He got a scholarship to do
research at Pennsylvania's Warton School. During his time in Pennsylvania, he conducted the
experiment which made him famous, the Hawthorne Experiment.
Elton Mayo is widely regarded as the “father of the human relations movement,” as well as the
“father of HR” and “father of scientific management.” Mayo was involved in several scientific
studies of organizational psychology in the early twentieth century, including the Philadelphia
Spinning Mill Studies and the Hawthorne Experiments, which were influential in the development of
corporate culture in the US.
Elton Mayo's contribution to management theory helped pave the way for modern human
relations management methods.
 Based on his well-known Hawthorne experiments, Mayo's management theories grew from his
observations of employee productivity levels under varying environmental conditions. His
experiments drew a number of conclusions about the real source of employee motivation, laying the
groundwork for later approaches to team building and group dynamics. Mayo management theory
states that employees are motivated far more by relational factors such as attention and camaraderie
(mutual trust and friendship) than by monetary rewards or environmental factors such as lighting,
humidity, etc.
Elton Mayo developed a matrix which he used to illustrate the likelihood that a given team
would be successful. His matrix demonstrates the role that varying combinations of group norms and
group cohesiveness play in team effectiveness.
MANAGEMENT AS AN ART
An art is often regarded as the systematic application of skill or knowledge in effecting
accomplishment of results. It represents the methods or ways of doing specific things and indicates
how an objective is to be achieved. The function of art is to effect change and accomplish results
through deliberate efforts. Art is a personalized process and every artist has his own style. It is
practice-based and perfection in it requires continuous practice over a long period of time.
The main elements of art are:
a) Personal Skill
b) Practical Knowledge
c) Result – oriented approach
d) Regular Practice
e) Creativity
1. Like any other artist, a manager also uses his knowledge and skill in coordinating the activities
of people in the organisation. Management is an art of dealing with people to accomplish
desired results.
2. Management is concerned with the application of knowledge and skill. Unless managerial
principles are used for making the things effective and better, these will not be covered in art.
3. Management is result oriented because it is concerned with accomplishment of objectives. It
aims at achieving maximum productivity at lowest costs.
4. Like an artist, management always tries to attain higher and higher goals in order to reach the
state of absolute perfection. This efficiency and effectiveness is attained through regular
practice.
5. Every art has an element of creativity and in this sense also management is one of the most
creative art as it is concerned with getting work done through others by motivating them to work
and coordinating their activities.
MANAGEMENT AS A SCIENCE
The word science literally means knowledge. It is a systematized body of knowledge acquired
by mankind through observation and experimentation which is capable of verification. The basic
difference between art and science is that art implies knowing, how the application, whereas science
is concerned with knowing, why?
Essential features of science are as follows:
1. It is a systematized body of knowledge that uses scientific methods for observation.
2. The principles are evolved on the basis of continued observation.
3. The principles are exact and have universal applicability without any limitation.
4. The principles established a cause and effect relationship between various factors.
5. The validity of scientific principles can be verified and they provide a reliable basis for
predicting future events.
 Let us now apply these features of science to management to determine whether it qualifies as
science?
1. Systematic body of knowledge.
2. Continued Observation.
3. Universal Application.
4. Cause and Effect Relationship.
5. Validity and Predictability.
MANAGEMENT AS A PROFESSION
Another question that arises in regard to the nature of management is whether management can be regarded
as a profession or not. To determine this, we must understand the meaning and special attributes of profession.
This dictionary meaning of profession is a “calling in which one professes to have acquired specialized
knowledge, which is used either in instructing, guiding or advising others.” The term “profession” has been
defined in a variety of meanings by different authors.
Hodge and Johnson “Profession is a vocation requiring some significant body of knowledge that is applied
with high degree of consistency in the service of some relevant segment of society.”
E. McFarland lays down the following criteria or special attributes in a profession.
1. The existence of a body of specialized knowledge or techniques.
2. Formalized method of acquiring training and experience.
3. The establishment of representative organisation with professionalism as its goal.
4. The formation of ethical codes for the guidance of conduct.
5. The charging of fees, based on services, but with due regard for the priority of service over the desire for
monetary reward.
 Let us now apply the above-mentioned attributes to ascertain the status of management as a
profession.
1. Body of specialised knowledge and techniques.
2. Formalised methods of acquiring, training and experience.
3. Establishment of professional associations.
4. Code of Conduct.
5. Priority of service over economic considerations.
MANAGEMENT AND ADMINISTRATION
There is a controversy on the use of these terms. Some authors say that administration and
management are the same thing and there is no difference between the two words while others feel
that they are different, various view points are discussed as such:
1. Administration is above management.
2. Administration is a part of management.
3. Administration and Management are one.
 DISTINCTION BETWEEN ADMINISTRATION AND
MANAGEMENT
Basis of Administration Management
Difference
Nature of Work It is primarily concerned with the determination of It is doing function, it involves the implication of
objectives and broad policies. It is a thinking plans and policies.
function.
Scope It takes major decisions and is a wider term than It takes the decision within the framework of
management. administration.
Level of It is a top management function. It is a lower level management function.
Authority
Status It consists of the owners of an enterprise. It consists of managerial personnel with specialized
knowledge who may be the employees.
Main Planning and control are the main functions at this Directing and Organising are the main functions at
Functions level. this level.
Skill Required Conceptual and human skills required. Technical and human skills are required.

Nature of Generally, it is used in relation to government, It is used mainly in business firms which have
Organisation military, educational and religious organisations. economic motives.
Influence Its decisions are generally influenced by external Its decisions are influenced by internal factors such as
factors such as social, political, legal, etc. values, beliefs and opinions.