FUNDAMENTALS OF

BUSINESS ADMINISTRATION
PRINCIPLES OF
MANAGEMENT
 THREE MAIN CLASSIFICATION
OF MANAGEMENT
• CLASSICAL APPROACH –
(Traditional Management) which
studies technical activities,
division of labor, specializations
and their co-ordination along the
chain of command.
• HUMAN RELATION’S
APPROACH – which
concentrates on the needs of
the individual and views
organizations from the point of
view of group behavior.
- emphasis is on employee participation
and co-operation.
• SYSTEMS APPROACH – which
views organizations from the
point of view of a decision-
making system. Concentration is
on information needs of decision-
makers and the design of
communications channels.
 NATURE OF MANAGEMENT
The activities of industrial undertakings can be
divided into the following :
• Technical (Production)
• Financial (Provision and Utilization of Capital)
• Commercial (Buying and Selling)
• Accounting (Recording, Costing, Preparation of
Accounts, Control Information)
• Security (Protection of Property and Persons)
• Management is a separate skill, though many
person who exercise a managerial function
may have been trained in one or more of
those techniques.
• The chief difference between the skill of
management and the skill exercised in other
crafts or callings is its human or social
character, it’s a responsibility exercised over
other people.
 FUNCTIONS OF MANAGEMENT
• Planning – determining the broad lines
for carrying out the operations and
planning the appropriate methods for
effective action.
• Control – checking current performance
against predetermined standards and
recording the experience gained as a
guide to future operations.
• Co-ordination – balancing and keeping
the team together by a suitable
allocation of work among the members,
and seeing that harmony is preserved
among them.
• Motivation – getting all members of the
team to pull their weight effectively, to
give their loyalty to the group so as to
carry out properly the activities allocated
to them.
 PLANNING
• It is similar to policy formulation.
Where policy is concerned with
future courses of action in general
terms, plans provide detailed
instructions to implement policy.
• The aim of planning is to determine
the requirements for attaining
certain objectives.
 CONTROL
• The control process falls into three parts :
- setting standards of performance for a
particular task.
- checking how the task is currently
performed,
- correction of deviations of current
performance from planned performance
• To be effective, control must be
operated as a continuous process,
otherwise deviation from planned
performance may pass unnoticed or
adjustments to rectify failures may
be based on insufficient information
and prove ineffective.
 CO-ORDINATION
• When a variety of tasks are to be
performed by different types of people,
each possessing different skills and
capabilities, co-ordination is needed.
• The idea of co-ordination is to integrate
individual efforts to produce a
homogenous team.
 MOTIVATION
• This involves directing people as a
group towards some given aim and is
partly a question of management
leadership.
• The aim is to inspire people to direct
their efforts to a common purpose so
as to induce high morale.
 POLICY FORMULATION
• The importance of “policy” lies in
providing management with a view
of the intentions of the Board of
Directors concerning the affairs of
the enterprise and provides basis for
day to day decisions.
 POLICY FORMULATION MUST CONSIST OF
TWO TYPES OF STATEMENTS
• GENERAL POLICY – consisting of
statements of objectives and general
principles which constitute a set of
standards governing company
operations
• SOCIAL POLICY – designed to give
detailed instructions to various
sections of the organization.
 POLICY IMPLEMENTATION
• To make full contribution to the success of an
enterprise, management decisions must be
based on clear policy directives setting out the
general characteristics of the activities to be
pursued to achieve the concern’s objectives.
 FRAMEWORK OF MANAGEMENT
• An important responsibility of
management is the design and
maintenance of an organization
structure. This provides framework
within which the process of executive
control can exist.
• It also provides part of the mechanism
for discharging management
responsibilities
• The line executives are functional executives
who provide specialized services and act in an
advisory capacity to the line executives.
 SPAN OF CONTROL
• The limitation of human ability and time make
it necessary to divide an organization into
areas of responsibility under the control of a
manager.
• The number of immediate subordinates
whose activities the manager is expected to
supervise is known as the Span of Control.
 FACTORS THAT NEED TO BE CONSIDERED
WHEN REACHING A DECISION

• The nature of the work done

• The quality of the superior and
the subordinates
• The cohesiveness of the
subordinate group
 PROCESS OF DELEGATION
• Administrative organizations by their
very nature create executive/
subordinate relationship and it is
vital that these relationships are
wisely defined and clearly
understood.
 LEGAL AUTHORITY
• When an individual is
permitted to take an
action.
 TECHNICAL AUTHORITY
• This stems from an
individual being
recognized as an expert
in some particular field.
 ULTIMATE AUTHORIY
• This is concerned with the
original source from which
the right to take a certain
action is derived.
OPERATING AUTHORITY
• Operational level can be
stated as giving someone
permission to do certain
things.
CLASSIFICATION OF AUTHORITY

• GENERAL LIMITS
• SPECIFIC LIMITS
 LIMITS OF AUTHORITY
• Responsibility cannot be
delegated
• Dual subordination must be
avoided
• Authority should equal
responsibility
 CENTRALIZATION
AND
DECENTRALIZATION
 CENTRALIZATION
• The concentration of the
management and decision-
making power at the top of
an organization’s hierarchy.
 DECENTRALIZATION
• Transfer of authority from central to
local government
• Is the process by which the activities
of an organization particularly those
regarding planning, and decision
making are distributed or delegated
away from a central, authoritative
location or group.
 FACTORS OF MANAGERIAL STYLE
OF ORGANIZATION
• The size of the understanding
• The extent of diversification of the
enterprise
• The type of technology in which the
company operates
• The ability of middle and junior
management
• The effectiveness of communications
systems within the company
ADVANTAGES OF CENTRALIZATION

• Better overall managerial

control
• Standardization
• Increased economy and
flexibility in the use of
resources
ADVANTAGES OF DECENTRALIZATION

• Improving morale
• Avoiding frustration of middle
and junior managers
• Minimization of bureaucracy
 DISADVANTAGES
• The reluctance to delegate which may stem
form lack of confidence in subordinates
• The lack of ability of executives to
communicate to subordinates what is required
• The absence of adequate controls to give
warning of impeding problems
• Difficult due to subordinates attempting to
avoid responsibility for such reasons as
preferring to rely on their people
• The fear of criticisms for mistakes
• The lack of necessary information
and resources
• An already full workload
• Lack of self-confidence
• Lack inadequacies of any positive
incentives
 LEADERSHIP
• This is the ability to inspire others by
personality and example.
• It means the manager’s ability to
choose the right subordinates to
weld them into a team and to bring
out in them the need for self-
discipline
• Leadership implies that the manager
accepts responsibility for
achievement of the group objectives,
but it also implies that he cannot
achieve it alone and that he requires
the co-operation of his team.
• The importance of the individual is becoming
more recognized. Before person can be
induced to behave in certain desirable ways, a
knowledge of human psychology is needed.
• A management policy to improve human
relationships must be a long-term one as such
changes do not happen overnight-often the
mere act of attempting to improve the
situation is treated with doubt.
 DECISION MAKING
• Falls the manager to make
decisions during the course of
every working day.
 KINDS OF DECISIONS
• Initial plans are formulated by senior
management and communicated down the
line to lower levels. Each manager decides
the action required of his department or
division in order to meet stated objectives
• In the execution of plans, employees may
face unforeseen problems and will require
their immediate manager to clarify past
policy decisions or revise them
• Whereas the circumstances may be
such that there is plenty of time in
which to arrive at a decision,
situations will inevitably occur where
a crisis develops and there is very
little time to obtain all the
information necessary for a decision.
 STAGES IN DECISION MAKING
• The manager must have a clear
understanding of the aims and
objectives of the business which will
provide the basis of all decisions.
• The circumstances giving rise to a
decision must be fully analyzed and
the maximum amount of relevant
information obtained.
• The information will probably suggest
various alternative courses of action that
could be taken, and the manager must
compare there the cost, likely outcomes
and effects on other departments.
 FACTORS THAT AFFECTS
DECISION MAKING
a. How urgent is the matter?
b. Has the manager the authority to give a
decision?
c. What are the financial implications of
the decision?
d. What information is available?
e. How long will it take to obtain additional
information, and at what cost?
 THE SOCIAL RESPOSIBILITY OF
MANAGEMENT
Management must admit wider
responsibilities than those contained
in its constitution than the mere
provision of a service in the case of a
nationalized body, or the making of
profits in a private enterprise
organization.
 RESPONSIBILITIES ARE AS
FOLLOWS
• To the staff and work people
• To the Trade Unions
• To other members of the
industry
• To customers
• To society
COMMITTEES