Chapter 1: The Basics of

Management
 What is Management?

Management is defined as a process of getting things done with the aim of acioeving
goals effectively and efficiently.

1. Henry Fayol:Henri Fayol was father of modern management, was an early

management writer who was instrumental in contributing immensely to ‘formal
organization theory’.
Fayol's administrative management theory can be described as an approach to
management and increasing productivity by emphasizing organizational structure and
human behavior. Fayol's theory is grounded in the five functions that represent
management: planning, organizing, command, coordination, and control.
 What is Management?

2. F.W. Taylor: He was known as a father of Scientific management, also known as

‘Taylorism’, is a management theory which was used for analysing and synthesizing
workflows with the main objective of improvement of economic efficiency and labour
productivity. Several parts of the theory, relating to industrial engineering and
management, are still relevant. Famous book is “ Principles of Scientific management”
 What is Management?
3. Peter F Drucker: Famous book “ Management : task, Responsibilities, practices

So finally “Management is not common sense alone but a discipline, a culture and an
art and science at the same time. It represents people, and their achievements or
failures denote the effectiveness of management or mismanagement of the
organisation’s affairs. “
Management Process
 Functions of Management?

1. Planning: planning involves setting of goals, determining the objectives of the

organization and selecting the future course of action required to be taken for
accomplishing the objectives of the organization.
It is deciding in advance about what needs to be done, when & where it needs to be done,
how it shall be done & who would be doing it.
 Functions of Management?

2. Oraganizing: Organising deals with the organizational structuring & arranging the
resources of the organization, viz. the people employed by the organization, the
materials, capital and technology used for achieving the objectives of the enterprise.
Organising involves taking decisions about division of work, allocation of responsibility
and authority & task coordination.
a) Task Management – What is to be done? Who will do it? How the grouping of tasks
shall be done?
b) The Reporting Structure – Who shall be reporting to whom?
c) Decision Making – Who shall make the decisions? At what level, decisions shall be
made?
 Functions of Management?

3. Staffing: Staffing refers to the continuous process of finding, selecting evaluating and
developing a working relationship with current or future employees. The main goal of
staffing is to fill the various roles within the company with suitable candidates.

4. Directing : Directing covers the functions of guiding and supervising the activities
performed by subordinates. It is not enough to recruit and place people on jobs. They
have also to be directed towards the achievement of organisational goals. This function
comprises of the following four important elements:
a. Leadership
b. Motivation
c. Communication
d. Supervision
 Functions of Management?

5. Controlling: The control function deals with monitoring and measuring of

performances of people and comparing them with the pre-decided standards and
projections. This also involves variance analysis and taking remedial measures for
achieving the planned targets.
Controlling involves the following four steps:

(a) Establishing performance standards;

(b) Measurement of actual performance,
(c) Comparison of actual performance against the established standards
(d) Taking corrective actions to achieve the desired objectives.
 Importance of Management?
a) Effective Change Management Tool
b) Helps achieve group goals
c) Optimum utilisation of resources
d) Improved functioning of business
e) Development of various resources
f) Contributes towards better organisation
g) Proper Direction to the organization: Management provides
h) Integration of various interests
i) Management of fluctuations
j) Innovation
k) Inculcation of team spirit
l) Problem solving
m) Helps Employee Growth
 Management Thoughts/Approaches?

1. Classical School
2. Neoclassical/Behavioral School
3. Quantitative school
4. System School
5. Contingency School
6. Contemporary School
 Management Thoughts/Approaches?
1. Classical School
The classical school believes in the use of technology for increasing efficiency of the
employees, & lays down more emphasis on the organisation, looks at the organisation as
a machine & the employees as its parts, who are imp. only as a means of production. The
features of the classical or traditional school include:
(a) Having an integrated & centralised system
(b) Greater emphasis on production
(c) Concentration on errors and their rectification
(d) Assuming employees’ continuity irrespective of organisational changes
(e) Based on an accounting model and
(f) Giving equal weightage to different types of jobs and employees.
 Management Thoughts/Approaches?
2. Neoclassical/Behavioural School:neoclassical approach of
management suggests the participation of workers in management.
The behavioural thought process attempted to solve the problems faced by the classical
theorists. This school of thought propounded the influence of human actions on the very
existence of an organisation. An organisation, according to this theory, comprises of both
formal and informal forms of organization, a fact which was overlooked by the Classical
theorists. This School of Thought had the following salient features:
a) Focus on motivation.
b) Different persons get motivated diversely for satisfying their specific needs.
c) For efficiency measurement, communication is a critical input.
d) For organizational performance, team-work is essential.
e) The thought has two different perspectives, viz. Human Relations perspective and
Psychological perspective.
 Management Thoughts/Approaches?

F ) This school of thought was also the originator of Maslow’s hierarchy of needs,
Douglas McGregor’s X and Y Theory and Motivation-Hygiene Theory.
 Management Thoughts/Approaches?
3. Quantitative School
The scientific management techniques, laid down by Fredrick Winslow Taylor, also
helped in laying down the foundations of this approach. Management is studied as
science under this approach, with special emphasis on operations & management
information systems. The main characteristics of the quantitative approach to
management includes:
A. Creation of models, theories and hypotheses.
B. Collection of empirical data.
C. Development of mathematical and statistical models.
D. Data analysis.
E. Experimenting in controlled environment.
F. Testing with changes in variables.
 Management Thoughts/Approaches?
4. System School
• This school of management thought was propounded by Daniel Katz, an American
Psychologist, & Ludwig Von Bertalanffy, an Australian Biologist.
• They advocated the concept of management being an open system, which is required
to interact with the environment constantly for getting resources, which are both
valuable & limited.
• The main objective of the research undertaken by the systems school was to
understand the external environment & conditions faced by an organisation & finding
ways of handling such conditions.
• The open system approach is important because of the interaction between an
organisation & the outside forces & the outside influence impacting the actions taken
 Management Thoughts/Approaches?

5. Contingency School
• This school of management thought was an offshoot of the scientific, behavioural &
systems approaches to management, & stated that there cannot be a unique way of
managing an organisation & which can be labelled as the best way to manage or lead
a business.
• The best or the optimal way shall always depend or be contingent on the internal and
external environment. In other words, there cannot be a standard solution to various
business situations faced by the management. Each leader might deal with the same
situation in different ways, depending on his/her leadership style.
Management Thoughts/Approaches?
 Management Thoughts/Approaches?

6. Contemporary School
Management theory continues to advance because of constant evolution of business
practices and management techniques, especially in the wake of technological
advancements. Further, continuous research is giving rise to new approaches to
management. The concepts of ‘Total quality management’ and ‘Learning organization’
are quite relevant in this context.
 Management Thoughts/Approaches?

6. Contemporary School
Management theory continues to advance because of constant evolution of business
practices and management techniques, especially in the wake of technological
advancements. Further, continuous research is giving rise to new approaches to
management. The concepts of ‘Total quality management’ and ‘Learning organization’
are quite relevant in this context.
 Management Thoughts/Approaches?

6a. TQM
Total Quality Management focuses on the management of an organisation for delivering
high quality goods and services to its customers. The four main elements of this
approach are:
i. Employee involvement
ii. Customer focus
iii. Standardization
iv. Continuous monitoring
 Management Thoughts/Approaches?
6a. TQM
Deming, Juran and Crosby were three main contributors to the Total Quality
Management approach. William Edwards Deming considered the quality of people more
important than the quality of products and accorded greater importance to how efficiently
the management planned, implemented and improved the projects. He laid down the
following fourteen principles of Total Quality Management:
1. Consistency of purpose
2. Adoption of the new philosophy
3. Ceasing dependence on inspection
4. Stopping lowest bid system
5. Introduction of all-round improvement
6. Instituting On-the-job training
 Management Thoughts/Approaches?

6a. TQM
7. . Instituting leadership
8. Driving out fear
9. Breaking down barriers
10. Eliminating exhortations
11. Eliminating arbitrary numerical targets
12. Permitting pride of workmanship
13.Encouraging education
14.Action for achieving transformation
 Management Thoughts/Approaches?
6b. Learning organization
a learning organization is a company that facilitates the learning of its
members and continuously transforms itself. The concept was coined
through the work and research of Peter Senge and his colleagues. Five
elements of learning organization are:
 Management Challenges

Management faces a lot of challenges for achieving the business objectives and also gets
a lot of opportunities, which need to be properly evaluated in a time bound manner.
Several issues which are faced by the management include:
a) Which business model to adopt?
b) How to manage the information explosion?
c) How to manage the changes taking place every now and then?
d) How to face the threat of globalisation?
e) How to manage the impact of environmental sustainability?
 Strategic Management

“Strategic management is defined as the process by which a firm manages the

formulation and implementation of its strategy”
 Strategic Management

Difference b/w Strategy and Plan?

A plan is an arrangement, a pattern, a programme, or a scheme for a definite purpose. A
plan is very concrete in nature and does not allow for deviation. If “Plan A” doesn’t
work, you don’t alter “Plan A” and try again. Rather, you move to “Plan B;” which may
be totally
 Strategic Management

Type of Strategies:
1.Corporate Strategy: company. It would spell out the general attitude of the company
towards growing and managing its different business lines, products and services. A
corporate strategy may be classified under the three different categories of stability,
growth, and retrenchment.
 Strategic Management

Type of Strategies:
2.Business Strategy: This strategy would normally be prepared at the level of the
business unit or at the level of product or service and it normally highlights the
improvement in the specific industry or market ranking of the business entity’s products
or services produced or delivered by that business unit. A business strategy could be
competitive or cooperatives. Under a competitive strategy, a company might try to
differentiate its services whereas, a company following a cooperative strategy may form
an alliance with other companies to extend its reach to global markets and get a
competitive advantage.
 Strategic Management

Type of Strategies:
3.Functional Strategy: It refers to the approach adopted by functional areas for achieving
the objectives of the business unit and the company by maximizing the productivity of
available resources. It involves the development and fostering a distinctive capability to
create a competitive advantage.
 Strategic Management
Elements of Strategic Management:
 Strategic Management
1.Enviromental Scanning: refers to monitoring, evaluation and dissemination of
information received from the internal and external environments. The information is
provided to the key people in the organisation with the overall objective of identifying
both internal as well as external strategic factors, which can impact the future of the
organisation. SWOT Analysis is one of the easiest ways of conducting environment
scanning.
2. Strategy Formulation: Strategy formulation requires, on the basis of information
gathered from situation analysis, to set strategic direction through business mission and
vision statements, and establish strategic objectives to reach there, and generate,
evaluate and select corporate, business and functional strategies to pursue.
 Strategic Management
3. Strategy Implementation: Strategy implementation is the fine art of detailing: what
all is to be done, when various tasks are to be performed, where are they to be
performed, how they are to be performed and who will perform. Strategy implementation
is the process of executing the strategy - of taking the actions that put the strategy into
effect and ensure that organizational decisions are consistent with it.

4. Evaluation & Control: Strategy evaluation is a logical step to obtain feedback from
strategy’s performance and taking corrective actions, if needed, in the light of constant
external and internal changes. Strategy evaluation is needed because success today does
not guarantee success tomorrow.
 Strategic Management
Benefits of Strategic Management:The three most important benefits of strategic
management are as under:
a) The management gets a clearer sense of strategic vision of the business entity.
b) Management is able to clearly focus on strategically important issues, faced by the
entity.
c) The dynamic environment can be better understood by management.

The Importance of Strategic Management Strategic management continues to be

patronised by big corporates.
 Strategic Management

Phases of Strategic Management

1.Basic Budgetary planning
2.Forecast based Planning
3.Extremly oriented planning
 Business Models

Business models are based on the type of clients to be served, the product offerings, the
revenue earning model, ways of differentiating and sustaining competitive advantages,
and the manner in which products or services are provided. The management of a
business entity shall be able to perform better if it understands the business model
followed by the organisation. Some of the other possible business models are:

a) Solution Providing or Consulting Services Model: Under this model, the business
may provide consulting services which help improve the client’s operations. IBM has
used this
 Business Models

b) Profit Pyramid Model: Under this model, the customers are provided low-priced
products initially and gradually they are moved to expensive products, where the
business earns higher profits. General Motors followed this model.
c) Multi-component Systems Model: Such models have been used by companies like
Gillette and HP. Gillette sold the cheaper razors at no-profit no-loss basis and made
money on High-end razor blades. HP has done it with its printers and ink cartridges,
where once a customer buys the printer, he also becomes dependent on HP for
cartridges. d) Advertisement Model: These models offer the basic product free and
make money through advertising. YouTube, Google etc. are live examples.
 Business Models

e) Switchboard Model: This model allows a firm to acts as an intermediary for

connecting multiple sellers with multiple buyers. eBay, Amazon, Flipkart are businesses
which have used this model successfully.
f) Time Model: This model depends on how fast research and development happens. A
business which pioneers some new idea shall be successful initially, till other
competitors join the bandwagon.
g) Efficiency model: A business following this model just waits for the market to mature
with standardisation of the product and enters with low-cost and low-margin products
with mass appeal. Southwest Airlines, Wal-Mart and Dell have been using this model
 Business Models

h) Blockbuster model: This model is typically used by industries which are having the
protection under patent laws, like pharma and film industry, where profits depend on a
few items and are driven by star appeal.
i) Profit multiplier model: This model involves developing concepts which may or may
not be profitable but are used for driving other products through synergy. The
management looks at the whole picture in such cases. For example, Walt Disney used
cartoon characters for developing theme parks, merchandise, and licensing opportunities,
which gave them huge profits.
 Business Models

j) Entrepreneurial model: This model deals with offering specialized products or

services to clients which are not attractive to large competitors but have potential of fast
growth. There are so many cases today where big companies like Tata’s have acquired
smaller players with potential, e.g., 1MG was acquired by Tata’s.
k) De Facto industry standard: Free products, under this model, may be offered at a
very low cost to increase the market share and for saturating the market to make
everybody talk about the product as a great brand and industry standard. Subsequently,
the users are offered high-end and high-margin products. Microsoft indulged into this
strategy.
Thank You