Business management

Module 1

Introduction to management.

Syllabus:

Introduction to management- meaning- nature , scope and functional areas of management.

Management as a science, art and profession. Management and Administration- principles of
management- managerial roles- Mintzberg model, functions of management- contribution of F W
Taylor and Henry Fayol- ( Levels of management)

Management

Management is the art of getting things done through and with the people in
formally organised groups.- Harold Koontz

To manage is to forecast and to plan , to organise , to command , to coordinate and

to control - Henry Fayol.

Management is the art of knowing what you want men to do and then seeing that it
is done in the best and cheapest way. [Link]

Management is the art and science of decision making and leadership. - D J Clough

Business management

The organising as well as the directing of business activities is known as Business

management.

Management of business organisation or business unit is called Business management.

Nature /characteristics/ features of management.

1) Goal oriented.

Group efforts of management are always directed towards achievement of a

common goal. If there is a predefined goal in the organisation , management can organise all other
activities for attainment of that goal. So management is goal oriented.

2) Management is a process.

Management is a process because it comprises a series of interrelated functions

such as planning, organising, directing and controlling that leads to the achievement of desired
objectives.

3) Management is a social process.

Management is concerned with effective utilisation of scarce resources like money,

materials, men etc. Among this , management of men is the most complex. It is through
management of human being , management of all other resources takes place. So management is a
social process.

4) Management is a continuous process.

Management is an ongoing process. It has to performed continuously. The cycle of

management continuous to operate till the attainment of group goals.

5) Management is dynamic.

Management is not static. The principles of management change with changes in

business environment . So management is a dynamic function.

6) It is a system of authority.

Authority means right to give orders and power to get them executed. Authority
enables the managers to perform their functions effectively.

7) Intangible forces.

Management is unseen or invisible force. It cannot be seen. But its presence can be
felt everywhere in the form of results.

8) Management is an art.

Art requires personal skills and application of knowledge . Management is an art

because it requires personal skills and application of knowledge of managers .

9) Management is a science.

Management is an organised body of knowledge consisting of well defined concepts

, principles and techniques which have wide application. So management is a science.

10) Management is a profession.

Management is a specialised body of knowledge that can be imparted through

formal education..

Scope and functional areas of management

(Functions of Management)

Management consist of a series of actions for attainment of given objective . A

number of steps are involved in this process and this can be termed as functions of management.
The process of management consist of several activities. These activities can divided into two groups

1) Managerial functions ( Functions of management)

2) Organisational functions (Functional areas of management)

1) Managerial functions.
 The activities performed by a manager for the achievement of organisational goals
are called managerial functions . It consists of

a) Planning.

It is the process of deciding in advance what, when , where and how it

should be done. Planning is thinking before doing. Planning is concerned with selecting from
alternative course of action. Planning is a continuous process that takes place at all levels of
management.

b) Organising.

Organising is the process of establishing authority –responsibility

relationship among the members of the enterprise. The network of authority –responsibility
relationship is known as organisational structure.

c) Staffing.

Staffing is the placement of right persons at the right job . Staffing is the process of
filling all positions in the organisation with qualified personnel. It include manpower planning ,
recruitment , selection , communication , appraisal, training, compensation , development of
employees etc.

d) Directing.

Direction is concerned with execution of plans and policies. It involves guiding ,

supervising, motivating and leading people towards the attainment of targeted performance. The
element of direction are leadership , motivation and communication.

e) Coordinating.

Coordination refers to create a link between various activities of the organisations

for obtaining the desired results. The integration of all activities in an organisation is called
coordination.

f) Controlling.

It is the process of checking whether actual performance is in tune with the planned
objectives. it involves:

 Establishment of standards.

 Measurement of performance.

 Comparison between actual and standards.

 Taking corrective action.

Organisational functions
 The operational areas of management is called organisational
functions or functional areas of management. It consists of:

a) Production management

Production means conversion of raw materials into finished products.

Production management is considered as a branch of management which deals with systematic /
scientific planning for the conversion of raw materials into finished products. It includes:-

 Plant location and layout

 Production policy

 Material handling.

 Research and development

 Repairs and maintenance.

b) Marketing management

Marketing management is the identification of consumers needs and supplying them

the goods and services. It includes:-

 marketing research.

 Development of products.

 Pricing.

 Channels of distribution.

 Advertising and sales promotion

c) Financial management.

Financial management is concerned with the raising and utilisation of funds of the
organisation at the right time and at reasonable cost. It involves:-

 Estimation of capital requirements

 Determination of source of funds.

 Determination of capital structure.

 Developing dividend policy.

d) Personnel management.

Personnel management deals with the effective control and use of manpower in the
organisation. It consists of:-

 Manpower planning.

 Recruitment and selection

 training and development.

 Compensation.

 Employee welfare.

e) Office management.

Office management refers to the techniques of planning , coordinating and control

office activities with a view to achieve organisational goals. It includes.

 Planning office activities.

 Organisation of the office.

 Controlling office activities.

 Providing the required information to various department.

Importance of management.

1) Determination of objectives.

The objectives of the organisation are determined by the management. No

organisation can succeed unless its objectives are identified and well defined.

2) Optimum utilisation of resources.

Only through right management , the business can economically and effectively
utilize the scarce resources like land , labour, materials, money etc. for the benefits of the
organisation.

3) Accomplishment of group goals.

It is the management which makes people to realise the objectives of the group and
direct their efforts towards the achievement of this objectives.

4) It helps in reducing cost of production.

By proper management , the various elements of production like men . Money,

materials , machinery etc. can be effectively utilised. This will ultimately reduce the cost of
production.

5) Helps in meeting the challenges of change.

 By proper planning , appropriate changes can be introduced in the operation of
business. This will help the business in meeting the challenges of change.

6) Helps in national growth.

With the help of proper management , organisation can create quality products and
services for the country and provide employment opportunities. It also helps in industrial growth.

7) Coordinating human efforts.

By providing leadership and guidance to the workers , management helps in

coordinating human efforts in the organisation.

Objectives of Management

 Run the organisation smoothly.

 To organise the expert personal for work.

 To utilise all the resources economically.

 To assess and evaluate the performance of work periodically.

 To draft policies for promoting industrial peace.

 To provide expansion of business.

 To prepare plans for future development.

 To promote economic development.

Management as a Science,

Science is a systematic body of knowledge acquired through observation and

experimentation and is capable of verification.

Characteristics of science.

 Systematic body of knowledge.

 Establish cause and effect relation.

 The principles should be verifiable.

 Universal application.

 Ensure predictive results.

Management can be considered as a science because:-

  Management has an organised body of knowledge built by management thinkers .

 Management principles are laid down after scientific enquiry and experimentation.

 Being an organised body of knowledge it establishes cause and effect relationship.

 Management principles has universal application.

Management can be considered as an Art because:-

 Management requires the use of knowhow and personal skills.

 The process of management is directed towards the accomplishment of concrete results.

 Management requires practical applications.

 Managers uses his own approach to solve the problems.

So management is an art of getting things done through others by motivating and

inspiring them.

Management as a profession.

Profession is an occupation requiring specialised knowledge and training

acquired after a formal system of study. The knowledge so acquired should be used for instructing ,
guiding and advising others.

Requirements of profession.

 Specialised body of knowledge.

 Formal method of acquiring training and experience.

 Professional association.

 Code of conduct.

 Priority to service rather than economic consideration.

Management satisfies the essential requirements of profession.

 Management is a specialised body of knowledge developed by its own thinkers.

 There is a formal system of education to acquire the knowledge in management.

 Professional management associations are established to regulate the activities of its

members and lay down code of conduct to them.

Eg. All India Management Association.

National Institute for Personal Management

 Management involves the application of expert knowledge for the service

 of society. Managers recognise their social responsibilities towards customers , workers and
other groups.

Management and administration.

Administration is concerned with the determination of overall objectives and policies of an

organisation. It is a decision making body of the organisation. There are three view points regarding
administration and management.

1) Management and administration are different.

2) Administration is a part of management.

3) Administration and management are same.

1) Management and administration are different.

The functions of management and administration are different. Administration

involves thinking functions, management involves the doing functions. The objectives and policies
are determined by the administration. Management deals with executive functions of direct
human efforts to achieve the desired results.

2) Administration is a part of management.

Management includes all functions like planning, organising, staffing, directing and
controlling. Administration is concerned mainly with planning process which is apart of
management.

3) Management and administration are same.

Management and administration involves the same work and there is no real
distinction between the two. Same set of persons perform both this functions . Management can be
classified into two.

a) Administrative management – laying down goals and policies.

b) Operative management - Implementation of policies.

2) On the basis of Usage.

Administration Management.

 It is used in case of non business Commonly used in business

organisation like govt., social organisation.

cultural organisation.

 Administration refers to the Management refers to

owners of the organisation employees of the organisation

who gets a share in profit. who gets remuneration in the

 form of salary.

 Administrators are influenced managers are influenced by

by public opinion, social and their own opinion and beliefs.

religious customs.

Levels of management

Levels of management is the arrangement of managerial positions in an

organisation. The chain of superiors and subordinates in various management positions in an
organisation is known as levels management. The number of levels of management depends on size
, technology , range of productions etc.

Basically there are three levels of management.

1) Top level management.

2) Middle level management.

3) Lower level management.

Top level management.

Top level management is the policy making group responsible for overall
direction and success of all company activities . It consist of Board of Directors and General managers
. It is the source of authority.

Functions

 Set objectives and goals of the organisation

 Decide the policies and plan.

 Control the operations of the business.

 Maintaining relation with outside agencies like government, trade union, general public etc.

Middle level management

Middle level management is concerned with the implementation of

plans and policies laid down by the top management. It consists of functional department heads . It
acts as a connecting link between top management and lower level management.

Functions

 Interpret the policies of top management.

 Execute the plans laid down by the top management.

 To make plans for sub unit of the organisations.

  To recruit and select supervisory staff.

 Motivate the staff.

 To report to the top management.

Lower level management

Lower level management is concerned with execution of work. It consist of foreman,

supervisors, accounts officers, sales officers etc. It is also known as operative level, supervisory level
or first line managers.

Functions.

 To plan day to day work.

 Supervise and guide workers.

 To arrange materials and equipments required for production

 Maintain good relations and solve the problems of workers.

 To provide on the job training to workers.

 Send periodical report to the middle management.

Managerial roles ( Mitzberg model – 1973)

Managerial role stands for the specific pattern of behaviour associated with the
managerial task. Henry Mitzberg conducted a detailed study of managerial activities. Mitzberg
identified 10 basic roles performed by managers and classified them under three heads.

1) Interpersonal roles.

2) informational roles

3) Decisional roles.

1) Interpersonal roles.

It is concerned with interacting with people inside and outside the organisation. A
manager plays the following interpersonal roles.

a) As a figurehead.

In this role a manager performs routine duties of legal nature as head of an

organisation. It includes:

 Signing on legal documents.

 Receiving official visitors.

  distribute gifts to retiring employees.

 Attend social functions of subordinates

 b) As a leader.

 A manager serves as a leader of the group. As a leader he is concerned with

hiring , training, motivating and guiding subordinates.

 c) As a liaison.

 A manager acts as a liaison between outsiders and the organisation. He

maintains mutually beneficial relations with other organisation , governments , industry
groups etc.

 2) Informational roles.

 Informational role of a manager is concerned with serving as

a point for exchange of information . It includes :

 d) As a monitor.

 As monitor , a manager seeks and receives information about his

organisation and outside environment. This information is collected through reports ,
periodicals , personal contacts , observations etc.

 f) As a disseminator.

 As a disseminator , managers transmits information to subordinates

and superiors with in the organisation by holding staff meeting, sending reports , making
phone calls etc.

 g) As a spokesman.

 In this role , a manager speaks for his organisation and transmitting

information on plans , policies, and actions of the organisation to outsiders.

 3) Decisional roles .

 Making important decisions on behalf of the organisation is the

decisional role of a manager. It includes:-

 h) As an entrepreneur.

 Initiating changes and improvements in the activities of the

organisation are the role of a manager as entrepreneur . Launching new projects or products
is an example manager as entrepreneur.
 i) Disturbance handler.

Taking charge and making corrective action on unexpected crisis

faced by the organisation is the role of manager as disturbance handler.

 j) As a resource allocator.

 Distribution of resources – money, materials, machinery and man

power – of the organisation is the role of manager as resource allocator.

 k) As a negotiator.

 Represent the organisation in bargaining and negotiations with

outsiders and employees are the role of a manager as negotiator.

 Bargaining with trade union.

 Negotiating with suppliers.

Contribution of F W Taylor and Henry Fayol

F W Taylor (1856- 1915) Father of scientific management

Scientific management is the art of knowing exactly what you want men to do and
seeing that they do it in the best and cheapest way. Taylor thought that there was “ one best way of
doing things” applicable to all situations.

Scientific management can be studied in two parts

Elements and tools of scientific management.

Principles of scientific management.

Elements and tools of scientific management.

Taylor suggested the following elements of scientific management.

1) Scientific task setting.

Organisation must set a standard task which an average worker should do in a working day.

2) Work study.

It is the analysis of the work to be performed by eliminating unnecessary operations and

finding out quicker and cheapest way of doing the work. Work study includes:-

a) Method study.

This study is conducted to know the best method of doing a particular job.

b) Motion study.

It is the study of movements of a machine or a machine operator . Its

purpose is to eliminate useless motions and find out best method of doing a work.

c) Time study.

This is an art of observing and recording the time required to do each

detailed element of an industrial operations.

d) Fatigue study.

It is the study relating to physical or mental fatigue caused by long working

hours without rest.

3) Standardisation of tools and equipment.

Proper tools and equipments are essential for increasing the speed of work.
Taylor wanted to use the best way of doing the work.

4) Scientific selection and training.

Workers should be selected by considering their education , experience ,

attitude towards work etc. Proper training should also given to improve efficiency.

5) Differential piece wage system.

If the worker finishes work within the standard time or produce more than
standard output within the standard time , he will be given higher piece rate . On the other hand , if a
worker is below standard , he shall be given lower piece rate.

6) Introduction of functional foremanship

According to Taylor , the two functions of planning and doing should be

separated . The planning section should concentrated on planning the task and doing section issues
instruction to workers for implementing them.

7) Mental revolution.

There should be change in mental attitudes of both workers and management .

Mutual understanding and cooperation between management and workers is an essential aspect in
this mental revolution.

Principles of Scientific management.

1) Replacement of old rule of thumb.

Every work should be properly planned before it is carried out. Through

scientific analysis , the best method of doing a work can be developed.
 2) Scientific selection and development of worker.

The workers should be scientifically selected , placed and developed . Management is

responsible for their scientific education and training.

3) Cooperation between labour and management.

There should be cooperation between the management and the workers .

Management should treat the workers as partners and workers should develop a sense of loyalty
towards business.

4) Maximum output.

The management and workers should try to achieve maximum output in place of
restricted output. Maximum output and better utilisation of resources will bring higher profit for the
employer and wages to workers.

5) Equal division of responsibility.

There must be equal division of responsibility and work between the managers and
the workers . The management should be responsible for planning and organising the work. Workers
should be responsible for the execution of work as per the instructions of the management.

Universality of management

Management principles has universal application. The problem of

management presents in all joint activities whether in the family, school, college, small business unit
big company or trade union .management is a universal process. An efficient manager can manage
any kind of institutions without much difficulty. This is known as universality of management.

The management principles are universal. But their practices may differ from
country to country or from organisation to organisation even within the same country. Therefore, the
knowledge of management can be transferred from one country to another country , though its
practice may differ from country to country. The science of management ( Basic principles) is
universal, while the art or practice of management ( application of management principles) is
culture bound and differs from one situation to another.

General principles of management.

 Henry Fayol, the father of modern theory management has put forward fourteen principles
of management. It includes :-

1) Division of work.

It is the process of sub dividing the total work into small elements and handing over
each element to a particular worker. Division of work reduces cost and increase productivity.

2) Parity between Authority and responsibility.

Authority is the right to give orders and responsibility is the obligations to perform
the work in a manner directed by authority. There should be a balance between authority and
responsibility in the organisation.

3) Discipline.

It means the willingness on the part of employees to obey rules and procedures of
the organisation . Good discipline promote team work among the workers

4) Unity of command.

Means a subordinate should get orders from one superior only at a time. He
should be accountable with one superior. If a person is getting instructions from more than one
superior at a time , it may create confusion and conflicts in the performance of workers.

5) Unity of direction.

means one unit ,one plan . Activities which have a common objective must
be grouped together and must be under one head.

6) Subordination of individual interest with general interest.

Interest of the organisation should prevail upon the interest of individual.

Organisation is important than individual .

7) Remuneration.

Workers should be paid reasonable and fair wages .Proper remuneration

motivate the workers and improves their performance.

8) Centralisation.

Centralisation means concentration of authority in one place or one level in

the organisation . Decentralisation means dispersal of authority to the lower level . Fayol advocated
a centralised management.

9) Scalar chain.
 The line of authority that exists in an organisation from top executive to the
lowest executive is known as scalar chain. If the chain is clear from the top to bottom , it will ensure
smooth functioning of the concern.

10) Order.

It is concerned with arrangement of material and placement of workers.

Material order:- having a place for all materials and keeping them in their

right place.

Social order:- Arrangement of people – right man is assigned the right

job.

11) Equity

Equal treatment to all the workers .Superiors should be impartial while dealing with
their subordinates.

12) Stability in tenure of personnel.

Managers and workers should not be shifted from their positions frequently . A
person need some time to adjust with new situation . So he should be provided with enough time.

13) Initiative.

Initiative implies the creativity of the individual. Fayol suggested that subordinates
should given some opportunity to take some initiative in making and execute the plans.

14) Espirit de crops( Union is strength)

Managers must develop a team spirit among workers in the organisation. Group
efforts is more productive than individual efforts.

Two enemies of espirit de crops:-

Divide and rule.

Absent of written communication

Comparison between Taylor and Fayol

Basis Taylor Fayol

Emphasis More attention to shop More attention on

and factory management the functions of

management at top.
Level of work He worked from bottom He worked from top to

to top level bottom.

Personality He was a scientist He was a practioner

Major contribution Scientific management Theory of management.

Popularity Father of scientific Father of modern theory

management of management.

Unity of command Unity of direction

 Subordinate should receive orders One unit one plan for the group

and instructions from one superior having same objectives.

only

 It is related to the functioning of It is related to functioning of a

personnel department.

 It is necessary to fix responsibility It is necessary for sound

of each subordinates. Organisation.

 To avoid conflicts in the to avoid duplication of efforts

organisation and wastage of resources.