Business Studies
Revision Notes Grade 12
Chapter 1 Nature and Significance of Management
Definition of Management
“Management is defined as the process of planning, organising, actuating and
controlling an organization’s operations to achieve coordination of the human
and material resources
essential in the effective and efficient attainment of objectives.”
Robert L. Trewelly and M. Gene Newport
Concept of Management
Management is a process that aims to bring the efforts of the people working in
the organisation to achieve a common objective effectively and efficiently.
● Process: The term process refers to the primary activities performed in an
organisation by the management to achieve the objective. It includes planning,
organising, staffing, directing and controlling.
● Effectively: The term effectively refers to the completion of the given task in
the allotted time frame.
● Efficient: The term efficient means completing the task within minimum cost
as well as optimum utilisation of resources.
Difference between Effectiveness and Efficiency
Characteristics of Management
1. Goal-Oriented Process: Every organisation has its own set of objectives to
achieve as a result. It is through management that the efforts of the people
working in the organisation are directed towards the accomplishment of these
objectives. Hence, we can say management is a goal-oriented process. It is
fruitless to operate if an organisation doesn't have a set goal.
2. All Pervasive: Management is a universal process. It is necessary in all
types of organisations whether big or small and is performed at every level of
authority; top, middle or lower. The five activities of management are the same
for all organisations irrespective of economic, social or political boundaries. It's
just that the methodology differs but the basics and foundation remain the
same.
3. Multidimensional: Management has three important dimensions. These are
as follows:
● Management of work: Every enterprise has a purpose behind its existence.
The major purpose is the performance of certain works for the accomplishment
of results. Management converts the work to be performed in terms of goals
and helps inachieving them. For example: A hospital operates for the treatment
of patients. A supermarket exists for the fulfilment of day-to-day demands of
people.
● Management of people: Management unites the efforts of the group of
individuals working in the enterprise so that they can work together as a team.
Human resources or manpower is said to be the biggest asset of an
organisation. The task of management is to get things done by individuals as
well as groups of people.
● Management of operations: Every enterprise has some basic product or
service to deliver which requires a production process, and a set of operations
where the inputs are converted to the final product, this is the management of
operations.
4. Continuous Process: Management is a continuous process as it consists of
a series of interrelated activities. These functions should be performed in a
systematic and orderly manner and a proper sequence. It is a never-ending
process. The activities include functions like planning, organising, directing,
staffing and controlling.
5. A Group Activity: Management is a group activity as it is concerned with
the efforts of a group of individuals. It unites the efforts of the members in the
group and directs them towards the attainment of a common objective.
6. A Dynamic Function: The business policies and practices of the
organisation need to be changed according to the business environment which
consists of various social, economic and political factors. The world is changing
dynamically in all aspects so economic and political factors. The world is
changing dynamically in all aspects so new practices and conventions must be
followed to cater to the ever-changing needs of the environment.
7. Intangible Force: Management is an invisible It cannot be seen, but it can
be felt through the achievement of objectives.
Objectives of Management
Objectives are the desired results that drive the management to work towards
it. There are three objectives of management:
1. Organisational Objectives: Organisational objectives are those objectives
that are set by the management of an organisation within a predetermined
period. An organisation has different types of objectives to be achieved, these
objectives are determined in consideration of the different interests of the
stakeholders. The main objective of an organisation is the optimum utilisation
of resources most effectively and efficiently. It is further divided into three
parts- survival, profit and growth.
● Survival: Ensuring survival in the market in the long run by making positive
decisions concerning business activities is the primary objective of
management. Earning enough revenue to cover the cost of production is of
utmost importance to an organisation.
● Profitability: Any person or individual who runs a business has the ultimate
objective of earning profit. Management ensures it earns sufficient profit to
meet its various needs. Management makes the best use of men, money,
materials, machinery and other resources to earn profit. A good amount of
profit provides better returns to investors in terms of dividends, interest etc.
● Growth: Management should aim towards continuously improving the
performance of the organisation. It is the general objective of management to
secure maximum results through minimum resources to increase prosperity
and growth. The growth of an organisation can be measured in various ways
and depending upon various parameters. The growth indicators can vary from
organisation to organisation. Some may consider an increase in sales volume,
some may look for an increasing number of products, etc.
2. Social Objectives: Any organisation that operates, doesn't solely have an
objective of profit-making. It also has some social obligations or social
objectives to fulfil towards society. This may differ from organisation to
organisation. For example: Some aim at providing basic infrastructure to the
people living around, some aim at providing maximum employment, and some
aim at producing products that are environment friendly.
3. Personal Objectives: Every individual joins an organisation to pursue their
objectives. Some join for a good package salary, some join for greater
recognition, and some just for survival. So, this depends from individual to
individual. An organisation needs to identify the personal objectives to
integrate them with the organisational objectives to bring harmony to the
organisation.
Importance of Management
1. Achievement of group objectives: Management creates coordination and
team spirit in the group of individuals. Management also inspires the members
of the groups to make their best contribution towards the achievement of the
common objective. This common objective is set by the management itself.
2. Optimum utilisation of resources: Management brings together men,
money, materials, and machines in the right proportion to reduce cost and
maximise production.
3. Minimisation of Cost: Management improves efficiency and reduces cost
through better planning, sound organisation and effective control. By
eliminating wastage and minimum cost, management helps an organisation
face cutthroat competition.
4. Social development: Management increases the standard of living of the
people by providing good quality products and services at minimum cost. It
also helps in generating employment opportunities and adopting new
technologies.
5. Achievement of personal objectives: Every individual joins an
organisation to pursue their objectives. Some join for a good package salary,
some join for greater recognition, and some just for survival. So, this depends
from individual to individual. Management plays an important role in
identifying personal objectives to integrate them with the organisational
objectives to bring harmony to the organisation, as well as the successful
fulfilment of the personal objectives of the individuals.
Nature of Management
Management has evolved, and it has become very dynamic in modern times.
Earlier it was based on a set of rules and regulations or we may state them as
conventions that evolve slowly and gradually as per the ever-changing needs.
Management can be an art, science or a profession.
Management as an Art
Art refers to putting the knowledge and capabilities into practice to achieve the
desired results. It can be acquired through various methods like observation,
study and experience.
The basic features are as follows :
● Existence of theoretical Knowledge: Art involves the application of theoretical
knowledge. Management is the art of getting things done through individuals
for the accomplishment of desired results by putting the available knowledge
into practice.
● Personalised application: The use of knowledge varies from person to person
and hence management is an individual skill. Two different people can perform
the same type of work but will always differ in the way they perform. For
example: two singers will always perform differently.
● Based on practice and creativity: Management is goal-oriented and result-
oriented. As for art, management also requires practice, continuous practice
hones the skills and creativity of an individual.
Hence, management can be considered as an art, as both require skills,
practice and creativity.
Management as a Science :
A systematised body of information that can be learned by observation and
experimentation is referred to as science. It is made of universally
acknowledged concepts that define the relationships between causes and
effects.
The following are the essential characteristics of science:
● A well-organised body of knowledge: Management is a systematised body of
knowledge with its own set of ideas and concepts based on cause-and-effect
relationships.
● Principle-based on experiments and observation: Fundamental principles of
management are developed through experiments and observations. Their
results can be tested and verified.