PRINCIPLES OF MANAGEMENT Module 1
Module 1
Introduction to Management: definitions, managerial roles and functions. Science or Art
perspectives- External environment-global, innovative and entrepreneurial perspectives of
Management Managing people and organizations in the context of New Era- Managing for
competitive advantage - the Challenges of Management.
Introduction
Management is the process of getting things done, effectively and efficiently, with and
through other people. Management of an organization is the process of establishing objectives
and goals of the organization periodically, designing the work system and the organization
structure, and maintaining an environment in which individuals, working together in groups,
accomplish their aims and objectives and goals of the organization effectively and efficiently.
Definition of management
“Management is the process of designing and maintaining an environment in which
individuals , working together in groups , efficiently accomplish selected aims-Harold
Koontz
The planning, organizing, leading and controlling of human and other resources to
achieve organizational goals effectively and efficiently.
“Management is the art and science of preparing, organizing and directing human
efforts to control the forces and utilize the material of nature for the benefit of
men”- ASME
1 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Management-Science or Art
Management is both an art and a science.
Management combines features of both science and art.
It is considered as a science because it has an organized body of knowledge which
contains certain universal truth.
It is called an art because managing requires certain skills which are personal
possessions of managers.
Science provides the knowledge & art deals with the application of knowledge and
skills
How Management is a Science
Science is obtaining information about a particular object by a systematic pattern of
observation, study, practice, experiments, and investigation.
Management process also follows the same pattern. Gathering data and facts,
analyzing them and making a decision based on analysis, are the basic functions of
the management.
The Elements of Science in Managing
Concepts: Managing has concepts to deal with situations
Methods and principles: “Scientific method” involves the determination of facts
through observation. This leads to the development of “principles” which have value
in predicting what will happen in similar circumstances
Theories: A ‘theory” is a systematic grouping of interdependent concepts and
principles that give a framework to, or ties together, a significant area of knowledge.
Management studies over the years developed many proved theories for making
management more realistic or scientific.
Organized knowledge: Science is organized Knowledge. If we compare, management
at the present day is a distinct field of organized knowledge.
Practice: The theories of managing are the results of practice, and the role of such
theories is to provide a systematic grouping of interdependent concepts and
principles. The theories of motivation, leadership may be mentioned as examples
2 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
How Management is an Art
Art implies application of knowledge & skill to trying about desired results.
The art of managing is a personal creative attribute of the manager, which is more often
than not, enriched by education, training, experience.
Elements of Art in Management
Practical Knowledge: Every art requires practical knowledge therefore learning of
theory is not sufficient. A manager can never be successful just by obtaining degree
or diploma in management; he must have also know how to apply various principles
in real situations by functioning in capacity of manager
Personal Skill: Every manager has his own way of managing things based on his
knowledge, experience and personality, that is why some managers are known as
good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.
Creativity: Every artist has an element of creativity in line. That is why he aims at
producing something that has never existed before which requires combination of
intelligence & imagination. Management is also creative in nature like any other art.
It combines human and non-human resources in useful way so as to achieve desired
results.
Perfection through practice: Practice makes a man perfect. Every artist becomes
more and more proficient through constant practice. Similarly managers learn
through an art of trial and error initially but application of management principles
over the years makes them perfect in the job of managing.
Goal-Oriented: Art is result oriented. Management works are also a goal or result
oriented. In the same manner, management is also directed towards
accomplishment of pre-determined goals.
Significance of Management
It helps in achieving group goals.
Optimum utilization of resources.
Minimizing cost.
Survival & growth-to adapt with changing demands of the market
Development of the nation: Increase the profit will get maximum output at minimum
cost by creating employment opportunities.
3 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Characteristics of Management
Universal: All the organizations, whether it is profit-making or not, they require
management, for managing their activities. Hence it is universal in nature.
Goal Oriented: Every organization is set up with a predetermined objective and
management helps in reaching those goals timely, and smoothly.
Continuous Process: It is an ongoing process which continues as long as the
organization exists. It is required in every sphere of the organization whether it is
production, human resource, finance or marketing.
Multi-dimensional: Management is not confined to the administration of people
only but it is a multi-disciplinary activity.
Group activity: An organization consists of various members who have different
needs, expectations and beliefs. Every person joins the organization with a different
motive, but after becoming a part of the organization they work for achieving the
same goal.
Dynamic function: An organization exists in a business environment that has various
factors like social, political, legal, technological and economic. A slight change in any
of these factors will affect the organization’s growth and performance. So, to
overcome these changes management formulates strategies and implements them.
4 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Intangible force: Management can neither be seen nor touched but one can feel its
existence, in the way the organization functions.
Levels of Management
Top-Level Management:
This is the highest level in the organizational hierarchy, which includes Board of
Directors and Chief Executives.
They are responsible for defining the objectives, formulating plans, strategies and
policies
Top management lays down the objectives and broad policies of the enterprise.
It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
It appoints the executive for middle level i.e. departmental managers.
It controls & coordinates the activities of all the departments.
It provides guidance and direction
Middle-Level Management:
It is the second and most important level in the corporate ladder, as it creates a link
between the top and lower level management.
5 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
It includes departmental and division heads and managers who are responsible for
implementing and controlling plans and strategies which are formulated by the top
executives.
They execute the plans of the organization in accordance with the policies and
directives of the top management.
They interpret and explain policies from top level management to lower level.
They are responsible for coordinating the activities within the division or
department.
It also sends important reports and other important data to top level management.
They evaluate performance of junior managers.
They are also responsible for inspiring lower level managers towards better
performance.
Lower Level Management:
Otherwise called as functional or operational level management. It includes first line
managers, foreman, supervisors.
As lower level management directly interacts with the workers, it plays a crucial role
in the organization because it helps in reducing wastage and idle time of the
workers, improving the quality and quantity of output
Assigning of jobs and tasks to various workers.
They guide and instruct workers for day to day activities.
They are responsible for the quality as well as quantity of production.
They are also entrusted with the responsibility of maintaining good relation in the
organization
Managerial roles (Mintzberg’s Managerial Roles)
The term managerial roles refers to specific actions or behaviors expected of and
exhibited by a manager.
Henry Mintzberg identified ten different roles, separated in to 3 categories
6 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Interpersonal Roles
Figurehead – includes symbolic duties which are legal or social in nature.
Leader – includes all aspects of being a good leader. This involves building a team,
coaching the members, motivating them, and developing strong relationships.
Liaison – includes developing and maintaining a network outside the office for
information and assistance.
Informational Roles
Monitor – includes seeking information regarding the issues that are affecting the
organization. Also, this includes internal as well as external information.
Disseminator – On receiving any important information from internal or external
sources, the same needs to be disseminated or transmitted within the organization.
Spokesperson – includes representing the organization and providing information
about the organization to outsiders
Decisional Roles
Entrepreneur – involves all aspects associated with acting as an initiator, designer,
and also an encourager of innovation and change.
Disturbance handler – taking corrective action when the organization faces
unexpected difficulties which are important in nature.
7 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Resource Allocator – being responsible for the optimum allocation of resources like
time, equipment, funds, and also human resources, etc.
Negotiator – includes representing the organization in negotiations which affect the
manager’s scope of responsibility.
Internal and external environment of management
Every organization, whether business or non-business, has its own environment.
Organizational environment is always dynamic.
By the word “environment” we understand the surrounding or conditions in which a
particular activity is carried on.
In an organization, every action of the management body is influenced by the
environment.
Organizations take inputs(raw materials, money, labor and energy) from the external
environment, transform them into products or services, and send back as output to
the external environment
Environment can be broadly classified into
8 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
(1) Internal environment
(2) External environment.
(1) Internal Environment
Each business organization has an internal environment, which includes all the
elements within the organization's boundaries.
Strictly speaking they are part of the organization itself. The major components of
the internal environment are
a. Employees
b. Shareholders and Board of Directors
c. Culture-It is the collective behavior of members of an organization.
(2) External environment
All the elements outside the organization are the elements of the external
environment.
The organization has no control over how the external environment elements will
shape up.
The external environment can be subdivided into 2 layers;
◦ General Environment(Macro Environment).
◦ Task / Industry Environment(Micro Environment).
General Environment.
◦ The general environment usually includes political, economic, socio cultural,
technological, legal, environmental (natural) and demographic factors in a
particular country or region.
◦ The general environment consists of factors that may have an immediate
direct effect on operations but nevertheless influences the activities of the
firm.
Task / Industry Environment
o The task environment puts indirect pressures on business management
through the institutional processes of following elements:
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9 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
[Link]
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6. Media
Functions of Management
Planning
It is the first step of management function.
Planning is how to do a work, when have to do this work, who will do this work and by
whom will do this work.
Planning means the process of achieving goals, development and establishment.
Planning means deciding how best to achieve goals, profit and applying best
strategies.
Planning is necessary to ensure proper utilization of human & non-human resources.
Organizing
Organizing is the second function of management. it follows the planning.
10 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals.
The function of organizing is concerned with:
Identifying the tasks that must be performed and grouping them whenever
necessary
Assigning these tasks to the personnel while defining their authority and
responsibility.
Delegating this authority to these employees
Establishing a relationship between authority and responsibility
Coordinating these activities.
Staffing
Staffing is the function of hiring and retaining a suitable work-force for the
enterprise both at managerial as well as non-managerial levels.
It involves the process of recruiting, training, developing, compensating and
evaluating employees, and maintaining this workforce with proper incentives and
motivations.
Since the human element is the most vital factor in the process of management, it is
important to recruit the right personnel.
Directing or Leading
The directing function is concerned with leadership , communication , motivation
and supervision so that the employees perform their activities in the most efficient
manner possible, in order to achieve the desired goals.
The leadership element involves issuing of instructions and guiding the subordinates
about procedures and methods.
The communication must be open both ways so that the information can be passed
on to the subordinates and the feedback received from them.
Motivation is very important, since highly motivated people show excellent
performance with less direction from superiors.
Supervising subordinates would lead to continuous progress reports as well as
assure the superiors that the directions are being properly carried out.
11 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Controlling
Controlling is the last step in the management functions process.
This process is simply steps of manager to determine whether organizational goals
have been met.
An efficient system of control helps to predict deviations before they actually occur.
“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”.
Global perspective of Management
Business in the global area involves risks and difficulties because of complicated
economic, legal-political and socio-cultural forces.
Free market agreements have made the fall of trade barriers which posses a serious
threat to the manager because they increase competition in the environment.
The environment factors that affect domestic firms usually are more critical for
international corporations operating in foreign countries.
There is a need for more of global managers, they not only handle the professional
goals but also handle cultural difference and human interaction at workplace.
The global economy creates opportunities because, with the entire world as a market
place and national borders becoming irrelevant, the potential for organizations to
grow and expand increases dramatically.
It can create challenges in that new competitors can suddenly appear anytime,
anywhere, and managers who don’t respond quickly to changes are likely to find their
organizations survival in doubt.
12 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Challenges to global management
Important challenges faced by global managers are:
The legal political environment : Managers in a global organization must aware of the
specific laws in countries where they run business.
The economic environment : The global managers must be aware of economic issues
when doing business in other countries.
Cultural environment :Every country has its own culture so it is very necessary to get
knowledge about culture of that specific country.
13 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Attitudes of managers for international Business
1. Ethnocentric :
viewing the world through one’s own eyes and perspectives.
Managers with this attitude believes that people in foreign countries do not have the
needed skills,knowledge or experience to make the best business decisions as people
in the home country do.
It creates problems for managers when they ignore foreign values and customs.
2. Polycentric :
It is the view that the managers in the host country, where the organization is doing
business, know the best work approaches and practices for running their operations.
3. Geocentric :
It is a world oriented view focusing on using the best approaches and people from
around the globe.
Major issues and decisions are viewed globally by looking for the best approaches.
The Innovative Perspective of Management
Innovation is the enhancement ,adaption or commercialisation of new products,
services or processes.
A innovative management , through continuous innovation and change ,creates
sustainable competitive advantage in its industry.
Three main types of innovation exist:
◦ Process innovation
◦ Technical innovation
◦ Administrative innovation
Process innovation
Process innovation is the application or introduction of a new technology or method
for doing something that helps an organization remain competitive and meet customer
demands.
Process is the combination of facilities, skills, and technologies used to produce,
deliver, and support a product or provide a service
14 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Process innovation can include changes in the equipment and technology used in
manufacturing (including the software used in product design and development),
improvement in the tools, techniques etc.
Technical innovation
Technical Innovation is the process of implementing new ideas, related with practical
knowledge or experience, into a productive process.
Technical innovation results in lower production costs or greater value added. Lower
production costs can arise from better production processes. Greater value added can
arise from new features or higher quality .
Ex: SA950 3D MONITOR BY SAMSUNG
Wireless Charging Technology
Administrative innovation
Administrative innovation is the implementing new idea, procedure, rules, methods,
techniques or establishing new organisation.
This can be done by bringing innovations m administration
Management in the context of new era
Technology management
◦ Look for new techniques and approaches
◦ Adequately respond to customers needs and requirements
Customer relationship management
◦ Uses latest technology to keep in touch with customers and to collect and
manage customer data
Internet and social media
◦ Interact electronically with employees, customers, partners and other stake
holders
◦ E-commerce and electronic fund transfer made processes easier
◦
Generate awareness about product and services, sharing ideas, seeking
feedbacks
Supply chain management
◦ Refers to managing the sequence of suppliers and purchasers to
obtain raw materials, distribute finished goods
15 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Collaboration across boundaries
◦ Capitalize on the ideas of people outside the traditional company “boundaries”
◦ Occurs between as well as within organizations
Globalization
◦ Far more than in the past, enterprises are global and competing globally is not
easy
◦ Even small firms that do not operate on a global scale must make strategic
decisions based on international considerations
Managing for competitive advantage
Competitive advantage means superior performance relative to other competitors in
the same industry or superior performance relative to industry average.
The Competitive advantage is considered as asset for the organizations to survive and
compete in the industry.
Cost competitiveness
Company could achieve superior performance by producing similar quality products
or services but at lower cost.
Company sells products at the same price as competitors but reaps higher profit
margins because of lower production costs.
Keeping production cost is achieved by managing resources, labour , manufacturing
and marketing.
Differentiation advantage
It is achieved by offering unique products and services and charging premium price
for that.
Customers are willing to pay higher price only for unique features and the best
quality.
16 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Quality
Quality is the excellence of a product, including lack of defects, reliability and
dependability.
Quality is the success driver that most companies want to achieve.
Speed
It means to know about the market condition to get the customer requirements and
then deliver the product as soon as possible in the market.
The timely response to the customer adds value to the company
Innovation
Innovation stands for the creation of new devices, objects , ideas or procedures useful
in accomplishing human objectives.
The companies must capitalize the human assets by unlocking their expertise to get
new ideas from supplier , employees , customers and other companies.
This leads the company to dominate by producing new products and services to the
customers.
Challenges of Management
17 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Globalization
The companies of developed countries are entering foreign countries by opening
manufacturing facilities there.
Management of global companies are adjusting their organizational structure as per
the requirement of situations.
The challenge of the managers are being taught to be global in approach.
Quality and productivity
Another competitive challenge that has attracted much attention is quality and
productivity.
Quality & productivity are also emerging issues of the business world.
Change in Technology
Technology is the set of processes the organization uses to transform resources into
goods and services.
A manager is required to be updated with new forms of technology and equipments.
Change in Environmental forces
Environment is one of the important global issues today.
The industry is facing increasing pressures to eliminate or reduce waste and pollution.
Organizations more concerned about the disastrous effects on the environment.
Change in sociological forces
Change in population ,culture , level of education etc have high impact on
organization in its functioning.
Lack of skills
It is very difficult to find talented and experienced people.
The challenge of the manager is to retain the skilled employees by applying
motivation and empowerment theories to secure their loyalty and job satisfaction.
Market Changes
Coping with continuous rapid changes in marketplace and the need to find new ways
in anticipating changes are the main challenge of a management.
Reshaping the organizational structure, searching for new markets and merging with
other organizations are the some of initial solutions for adapting with market changes.
18 | Harish Kumar B Dept. of Mechanical Engineering, CET
PRINCIPLES OF MANAGEMENT Module 1
Ethical and social responsibility
The ethical and social responsibility concerns were coded as laws and regulations.
The problems and conflicts in business can be avoided if owners, managers and
employees know more about business law and legal system.
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19 | Harish Kumar B Dept. of Mechanical Engineering, CET