CHAPTER ONE

1. FUNDAMENTALS OF MANAGEMENT

Because of human limitation, people started cooperation and working in-group. To coordinate and lead
groups of people to achieve their pre-stated goals, functions of management i.e., planning, organizing,
staffing, leading/ directing, and controlling are important and essential. The monumental
accomplishments and scripts of the ancient societies proved their importance. However, the discipline
needs to be studied in a modern way.

When people started working in group, although it was not formalized, they planned their work, they
organized their activities, assigned people to those positions, led their people/workers and checked
whether they achieved their interest or planned action or not; and these activities were prevalent and
apparent. This is to say that, management, had existed in the past, exists today, and will exist tomorrow.

General Objectives of this chapter:-

After studying this unit, you will be able to:

 Understand the concept of management.

 Understand the nature of management.

 Understand the management levels, skills and roles.

 Understand the functions of management.

 Explain the universality of management.

 Understand the management environment.

1.1 DEFINITION OF MANAGEMENT

As far as the definition of management is concerned, it is rich in definition. Hence, there is no one
universally accepted definition of management. This is because,

(i) Management as a discipline is recent in origin: management as a field of study is too young, to
develop.

(ii) Management is so broad that it is difficult to encompass all of its aspects in a single definition.

(iii)There are different approaches to management, definitions change as the environment changes.
The environment of an organization changes because of changes in political, economic, social, ethical,
etc environment changes.

Management has been given various but mutually supportive definitions by different authors and
scholars. Among others the following are several of them are:

According to F.W. Taylor, "Management is the art of knowing what you want to do... in the best and
cheapest way."

According to H. Koontz and his co-author, "Management is the process of designing and maintaining
an environment in which individuals are working together in-group accomplish efficiently selected
aims."

According to Terry and Franklin, "Management is a distinct process consisting of activities of planning,
organizing, actuating, and controlling, performed to determine and accomplish stated objectives with
the use of human beings and other resources.

According to Henery Fayol; "to manage is to forecast and plan, to organize, to command, to coordinate,
and to control.

According to Mery Parker Fellott; "the art of getting things done through the efforts of other people."

According to Kinard, "Management is the process of maximizing the potential of an organization's

people and coordinating their efforts to attain predetermined goals.

Management is defined as the process of planning, organizing, staffing, leading and controlling the
efforts of organization members and of using all other organizational resources to achieve stated
organizational goals.

From the various definitions of management, we can derive the following important points.

a) Management refers to the managerial functions of planning, organizing, staffing, leading and
controlling.

b) Management co-ordinates both human and non-human resources (land, labour, capital) for the
accomplishment of objectives.

c) Management is applied to all types of organization

- Profit or not for profit

- Large, medium or small organization

- Manufacturing or service giving, etc.

d) Management deals with creating a comfortable internal environment, with a great consideration of
the external environment.

 We can define management as a distinct process consisting of managerial functions of planning,

organizing, staffing, directing/leading, and controlling so as to design and maintain conducive
 environment in order to achieve common group goals and organizational objectives efficiently
and effectively.

1.2. Characteristics of management

a) Management is a continuous process-whenever there is a group endeavor/effort, the need for

management arises.

b) Management is viewed in terms of the managerial function a manager does.

c) Management deals with the coordination of both human and non-human resources/physical
resources.

d) Management is applied wherever there is an organization with an objective to be achieved.

e) Since an organization exists in an open system, management creates a favorable environment in

order to achieve organizational goals.

f) The target of managerial process is to achieve organizational objective-reason for their existence.

1.3. Significance and nature of Management

A. Significant of management

1. Encourages initiatives: means to do the right thing at the right time without being told or influenced
by the superior.

2. encourages innovation: management also encourages innovation. Innovation brings new ideas, new
technology, new methods, new products and new services.

3. Facilitate growth and expansion: management makes optimum utilization of available resources it
reduces wastes and increase efficiency.

4. Improve life of workers: management shares some of its profits with the workers. Provide the
workers with good working environment and conditions.

5. Improves corporate image: if the management is good, the organization will produce quality goods
and services. This will improve the goodwill and corporate image of the company.

6. Motivate employees: management motivates employees by providing financial and non-financial

incentives.

7. Optimum use of resources: management makes optimum (best) use of these resources. This brings
best results to the organization.

8. Reduce wastage: management reduce the wastage of human, material and financial resources. If
wastage is reduced then productivity will increase.
9. Increases efficiency: management uses techniques to increase returns and to reduce costs.

10. encourage team work: management encourage employees to work as a [Link] develops a team
spirit in the organization

B. The Nature of Management

1. Universal Application: - Management is applied in any organization (large, small in size, or service or
manufacturing or for-profit or not-for-profit) and its functions are practiced in any level of management.

2. Goal Oriented: - Any organization is established to achieve objectives, and management is important
for any organization to achieve its pre-stated objectives efficiently and effectively.

3. Guidance: - The main task of management is guidance in the utilization of material and human
resources in the best possible manner. Without the involvement of management, resources might be
mis utilized and wasted. Through the optimum utilization of resources, it to ensure that the objectives
are attained.

4. Divorced/Separated from ownership: - Management does not signify ownership. Managers work for
the attainment of organizational goals and objectives.

5. Management is a human activity: - Management functions are discharged by individuals not by

machines such as computers. However, it can be aided by such instruments as computers.

6. Management signifies Authority: - Since the significance of management is to direct, to guide and to
control, it has to have authority. Authority is the power to compel others to work and behave in
particular manner.

7. Leadership: - The manager has to lead a team of workers. He/she must be capable of inspiring,
motivating and winning their confidence.

8. Management is Multidisciplinary: - It has grown as a body of discipline taking the help of so many
social sciences like sociology, psychology, economics, etc.

9. management is a process and it influences behavior.

1.4. Managerial Functions an Overview

Regardless of the type, size and objective of the firm, all managers have certain basic functions. These
are planning, organizing, staffing, leading/directing/, and controlling. The nature and scope of these
functions differ from manager to manager and from firm to firm.

1. Planning

planning is the dynamic process of making decisions today about future actions; and it is a selection or
choice among alternatives as to: What missions or objectives be achieved, What actions should be
taken, What organizational positions be assigned, How the end can be achieved, When to achieve it,
Who is to do it, Where to do it. It bridges the gap between where we are now and where we want to be.

Answers six basic questions in regard to any intended activity:

 What (the goal or goals).

 When (the time frame in which it will be accomplished)

 Where (the place or places where the plans or planning will reach its conclusion).

 Who (which people will perform the tasks).

 How (the specific steps or methods to reach the goals).

 What resources (resources necessary to reach the goals).

Top level managers set plans for the entire company; while lower level managers prepare plans for
their immediate areas of responsibility.

Planning is the process of integrating the future activities of an organization, and requires the ability to
forecast, visualize, and look ahead purpose fully.

2. Organizing

Organizing is the grouping of resources and activities to accomplish some end result in an efficient and
effective manner. Organizing is Arrange and relates the work, so that it can be done efficiently by
people.

Purpose of organizing

 Dividing work

 Assigning tasks

 Coordinating diverse organizational tasks

 Clustering jobs into units

 Establishing relationships

 Establishing formal lines of authority

 Allocating and deploying organizational resources

3. Staffing

It is the process of filling and keeping filled the positions in the organization structure. This is done by
identifying work force requirements, inventorying the people available, recruiting, selecting, placing,
promoting, compensating, training and developing both candidates and current employees to
accomplish their tasks effectively and efficiently.

4. Directing

Directing is a process in which the managers instruct, guide and oversee the performance of the
workers to achieve predetermined goals. Leading or directing is influencing, motivating and directing
people so that they will contribute to organization and group goals; it has to do predominantly with the
interpersonal aspect of managing. Mangers must develop relationships that ensure adequate
communication with their subordinates. Leading also includes managing personal conflict, helping
employees, deal with changing conditions, and in some cases disciplining employees. Leadership
requires good interpersonal skills. Leading /directing has the following three elements:

(i) Motivation

(ii) Leadership styles

(iii) Communication

5. Controlling

Controlling is Management function that provides information on the degree to which goals and
objectives are being accomplished, Monitoring of activities and Taking corrective action. The
controlling function involves the following steps:

 Establish Standards of Performance

 Measure Actual Performance

 Compare Performance to Standards:

 Take Corrective Action

Actual results may differ from desired results in any area, but the three that require the most attention
are product quality, worker performance, and cost control.

1.5 Levels of Management and Types of Managers

Managers can be classified into two ways,

1. by their level in the organization – so called first line, middle and top managers and

2. by the range or scope of organizational activities for which they are responsible – so called
Functional and general managers.
[Link] of management

(1) First line Managers- Managers who are responsible for the work of operating employees only and
do not supervise other managers; they are the first or lowest levels of managers in the organizational
hierarchy. These people are managers at the firing line where most concrete organizational tasks are
performed.

It includes office managers, superintendents, foreman, chief clerks, supervisors, etc. First level
management is often called "supervisors". They are mainly concerned with:

i) Planning of day to day work.

ii) Assignment of jobs

iii) Keeping a watch on workers performance.

iv) Sending reports and statements to superiors

v) Maintaining close and personal contacts with workers and evaluation of their work.

They are responsible for

• Managing the performance of employees.

• Teaching employees how to do their jobs.

• Making detailed schedules and operating plans on middle management’s intermediate range plans.

(2) Middle level Managers: these are managers who direct the activities of lower level managers and
sometimes extend to supervision of operating employees. Their principal responsibilities are to direct
the activities that implement their organization's policies and to balance the demands of their superiors
with the capacities of their subordinates. The titles include Department heads, deputy department
heads, branch managers, work managers, etc.

Middle level managers Responsible for:

 Planning and allocating resources to meet objectives.

 Coordinating and linking groups, department and divisions.

 Monitoring and managing the performance of the subunits and individual managers who report
to them.

 Implementing the changes or strategies generated by top managers.

(3) Top Managers: - sets the missions and goals, develops policies, evaluate the overall performance of
various departments and responsible for the overall management of an organization.
• They establish operating policies and guidelines the organization's interactions with environment.
Typical titles include CEO, president, senior vice president, etc.

Top managers Responsible for:

 Planning and executing broad policy and strategies.

 Monitoring and directing middle level managers

 Developing attitudes of commitment and ownership in employees.

 Creating a positive organizational culture.

 Monitoring their business environments.

B. Functional and General Managers

The other major classification of managers depends on the scope of the activities they manage.

1. Functional Managers: - these are managers who are responsible for only one organizational activity,
such as production, marketing, sales, or finance. The people and activities headed by a functional
manager are engaged in a common set of activities.

2. General Managers: - these managers, on the other hand, oversee a complex unit, such as a company,
a subsidiary, or an independent operating division. He or she is responsible for all the activities of that
unit, such as its production, marketing, sales, and finance. Managers who are responsible for managing
the entire operations of a more complex unit or division which may have two or more functional units.

1.6. Managerial Roles and Skills

A. Managerial Roles

Managerial functions are general administrative duties that need to be carried out in all productive
organizations. Managerial roles are specific categories of behavior/managerial behavior. Managerial
functions involve "desired out comes". These outcomes are achieved through the performance of
managerial roles (actual behavior). In other words, Roles are the means and functions are the ends of
the manager's job. Roles are actual behaviors of a managers in the organization.

Henry Mintzberg identified ten different but interrelated organized sets of behavior, or roles. These ten
roles can be separated into three categories /general groupings.
1. Interpersonal roles: three managerial roles are enacted when the manager engages in interpersonal
relationship. They are:

• Figure head role:- this role is played by managers who represent the company on social occasions.
They are ceremonial and symbolic in nature such as signing documents, receiving visitors, etc.

- E.g. When the president of a college hands out diplomas for graduates.

• Leader role:- managers play this role by motivating, encouraging ,inspiring and directing employees to
get the job done properly.

• Liaison role: - managers play this role by contacting people outside the group, ^ by serving as a link in
a horizontal (as well as vertical) chain of communication.

- E.g. the sales manager who gains information from the personnel manager with in the same company.
Internal liaison.

- The sales manager who has contact with other sales executive through a making trade association. –
External liaison.

2. Informational roles: - All managers, to some degree, will receive or collect and transmit information
in and outside the organization. Managers play:

• Monitor/Nerve Center Role: - as a monitor /nerve center, the manager tries to keep informed about
what is happening in and outside the organization. Managers serve as a focal point for non-routine
information; they receive all types of information from news reports, trade publications, magazines,
clients, etc.

• Disseminator role: - the information a manager gathers as a monitor must be gleaned and
transmitted to appropriate members of the organization. As a disseminator, a manager sends out side
information into the organization and internal information from one subordinate to another.
/Transmitting selected information to subordinates.

• Spokesperson role: - it is the role of a manager in transmitting selected information to outsiders. It is

played by a manager whenever he/she represents the organization or its position to other groups,
including government agencies, customer, and trade organizations.

3. Decisional Roles: - Both interpersonal and informational roles are really includes to the decisional
role. It involves decision-making. The manager plays this role as:

• Entrepreneur: act as an initiator and designer and encourage changes and innovation, identify new
ideas, delegate ideas and responsibility to others.

• Disturbance handler: - taking corrective actions during disputes and crises, resolve conflict among
employees adapt to environmental crises. These may involve conflict between people or groups or
unexpected events outside the company may affect the firm's operations.

• Resource allocator: - managers decides distribution of resources among various individuals and
groups in the organization. (These resources include time, money, people, physical resources)

• Negotiator: - participating in negotiating sessions with other parties (e.g. vendors and unions) to
make sure the organizations interests are adequately represented. Managers perform this role, in
which they discuss and bargain with other units to gain advantages for their own unit.

B. Skills of Management

A skill is a person's or an individual's ability to do or perform a certain thing expertly or intellectually.

Similarly, managerial skills are skills of a manageability of a manager to perform his duties and
responsibilities expertly. These skills help managers to perform their activity in efficient and effective
way/manner for the achievement of the objective of the organization.

These managerial skills can be classified as:

1. Technical skills: These skills are the abilities of a manager that are necessary to carry out a specific
task. It involves the ability to use specialized knowledge and expertise with work related tools,
procedures, and techniques. Technical knowledge is of great importance at lower levels where the
organization's goods and services are produced. Examples include:

- Writing computer programs

- Completing accounting statements

- Analyzing marketing statistics

- Drafting a design for a certain building etc…

Technical skills are usually obtained through training programs that an organization may offer its
managers, or employees, or may be obtained by way of a college degree.

2. Human Skill: the ability to work with peoples, motivate, direct individuals or groups in the
organization whether they are subordinates, pears, or superiors and the ability to resolve conflict.
Because, all tasks in an organization are done with people, these skills are equally important to all
levels of management. This skill includes:-

- Effective communication (writing and speaking);

- Creation of positive attitude toward others and the work setting;

- Development of co-operation among group members; and

- Motivation of subordinates.
3. Conceptual skill: - the ability of a manager "to see" the big picture of the organization /to view the
organization from a broad perspective. It is the ability of a manager to see the organizational system in
its totality, how its different parts are interrelated and how they affect each other. A manager needs
conceptual skills to recognize the interrelationships of various situational factors, and; therefore, make
decisions that will be in the best interests of the organization. They are most important in strategic
(long range) planning; therefore, it is top level managers/executives who require more conceptual skill
than middle level managers and supervisors.

1.7 Universality of Management

Management is universal in the sense that:-

• Basic applications of management in any organizations are the same whether it is small or complex,
business or non-business. The managerial functions exist in every organization regardless of the size
and the type of the organization. This is because any organization has an objective to be achieved and
goal achievement requires planning, organizing, staffing leading and controlling. (The armies general,
the bishop of the church, the financial manager use the same management principles to achieve
objectives.)

• The concept of universality of management is also applicable to all levels of management within an
organization; it is not confined to a particular level. Although the scope of authority held, responsibility
assigned and the types of problems dealt vary from one level to another, as managers all obtain results
by establishing an environment for effective group endeavor.

• Managers can be transferred from one organization to another and the higher the management level
the less will be the operating non-managerial job components and the more "pure" will be the
managerial jobs and the easier the transferability of managers.

1.8. The Environment of Management

According to Stephan, "the term environment refers to institutions or forces that are outside the
organization and that affect the organization's performance." Another writer put it, "just takes the
universe, subtract from it the sub set that represents the organization, and the remainder is
environment." But an environment is really not that simple.

In management, the term environment refers influences/forces that reside inside or outside the
organization and affects the operations of the organization negatively or positively. /which provide both
problems and opportunities to the firm. /

Therefore, the management environment can be divided in to two:

1. The Internal Environment

It includes all the activities that are performed within the organization. Since they are within the
organization, internal factors are under the control of the management. These factors include the
activities of different divisions and departments, the organizations physical, financial and human
resources along with the value systems of managers who control those systems. However we are
more concerned with the external environment on which the existence of the organization depends.

2. The External Environment

Organizations are neither self-sufficient not self-contained. They exchange resources with the
environment and depend on it for their survival. Organizations take resource inputs (raw materials,
money, labor, energy, etc) from the external environment, transform them into products and services,
and then send them back as out put to the external environment.

The external forces include:-

a. The political environment- Government affects virtually every organization and every aspect of life.
In respect to business it either promotes or constrains. The general activities of organizations depend
on the political directions of the government. Sometimes government promotes business by
subsidizing selected industries, by reducing tax payments, by supporting research and development, by
increasing the availability of capital etc. It is also the biggest customer, purchasing goods and services.

b. The legal environment-The political and legal environments of management are intertwined with the
social environment. Laws are ordinarily passed as the result of social pressures and problems. This
force is a complex of laws and regulations. Every manager is included by a wed of laws, regulations,
and court decisions that are designed to protect different social groups in the society. Many of them
are designed to regulate the behavior of managers and their subordinates in business and non-
business areas. Thus, managers are expected to know the legal restrictions and requirements
applicable to their actions in their decision making process.

[Link] Economic Forces-The economic forces include the availability of resource inputs (capital, labor,
money, energy), trends in GNP, disposable personal income, consumer's purchasing power, industrial
investment, price levels, governments policy towards tax and fiscal policies, the nature of competition,
price level of goods and services, demands of goods and services by the customers, and other similar
variables that influence and are influenced by the organization.

[Link] Social Forces-The social environment includes national traditions, values, customs, consumer
psychology, attitudes, desires, expectations, degree of intelligence and education, and beliefs, of people
in a given group or society. These forces present both opportunities and threats to the business sector.
The variety of values makes it difficult for managers to design an environment conducive to
performance and satisfaction. The reason is the attitudes, values and beliefs are different for
numerous social groups such as workers and employers, rich and poor people, literate and illiterate
people and among various professions it is really very difficult for a manager to be responsive to these
forces, thus managers have no choice but to take them into consideration in their decision making.

[Link] Technological Forces- Technological variables are breakthroughs that result in improved
products, services, production methods, techniques, procedures. Its influence is reflected on way of
doing things, on how we design, produce, distribute and sell goods as well as services. Greater
productivity, higher living standards, more leisure time and a greater variety of products are a few of the
advantages of technology. But it also has some disadvantages such as air pollution, unemployment,
shortage of energy, etc. Here managers should weigh the advantages and disadvantages of technology
and their impacts on the society. Besides, any organization should cope with the technological changes.

[Link] Ethical Forces:-Ethics is the discipline dealing with what is good and bad and with moral duty and
obligation. Ethics consists of sets of generally accepted and practiced standards of personal conduct.
The standards may or may not be confined by law, but for any group to which they are meant to apply,
they sometimes have virtually the force of law. The Ethical standards may differ from one society to
another. Ethics is beyond legal responsibilities, thus it fills the gap between legal requirements and the
actual decisions that managers must take. Beyond the strict term of legal obligation, management of
an organization should see what is bad and good, and what is right and wrong. Actually, our
conceptions of bad or good depends on the custom, religion, belief, intuition and tradition of the society.
Therefore, managers have the responsibility to consider and adhere to the ethical codes of the society
by integrating the ethical concepts in their decision making.