Business Studies: Principles of Management
Management Fundamentals
Management: Coordination of people and resources to achieve goals effectively and
efficiently.
Effectively: Completing tasks on time.
Efficiently: Completing tasks at minimal cost.
Functions of Management: Planning, Organizing, Staffing, Directing, Controlling.
Characteristics of Management:
Goal-Oriented Process
Universal
Continuous Process
Dynamic
Intangible
Multi-dimensional
Management of Work
Management of People
Management of Operations
Group Activity
Importance of Management:
Increases Efficiency
Helps in Achieving Group Goals
Helps in Achieving Individual Objectives
Helps in the Development of Society
Adapts to Changing Environment
Objectives of Management:
Organizational Objectives: Survival, Profit, Growth
Social Objectives: Providing Employment, Providing Quality Products at Reasonable Prices
Personal Objectives: Meeting the Financial and Social Needs of Employees
Levels of Management:
Top Level: Formulating Policies
Middle Level: Implementing Policies
Lower Level: Supervising Workers
Fayol's 14 Principles of Management:
Division of Work
Authority and Responsibility
Discipline
Unity of Command
Unity of Direction
Subordination of Individual Interest to General Interest
Remuneration of Employees
Centralization and Decentralization
Scalar Chain
Order
Equity
Stability of Tenure of Personnel
Initiative
Esprit de Corps (Team Spirit)
Coordination:
Process of synchronizing activities of different departments.
Essence of management.
Importance: Growth in size, Functional differentiation, Specialization.
Planning
Planning: Deciding in advance what to do, how to do it, when to do it, and who is to do it.
Planning Process:
1. Setting Objectives
2. Developing Premises
3. Identifying Alternative Courses of Action
4. Evaluating Alternative Courses of Action
5. Selecting the Best Alternative
6. Implementing the Plan
7. Follow-up Action
Characteristics of Planning:
Primary Function
Focuses on Objectives
Futuristic
Decision Making
Mental Exercise
Pervasive
Continuous Process
Importance of Planning:
Provides Direction
Reduces the Risks of Uncertainties
Reduces Overlapping and Wasteful Activities
Promotes Innovative Ideas
Facilitates Decision Making
Establishes Standards for Controlling
Limitations of Planning:
Leads to Rigidity
May Not Work in a Dynamic Environment
Reduces Creativity
Huge Cost
Time Consuming Process
Does Not Guarantee Success
Types of Plans:
Single Use Plans (Budget, Program)
Standing Plans (Policy, Procedure, Method)
Types of Plans - Detailed
Objective: Goal setting. Targets expressed numerically (e.g., increase sales, revenue, profit).
Set by top management.
Strategy: Comprehensive, detailed plan. Focuses on outperforming competitors. Includes
long-term objectives, course of action, and resource allocation.
Rule: Strict instructions on what to do and not to do. No flexibility. Penalties for violations.
Method: Way of doing a task. Selection of the right method to enhance efficiency.
Policy: General guidelines. For solving problems. Ensures uniformity.
Procedure: Sequence of steps in chronological order.
Budget: Numerical statement of expected results for a future period. Details of expenses,
revenues, and income.
Program: Detailed statement about a project. Includes objectives, policies, procedures, rules,
and resources.
Organizing
Definition: Process of defining and grouping activities. Establishing authority relationships.
Organizing Process:
1. Identification and Division of Work: To avoid duplication.
2. Departmentalization: Grouping similar activities together. Promotes specialization.
3. Assignment of Duties: Assigning duties to job positions according to skills.
4. Establishment of Reporting Relationships: Defining superior and subordinate.
Importance of Organizing:
Specialization
Clarity
Effective Administration
Optimum Utilization of Resources
Growth and Expansion
Organizational Structure:
Framework of the organization.
Functional and Divisional Structures.
Functional Structure: Departments created based on functions.
Divisional Structure: Departments created based on products.
Span of Management:
Number of subordinates that can be effectively managed by a superior.
Formal and Informal Organization:
Formal: Created by management. Rules and regulations.
Informal: Arises naturally from social relations.
Staffing
Definition: Obtaining, using, and maintaining qualified personnel.
Importance of Staffing:
Obtaining Competent Personnel
Higher Performance
Continuous Survival and Growth
Optimum Utilization of Human Resources
Job Satisfaction
Staffing as Part of HRM:
HRM is a broader concept. Staffing is a part of it.
Staffing Process:
1. Estimate Manpower Requirement
2. Recruitment
3. Selection
4. Placement & Orientation
5. Training & Development
6. Performance Appraisal
7. Career Planning
8. Compensation
Sources of Recruitment:
Internal Sources: Transfers, Promotions.
External Sources: Direct Recruitment, Casual Callers, Labor Contractors, Advertisements,
Campus Recruitment, Placement Agencies, Employment Exchange, Web Publishing.
Selection Process:
Initial Screening, Selection Tests, Interview, Reference and Background Checks, Selection
Decision, Medical Examination, Job Offer, Employment Contract.
Selection Tests:
Intelligence Test, Aptitude Test, Personality Test, Trade Test, Interest Test.
Delegation:
Transfer of authority from a superior to a subordinate.
Assigning responsibility and accountability.
Decentralization:
Systematic delegation of authority at all levels.
Elements of Delegation:
Authority, Responsibility, Accountability.
Directing
Meaning of Directing: Giving instructions, guiding, motivating, leading.
Characteristics of Directing:
Initiates Action
At Every Level of Management
Flows from Top to Bottom
A Continuous Process
Importance of Directing:
Helps in Achieving Goals
Integrates Employees' Efforts
Reduces Resistance to Change
Brings Stability to the Organization
Elements of Directing:
Supervision: Monitoring, guiding.
Motivation: Internal drive.
Maslow's Hierarchy of Needs Theory: Physiological, Safety, Affiliation, Esteem, Self-
Actualization.
Monetary and Non-Monetary Incentives.
Leadership: Influencing others.
Leadership Styles:
Autocratic (I style)
Democratic (We style)
Laissez-faire (You style)
Communication: Exchange of information.
Elements of Communication Process: Sender, Message, Encoding, Media, Decoding,
Receiver, Feedback, Noise.
Controlling
Meaning of Controlling: Measuring actual performance against standards and correcting
deviations.
Steps in Controlling Process:
1. Establishment of Performance Standards.
2. Measurement of Actual Performance.
3. Comparison of Actual Performance with Standards.
4. Analyzing Deviations.
Critical Point Control.
Management by Exception.
1. Taking Corrective Action.
Importance of Controlling:
Achievement of Organizational Goals.
Efficient Use of Resources.
Maintaining Order and Discipline.
Improving Employee Motivation.
Judging Accuracy of Standards.
Relationship Between Planning and Controlling:
Inseparable twins.
Barriers to Communication:
Semantic: Problem in understanding.
Psychological: Mental barriers.
Personal: Individual issues.
Organizational: Organizational policies.
Ways to Improve Communication:
Clarity, Use of Appropriate Language, Feedback, Be a Good Listener.
Staffing, Training, and Development - Additional
Notes
Recruitment:
Internal Sources: Transfers, promotions.
External Sources: Advertising, employment agencies.
Selection:
Aptitude Test (Check ability)
Personality Test (Overall personality)
Trade Test (Skills)
Interest Test (Interest)
Training and Development:
Training: Specific skill development.
Development: Overall career growth.
Benefits of Training:
Increase in labor productivity.
Preparing future managers.
Reduction in employee turnover.
Better career opportunities for employees.
Fewer accidents.
Employees earn more money.
Training Methods:
On-the-Job Training (Learning by doing)
Apprenticeship: Under the guidance of a master worker.
Internship: Practical experience for college students.
Orientation/Induction: Familiarizing with the company.
Off-the-Job Training (Learning first, then doing)
Vestibule Training: Training on similar equipment, away from the actual workplace.