1.

NATURE AND SIGNIFICANCE OF MANAGEMENT

LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of management and its importance in an organisation;
2. Explain the nature of management as an art, science and profession;
3. Explain the functions of management; and
4. Appreciate the nature and importance of coordination.
IntroductIon
Management is essential for all organisations big or small, profit or non-profit, services or
manufacturing. Management is necessary so that individuals make their best contribution
towards group objectives.

concept
Management is a very popular term and has been used extensively for all types of activities
and mainly for taking charge of different activities in any enterprise. People in organisations
are performing diverse tasks but they are all working towards the same goal. Management
aims at guiding their efforts towards achieving a common objective — a goal. Thus,
management has to see that tasks are completed and goals are achieved (i.e., effectiveness)
with the least amount of resources at a minimum cost (i.e., efficiency).

Management, has therefore, been defined as a process of getting things done with the
aim of achieving goals effectively and efficiently. We need to analyse this definition.
There are certain terms which require elaboration. These are (a) process, (b) effectively,
and (c) efficiently.

Process in the definition means the primary functions or activities that management
performs to get things done. These functions are planning, organising, staffing, directing
and controlling which we will discuss later in the chapter and the book.

Being effective or doing work effectively basically means finishing the given task.
Effectiveness in management is concerned with doing the right task, completing activities
and achieving goals. In other words, it is concerned with the end result.

But it is not enough to just complete the tasks. There is another aspect also, i.e., being
efficient or as we say doing work efficiently.

Efficiency means doing the task correctly and with minimum cost. There is a kind of cost-
benefit analysis involved and the relationship between inputs and outputs. If by using less
resources (i.e., the inputs) more benefits are derived (i.e., the outputs) then efficiency has
increased. Efficiency is also increased when for the same benefit or outputs, fewer
resources are used and less costs are incurred. Input resources are money, materials,
equipment and persons required to do a particular task. Obviously, management is

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concerned with the efficient use of these resources, because they reduce costs and
ultimately lead to higher profits.

Definitions 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 and Heinz Weihrich
“Management is defined as t he process of planning, organising, actuating and controlling
an organisation’s operations in order 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
“Management is the process of working with and through others to effectively achieve
organisational objectives by efficiently using limited resources in the changing
environment.” Kreitner

Effectiveness versus Efficiency

These two terms are different but they are interrelated. For management, it is important to
be both effective and efficient. Effectiveness and efficiency are two sides of the same coin.
But these two aspects need to be balanced and management at times, has to compromise
with efficiency. For example, it is easier to be effective and ignore efficiency i.e., complete
the given task but at a high cost. Suppose, a company’s target production is 5000 units in
a year. To achieve this target the manager has to operate on double shifts due to power
failure most of the time. The manager is able to produce 5000 units but at a higher
production cost. In this case, the manager was effective but not so efficient, since for the
same output, more inputs (labour cost, electricity costs) were used.

At times, a business may concentrate more on producing goods with fewer resources i.e.,
cutting down cost but not achieving the target production. Consequently, the goods do not
reach the market and hence the demand for them declines and competitors enter the
market. This is a case of being efficient but not effective since the goods did not reach the
market.

Therefore, it is important for management to achieve goals (effectiveness) with minimum

resources i.e., as efficiently as possible while maintaining a balance between effectiveness
and efficiency. Usually high efficiency is associated with high effectiveness which is the aim
of all managers. But undue emphasis on high efficiency without being effective is also not
desirable. Poor management is due to both inefficiency and ineffectiveness.

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 characterIstIcs of ManageMent
After going through some of the definitions we find some elements that may be called the
basic characteristics of management:

Management is a goal-oriented process: An organisation has a set of basic goals which

are the basic reason for its existence. These should be simple and clearly stated. Different
organisations have different goals

(ii) Management is all pervasive: The activities involved in managing an enterprise are
common to all organisations whether economic, social or political. A petrol pump needs to
be managed as much as a hospital or a school. What managers do in India, the USA,
Germany or Japan is the same How they do it may be quite different. This difference is due
to the differences in culture, tradition and history.
(iii) Management is multidimensional: Management is a complex activity that has three
main dimensions. These are:
(a) Management of work: All organisations exist for the performance of some work. In a
factory, a product is manufactured, in a garment store a customer’s need is satisfied and in
a hospital a patient is treated. Management translates this work in terms of goals to be
achieved and assigns the means to achieve it. This is done in terms of problems to be
solved, decisions to be made, plans to be established, budgets to be prepared,
responsibilities to be assigned and authority to be delegated.

(B)Management of people: Human resources or people are an organisation’s greatest

asset. Despite all developments in technology “getting work done through people” is still a
major task for the manager. Managing people has two dimensions
(i) it implies dealing with employees as individuals with diverse needs and behavior;
(ii) it also means dealing with individuals as a group of people The task of management is to
make people work towards achieving the organisation’s goals, by making their strengths
effective and their weaknesses irrelevant.

C )Management of operations: No matter what the organisation, it has some basic

product or service to provide in order to survive. This requires a production process which
entails the flow of input material and the technology for transforming this input into the
desired output for consumption. This is interlinked with both the management of work and
the management of people.

IV. Management is a continuous process: The process of management is a series of

continuous, composite, but separate functions (planning, organising, directing, staffing and
controlling). These functions are simultaneously performed by all managers all the time.

V. Management is a group activity: An organisation is a collection of diverse individuals

with different needs. Every member of the group has a different purpose for joining the
organisation but as members of the organisation they work towards fulfilling the common
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organisational goal. This requires team work and coordination of individual effort in a
common direction. At the same time management should enable all its members to grow
and develop as needs and opportunities change.

VI. Management is a dynamic function: Management is a dynamic function and has to

adapt itself to the changing environment. An organization interacts with its external
environment which consists of various social, economic and political factors. In order to be
successful, an organisation must change itself and its goals according to the needs of the
environment.

VII. Management is an intangible force: Management is an intangible force that cannot

be seen but its presence can be felt in the way the organisation functions. The effect of
management is noticeable in an organization where targets are met according to plans,
employees are happy and satisfied, and there is orderliness instead of chaos.

objectives of Management
Management seeks to achieve certain objectives which are the desired result of any activity.
Objectives can be classified into organisational objectives, social objectives and personal or
individual objectives.

(i)Organisational Objectives: Management is responsible for setting and achieving

objectives for the organisation. It has to achieve a variety of objectives in all areas
considering the interest of all stakeholders including, shareholders, employees, customers
and the government. The main objective of any organisation should be to utilise human
and material resources to the maximum possible advantage, i.e., to fulfill the economic
objectives of a business. These are survival, profit and growth.

(a)Survival: The basic objectives of any business is survival. Management must strive to
ensure the survival of the organisation. In order to survive, an organisation must earn
enough revenues to cover costs.
(b)Profit: Mere survival is not enough for business. Management has to ensure that the
organisation makes a profit. Profit provides a vital incentive for the continued successful
operation of the enterprise. Profit is essential for covering costs and risks of the business.
(c)Growth: A business needs to add to its prospects in the long run, for this it is important
for the business to grow. To remain in the industry, management must exploit fully the
growth potential of the organisation. Growth of a business can be measured in terms of
sales volume increase in the number of employees, the number of products or the increase
in capital investment, etc. There can be other indicators of growth.
(ii) Social objectives: It involves the creation of benefit for society. As a part of society,
every organisation whether it is business or non-business, has a social obligation to fulfill.
This refers to consistently creating economic value for various constituents of society. This
includes using environmental friendly methods of production, giving employment
opportunities to the disadvantaged sections of society and providing basic amenities like
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schools and crèches to employees. The box given below illustrates how a company can
fulfill its social responsibility.

Personal objectives: Organisations are made up of people who have different personalities,
backgrounds, experiences and objectives. They all become part of the organisation to
satisfy their diverse needs. These vary from financial needs such as competitive salaries
and perks, social needs such as peer recognition and higher level needs such as personal
growth and development. Management has to reconcile personal goals with organisational
objectives for harmony in the organisation.

IMportance of ManageMent
Having understood that management is a universal activity that is integral to any
organisation we now examine some of the reasons that have made management so
important:
(i) Management helps in achieving group goals: Management is required not for itself but
for achieving the goals of the organisation. The task of a manager is to give a common
direction to the individual effort in achieving the overall goal of the organisation.
(ii) Management increases efficiency: The aim of a manager is to reduce costs and
increase productivity through better planning, organising, directing, staffing and controlling
the activities of the organisation.
(iii) Management creates a dynamic organisation: All organisations have to function in
an environment which is constantly changing. It is generally seen that individuals in an
organisation resist change as it often means moving from a familiar, secure environment
into a newer and more challenging one. Management helps people adapt to these changes
so that the organisation is able to maintain its competitive edge.
(iv) Management helps in achieving personal objectives: A manager motivates and leads
his team in such a manner that individual members are able to achieve personal goals
while contributing to the overall organisational objective. Through motivation and
leadership the management helps individuals to develop team spirit, cooperation and
commitment to group success.
(v) Management helps in the development of society:An organisation has multiple
objectives to serve the purpose of the different groups that constitute it. In the process of
fulfilling all these, management helps in the development of the organisation and through
that it helps in the development of society. It helps to provide good quality products and
services, creates employment opportunities, adopts new technology for the greater good of
the people and leads the path towards growth and development.
Nature of ManageMent
Management is as old as civilisation. Although modern organisations are of recent origin,
organised activity has existed since the time of the ancient civilisations. In fact,
organisations may be considered the distinguishing feature that separated civilised society
from uncivilised ones. The earliest management practices were a set of rules and
regulations that grew out of the experiences of governmental and commercial activities. The
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development of trade and commerce gradually led to the development of management
principles and practices. The term ‘management’ today has several different connotations
that highlight the different aspects of its nature. The study of management has evolved over
a period of time along with the modern organisations; based both on the experience and
practice of managers and a set of theoretical relationships. Over a period of time, it has
grown into a dynamic subject with its own special characteristics.
However, one question that needs to be addressed pertaining to the nature of management
is whether it is a science or an art or both? In order to answer this let us examine the
features of both science and art to see how far management fulfills them.
ManageMent as an art
What is art? Art is the skillful and personal application of existing knowledge to achieve
desired results. It can be acquired through study, observation and experience. Since art is
concerned with personal application of knowledge some kind of ingenuity and creativity is
required to practice the basic principles learnt. The basic features of an art are as follows:
(i) Existence of theoretical knowledge: Art presupposes the existence of certain
theoretical knowledge. Experts in their respective areas have derived certain basic
principles which are applicable to a particular form of art. For example, literature on
dancing, public speaking, acting or music is widely recognised.
(ii) Personalised application: The use of this basic knowledge varies from individual to
individual. Art, therefore, is a very personalised concept. For example, two dancers, two
speakers, two actors, or two writers will always differ in demonstrating their art.
(iii) Based on practice and creativity: All art is practical. Art involves the creative practice
of existing theoretical knowledge. We know that all music is based on seven basic notes.
However, what makes the composition of a musician unique or different is his use of these
notes in a creative manner that is entirely his own interpretation. Management can be said
to be an art since it satisfies the following criteria:
(i) A successful manager practices the art of management in the day-to-day job of managing
an enterprise based on study, observation and experience. There is a lot of literature
available in various areas of management like marketing, finance and human resources
which the manager has to specialise in. There is existence of theoretical knowledge.
(ii) There are various theories of management, as propounded by many management
thinkers, which prescribe certain universal principles. A manager applies these scientific
methods and body of knowledge to a given situation, an issue or a problem, in his own
unique manner. A good manager works through a combination of practice, creativity,
imagination, initiative and innovation. A manager achieves perfection after long practice.
Students of management also apply these principles differently depending on how creative
they are.
(iii) A manager applies this acquired knowledge in a personalised and skillful manner in the
light of the realities of a given situation. He is involved in the activities of the organisation,
studies critical situations and formulates his own theories for use in a given situation. This
gives rise to different styles of management The best managers are committed and

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dedicated individuals; highly trained and educated, with personal qualities such as
ambition, self motivation, creativity and imagination, a desire for development of the self
and the organisation they belong to. All management practices are based on the same set of
principles; what distinguishes a successful manager from a less successful one is the
ability to put these principles into practice.
ManageMent as a scIence
Science is a systematised body of knowledge that explains certain general truths or the
operation of general laws. The basic features of science are as follows:
(i) Systematised body of knowledge: Science is a systematic body of knowledge. Its
principles are based on a cause and effect relationship. For example, the phenomenon of an
apple falling from a tree towards the ground is explained by the law of gravity.
(ii) Principles based on experimentation: Scientific principles are first developed through
observation and then tested through repeated experimentation under controlled conditions.
(iii) Universal validity: Scientific principles have universal validity and application.

Based on the above features, we can say that management has some characteristics of
science.
(i) Management has a systematised body of knowledge. It has its own theory and principles
that have developed over a period of time, but it also draws on other disciplines such as
Economics, Sociology, Psychology and Mathematics. Like all other organised activity,
management has its own vocabulary of terms and concepts. For example, all of us discuss
sports like cricket and soccer using a common vocabulary. The players also use these
terms to communicate with each other. Similarly managers need to communicate with one
another with the help of a common vocabulary for a better understanding of their work
situation.
(ii) The principles of management have evolved over a period of time based on repeated
experimentation and observation in different types of organisations. However, since
management deals with human beings and human behaviour, the outcomes of these
experiments are not capable of being accurately predicted or replicated. Therefore,
management can be called an inexact science. Despite these limitations, management
scholars have been able to identify general principles of management. For example,
scientific management principles by F.W. Taylor and Functional Management principles by
Henri Fayol which you will study in the next chapter.
(iii) Since the principles of management are not as exact as the principles of science, their
application and use is not universal. They have to be modified according to a given
situation. However, they provide managers with certain standardised techniques that can
be used in different situations. These principles are also used for training and
development of managers. You must have understood from the foregoing discussion that
management has features of both art and science. The practice of management is an art.
However, managers can work better if their practice is based on the principles of
management. These principles constitute the science of management. Management as an

7
art and a science are therefore not mutually exclusive, but complement each other.

ManageMent as a professIon
You have understood so far that all forms of organised activity need to be managed. You
would also have observed that organisations look for individuals with specific qualifications
and experience to manage them. It has also been observed that there has been an increase
in the corporate form of business on the one hand and increasing emphasis on managed
business concerns. Does this imply that management is a profession? To answer this
question let us examine the salient features of a profession and see whether management
satisfies them. A profession has the following characteristics:
(i) Well-defined body of knowledge: All professions are based on a well-defined body of
knowledge that can be acquired through instruction.
(ii) Restricted entry: The entry to a profession is restricted through an examination or
through acquiring an educational degree. For example, to become a chartered accountant
in India a candidate has to clear a specified examination conducted by the Institute of
Chartered Accountants of India.
(iii) Professional association: All professions are affiliated to a professional association
which regulates entry, grants certificate of practice and formulates and enforces a code of
conduct. To be able to practice in India lawyers have to become members of the Bar
Council which regulates and controls their activities.
(iv) Ethical code of conduct: All professions are bound by a code of conduct which guides
the behaviour of its members. All doctors, for example, take the oath of ethical practice at
the time they enter the profession.
(v) Service motive:The basic motive of a profession is to serve their client’s interests by
rendering dedicated and committed service. The task of a lawyer is to ensure that his client
gets justice. Management does not meet the exact criteria of a profession. However, it does
have some of the features of a profession:
(i) All over the world there is marked growth in management as a discipline. It is based on a
systematic body of knowledge comprising welldefined principles based on a variety of
business situations. This knowledge can be acquired at different colleges and professional
institutes and through a number of books and journals. The subject of management is
taught at different institutions. Some of these have been set up with the specific purpose of
providing management education such as the Indian Institutes of Management (IIMs) in
India. Entry to different institutes is usually through an examination.
(ii) There is no restriction on anyone being designated or appointed as manager in any
business enterprise. Anyone can be called a manager irrespective of the educational
qualifications possessed. Unlike professions such as medicine or law which require a
practicing doctor or lawyer to possess valid degrees, nowhere in the world is it mandatory
for a manager to possess any such specific degree. But professional knowledge and training
is considered to be a desirable qualification, since there is greater demand for those who
possess degrees or diplomas from reputed institutions. Therefore, as such the second
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criterion has not been strictly met.
(iii) There are several associations of practising managers in India, like the AIMA (All India
Management Association) that has laid down a code of conduct to regulate the activities of
their members. There is, however, no compulsion for managers to be members of such an
association nor does it have any statutory backing.
(iv) The basic purpose of management is to help the organisation achieve its stated goal.
This may be profit maximisation for a business enterprise and service for a hospital.
However, profit maximisation as the objective of management does not hold true and is fast
changing. Therefore, if an organisation has a good management team that is efficient and
effective it automatically serves society by providing good quality products at reasonable
prices.

LeveLs of ManageMent
Generally speaking there are three levels in the hierarchy of an organisation.
(i) Top Management: They consist of the senior-most executives of the organisation by
whatever name they are called. They are usually referred to as the chairman, the chief
executive officer, chief operating officer, president and vice-president. Top management is a
team consisting of managers from different functional levels, heading finance, marketing
etc. For example chief finance officer, vice president (marketing). Their basic task is to
integrate diverse elements and coordinate the activities of different departments according
to the overall objectives of the organisation. These top level managers are responsible for
the welfare and survival of the organisation. They are responsible for all the activities of the
business and for its impact on society. The job of the top manager is complex and stressful,
demanding long hours and commitment to the organisation.
(ii) Middle Management: is the link between top and lower level managers. They are
subordinate to top managers and superior to the first line managers. They are usually
known as division heads, for example production manager. Middle management is
responsible for implementing and controlling plans and strategies developed by top
management. At the same time they are responsible for all the activities of first line
managers. Their main task is to carry out the plans formulated by the top managers.
(iii) Supervisory or Operational Management: Foremen and supervisors comprise the
lower level in the hierarchy of the organisation. Supervisors directly oversee the efforts of
the workforce. Their authority and responsibility is limited according to the plans drawn by
the top management. Supervisory management plays a very important role in the
organisation since they interact with the actual work force and pass on instructions of the

9
middle management to the workers.

MAGERIAL LEVEL(PICTURE FROM PAGE NO 19)

10
FunctIons of ManageMent
Management is described as the process of planning, organising, directing and controlling
the efforts of organisational members and of using organisational resources to achieve
specific goals.
(i)Planning is the function of determining in advance what is to be done and who is to do
it. This implies setting goals in advance and developing a way of achieving them efficiently
and effectively Planning cannot prevent problems, but it can predict them and prepare
contingency plans to deal with them if and when they occur.
(ii)Organising is the management function of assigning duties, grouping tasks,
establishing authority and allocating resources required to carry out a specific plan. Once a
specific plan has been established for the accomplishment of an organisational goal, the
organising function examines the activities and resources required to implement the plan.
It determines what activities and resources are required. It decides who will do a particular
task, where it will be done, and when it will be done. Organising involves the grouping of
the required tasks into manageable departments or work units and the establishment of
authority and reporting relationships within the organisational hierarchy.

(iii)Staffing simply stated, is finding the right people for the right job. A very important
aspect of management is to make sure that the right people with the right qualifications are
available at the right places and times to accomplish the goals of the organisation. This is
also known as the human resource function and it involves activities such as recruitment,
selection, placement and training of personnel. Infosys Technologies which develops
software needs systems analysts and programmers, whereas Fabmart needs a team of
designers and craftspeople.
(iv)Directing involves leading, influencing and motivating employees to perform the tasks
assigned to them. This requires establishing an atmosphere that encourages employees to
do their best. Motivation and leadership are two key components of direction. Directing also
involves communicating effectively as well as supervising employees at work. Motivating
workers means simply creating an environment that makes them want to work. Leadership
is influencing others to do what the leader wants them to do. A good manager directs
through praise and criticism in such a way that it brings out the best in the employee.
(v)Controlling is the management function of monitoring organisational performance
towards the attainment of organisational goals. The task of controlling involves establishing
standards of performance, measuring current performance, comparing this with
established standards and taking corrective action where any deviation is found. Here
management must determine what activities and outputs are critical to success, how and
where they can be measured and who should have the authority to take corrective action.
coordInatIon — the essence of ManageMent
You have understood by now that a manager has to perform five interrelated functions in
the process of managing an organisation which is a system made up of different interlinked
and interdependent subsystems. A manager has to link these diverse groups towards the
achievement of a common goal. The process by which a manager synchronises the activities
11
of different departments is known as coordination. Coordination is the force that binds all
the other functions of management. It is the common thread that runs through all activities
such as purchase, production, sales, and finance to ensure continuity in the working of the
organisation. Coordination is sometimes considered a separate function of
management. It is however, the essence of management, for achieving harmony
among individual efforts towards the accomplishment of group goals. Each managerial
function is an exercise contributing individually to coordination. Coordination is implicit
and inherent in all functions of an organisation.

Definitions of Coordination
Coordination is balancing and keeping together the team by ensuring suitable
allocation of tasks to the various members and seeing that the tasks are performed
with harmony among the members themselves. E.F.L. Brech

Coordination is the process whereby an executive develops an orderly pattern of

group efforts among his subordinates and secures unity of action in the pursuit of
common purpose. McFarland

Coordination is the orderly synchronising of efforts of subordinates to provide proper

amount, timing and quality of execution so that their united efforts lead to the
stated objectives, namely, the common purpose of the enterprise. Theo Haimann

characterIstIcs of coordInatIon
The definitions given above highlight the following features of coordination:

(i) Coordination integrates group efforts: Coordination unifies unrelated or diverse

interests into purposeful work activity. It gives a common focus to group effort to ensure
that performance is as it was planned and scheduled.
(ii) Coordination ensures unity of action: The purpose of coordination is to secure unity
of action in the realisation of a common purpose. It acts as the binding force between
departments and ensures that all action is aimed at achieving the goals of the organisation.

(iii) Coordination is a continuous process: Coordination is not a one-time function but a

continuous process. It begins at the planning stage and continues till controlling.

(iv) Coordination is an all pervasive function:Coordination is required at all levels of

management due to the interdependent nature of activities of various departments. It
integrates the efforts of different departments and different levels.

(v) Coordination is the responsibility of all managers: Coordination is the function of

every manager in the organisation. Top level managers need to coordinate with their
subordinates to ensure that the overall policies for the organisation are duly carried out.
Middle level management coordinates with both the top level and first line managers.
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Operational level management coordinates the activities of its workers to ensure that work
proceeds according to plans.
(vi) Coordination is a deliberate function: A manager has to coordinate the efforts of
different people in a conscious and deliberate manner. Even where members of a
department willingly cooperate and work, coordination gives a direction to that willing
spirit. Cooperation in the absence of coordination may lead to wasted effort and
coordination without cooperation may lead to dissatisfaction among employees.
Coordination, therefore, is not a separate function of management, but its very
essence. For an organisation to effectively and efficiently achieve its objectives coordination
is required. Like a thread in a garland, coordination is a part of all management functions.
IMportance of coordInatIon
Coordination is important as it integrates the efforts of individuals, departments and
specialists. The primary reason for coordination is that departments and individuals in the
organisation are interdependent, i.e. they depend on each other for information and
resources to perform their respective activities. Thus, managers need to reconcile
differences in approach, timing, effort or interest. At the same time, there is a need to
harmonise individual goals and organisational goals.

(i) Growth in size: As organisations grow in size, the number of people employed by the
organisation also increases. At times, it may become difficult to integrate their efforts and
activities. All individuals differ in their habits of work, background, approaches to
situations and relationships with others. It becomes necessary to ensure that all
individuals work towards the common goals of the organisation. But employees may have
their own individual goals also. Therefore, for organisational efficiency, it is important to
harmonise individual goals and organisational goals through coordination.
(ii) Functional differentiation: Functions of an organisation are divided into departments,
divisions and sections. In an organisation there may be separate departments of finance,
production, marketing or human resources. All these departments may have their own
objectives, policies and their own style of working. For example, the marketing
department’s objective may be to increase sales by 10 per cent by offering discounts. But,
the finance department may not approve of such discounts as it means loss of revenue.
These kinds of conflict arise in organisations because each unit/department is performing
activities in isolation from others and barriers between departments are becoming more
rigid. However, all departments and individuals are interdependent and they have to
depend on each other for information to perform their activities. The activity of each
department needs to be focused on attainment of common organisational goals. The
process of linking the activities of various departments is accomplished by coordination.
(iii) Specialisation: Modern organisations are characterised by a high degree of
specialisation. Specialisation arises out of the complexities of modern technology and the
diversity of tasks to be performed. Organisations, therefore, need to employ a number of
specialists. Specialists usually think that they only are qualified to evaluate, judge and
decide according to their professional criteria. They do not take advice or suggestions from
13
others in matters pertaining to their area of specialisation. This often leads to conflict
amongst different specialists as well as others in the organisation. Therefore, some
coordination is required by an independent person to reconcile the differences in approach,
interest or opinion of the specialists.

In the absence of coordination what results is chaos

ManageMent In the twenty-fIrst century

Even as you read this chapter, the organisation and its management are changing. As
boundaries between cultures and nations get blurred and new communication technology
makes it possible to think of the world as a ‘global village’, the scope of international and
intercultural relationships is rapidly expanding. The modern organisation is a global
organisation that has to be managed in a global perspective. What does this imply?

14
 CASE STUDIES--1

Management at HCL

At a time when India had a total of 250 computers, Shiv Nadar led a young team which
passionately believed in the growth of the indigenous IT industry. That vision in 1976, born
out of a Delhi ‘barsaati’, has resulted three decades later in creating a US $ 3.5 billion
global enterprise. HCL is today a leader in the IT industry, employing 41,000 professionals
and having a global presence in 16 countries spanning locations in the US, Europe, Japan,
ASEAN and the Pacific Rim. HCL’s business today spans IT hardware manufacturing and
distribution, system integration, technology and software services, business process
outsourcing, and infrastructure management. HCL Enterprises is a leader in global
technology and IT services. HCL’s basic plan of developing an indigenous microcomputer
bore fruit in 1978 at the same time as Apple and three years before IBM. This was
considered by many industry observers as the birth of the Indian computer industry. Under
the able direction of its founding fathers it commenced global operations
in the US in 1988. Shiv Nadar’s risk-taking ability is legendary and he has often made
daring forays based on his conviction of the future. At a time when hardware was the name
of the game, Nadar foresaw the huge potential in the area of IT education and learning from
which NIIT was born. Yet again when software development was still in the nascent stages,
Shiv Nadar took the lead and today HCL is a force to reckon with in the global markets. The
organisation structure of HCL Enterprises consists of two listed companies in India – HCL
Technologies and HCL Infosystems. Shiv Nadar, Chairman and CEO, attributes the success
of the group to its management team and their entrepreneurial spirit, which together have
enabled it to handle rapid changes in environments and technologies, and to transform
threats into opportunities. Fundamental to the process has been the development of new
paradigms for the unprecedented situations into which the group ventures. These include
guidelines for organisation restructuring, market creation, technology leveragingand
business up-scaling. Like any other business enterprise profits are important for the
survival and growth of HCL as an enterprise. At HCL the management believes that a
satisfied employee creates a satisfied customer, who in turn creates profits that lead to
satisfied shareholders. HCL has a strong sense of social responsibility. It has set up
educational institutions in the fields of management, engineering and computer education,
in which one-third of the students are girls. According to Shiv Nadar, the future belongs to
the global enterprise which is able to transform itself according to the challenges of global
economy.

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 CASE STUDIES—2

The Management Mantra from GE

Jack Welch was appointed CEO of GE in 1981. At that time the firm had a market
capitalisation of $13 billion. In 2000 when he stepped down the firm’s turnover had
increased multifold to $500 billion. What was the secret of Welch’s success? He has laid
down the following pointers for managers to be successful:
Create a vision and then ignite your organisation to make this vision a reality. Get
people so passionate about what they are doing that they cannot wait to execute this plan.
Have great energy, competitive spirit and the ability to spark excitement and achieve
results. Search for leaders who have the same qualities.
Focus on strategic issues. Your job is to understand the vital issues within each of your
businesses. Recognise the talent needed to win in those markets.
Focus on the main issue . Your job is to see the big picture. Don’t manage every detail.
Don’t get caught up in the minute details, but instead inspire others to execute some of
your vision. Surround yourself with great people and trust them to do their job and
contribute their best to the organisation.
Involve everyone and welcome great ideas from everywhere. Anyone can be a leader,
just so long as they contribute, and the most meaningful way for anyone to contribute is to
come up with a good idea. Business is all about getting the best ideas from everyone. New
ideas are the lifeblood of the organisation, the fuel that makes it run. “The hero is the
person with a new idea.” There is simply nothing more important to an organisation than
expressing ideas and creating a vision.
Lead by example. To spark others to perform, you must lead by example. Jack Welch’s
mastery of the four E’s of leadership – Energy, Energise, Edge, and Execution – was always
in evidence. “He had great energy, sparked others, had incredible competitive
spirit, and had a record of execution that was second to none. This is a key of the Welch
phenomenon. Had he been lacking in any of the traits he espoused, he would not have
commanded such acclaim.”

CASE STUDIES—3

ITC – Empowering Rural India

A quiet digital revolution is reshaping the lives of farmers in remote Indian villages. In these
villages, farmers grow soyabeans, wheat and coffee in small plots of land, as they have done
for thousands of years. A typical village has no reliable electricity and has antiquated
telephone lines. The farmers are largely illiterate and have never seen a computer. But
farmers in these villages are conducting e-business through an initiative called E-Choupal,
created by ITC, one of India’s largest consumer product and agribusiness companies. ITC’s
E-Chaupal initiative is a fine example of a business organisation fulfilling corporate social
responsibility. The basic aim of the programme is to provide farmers in rural India with the

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opportunity to make use of a direct marketing channel eliminating multiple intermediation
and wasteful handling and unnecessary transaction costs. It is the single-largest
information technology-based intervention by a corporate entity in rural India, transforming
the Indian farmer into a progressive knowledge-seeking citizen, enriching him with
knowledge and elevating him to a new order of empowerment. E-Choupal delivers real-time
information and customised knowledge to improve the farmer’s decision-making ability,
thereby better aligning farm output to market demands; securing better quality,
productivity and improved price discovery. Given the low levels of literacy in the rural
sector, the role of the Choupal Sanchalak, the lead farmer of the village, in facilitating
physical interface between the computer terminal and the farmers is central to the project.
E-Choupal Smart Cards enable farmer identification to provide customised information on
the E-Choupal website. Online transactions are captured to reward farmers for volume and
value of usage. The E-Chaupal initiative has found its way into the Harvard Business
School as a leading case study illustarating the use of modern technology by a leading
business house for the benefit of the rural poor.

CASE STUDIES—4

‘DABBAWALLAS’ – Excellence through Coordination

The Dabbawallas of Mumbai is the story of a SIX SIGMA business enterprise. The success
of the business lies in the complex yet well coordinated exercise that is carried out on the
streets of Mumbai day after day. What is the secret behind the efficiency with which their
business is conducted?
The story of the dabbawallas begins in the kitchens of Mumbai. After they step out of their
door, someone begins the time-consuming process of preparing the worker a fresh,
homecooked lunch. What happens next for demonstrates the coordination of the
dabbawallas system. The first dabbawalla picks up the tiffin from home and takes it to the
nearest railway station.The second dabbawalla sorts out the dabbas at the railway station
according to destination and puts them in the luggage carriage. The third one travels with
the dabbas to the railway stations nearest to the destinations. The fourth one picks up
dabbas from the railway station and drops them off at the offices. By mid-morning,
thousands of dabbawallas are bicycling through the streets of Mumbai, ensuring a hot
home cooked lunch for their customers. The whole tiffin distribution requires negligible
technology. The dabbawallas rely on low capital and use cycles, wooden carriages and local
trains to achieve their target.There are several groups that work independently and network
with each other to achieve their goal. Each area is divided into several small distribution
sectors and each sector is handled by a particular person. This person understands the
address in that locality very well. Also, this perfection comes with practice. Many new
employees work for months under the guidance of their seniors. Punctuality and time
management are on top of the agenda for dabbawallas. Whatever be the circumstances, the
dabbawallas never get delayed even by a few minutes.

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 Some Interesting Cross-disciplinary Perspectives

Anthropology – Anthropology is the study of societies, which helps us learn about human
beings and their activities. Anthropologists’ work on cultures and environments, for
instance, has helped managers to better understand differences in fundamental values,
attitudes, and behavior between people in different countries and within different
organisations.
Economics – Economics is concerned with the allocation and distribution of scarce
resources. It provides us with an understanding of the changing economy as well as the
role of competition and free markets in a global context. An understanding of free trade and
protectionist policies is absolutely essential to any manager operating in the global
marketplace, and these topics are addressed by economists.
Philosophy – Philosophy courses inquire into the nature of things, particularly values and
ethics. Ethics are standards that govern human conduct. These ethics have shaped today’s
organisations by providing a basis for legitimate authority, linking rewards to performance,
and justifying the existence of business and the corporate form.
Political Science – Political science is the study of the behavior of individuals and groups
within a political environment. Management is affected by a nation’s form of government –
by whether it allows its citizens to hold property, by its citizens’ ability to engage in and
enforce contracts, and by the appeal mechanisms available to redress grievances. A
nation’s stand on property, contracts, and justice, in turn, shapes the type, form, and
policies of its organisations.
Psychology – Psychology is the science that seeks to measure, explain, and sometimes
change the behaviour of humans and other animals. Today’s managers confront both a
diverse customer base and a diverse set of employees. Psychologists’ efforts to understand
gender and cultural diversity provide managers with a better perception of the needs of
their changing customer and employee populations. Psychology courses are also relevant to
managers in terms of gaining a better understanding of motivation, leadership, trust,
employee selection, performance appraisals, and training techniques.
Sociology – Sociology is the study of people in relation to their fellow human beings. What
are some of the sociological issues that have relevance to managers? Here are a few. How
are societal changes such as globalisation, increasing cultural diversity, changing gender
roles, and varying forms of family life affecting organisational practices? What are the
implications of schooling practices and education trends on future employees’ skills and
abilities? Answers to questions such as these have a major effect on how managers operate
their businesses.

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QUESTION BANK AS PER NCERT TEXT BOOKS

Short Answer Type

1. Define management.
2. Name any two important characteristics of management.
3. Ritu is the manager of the northern division of a large corporate house. At what level
does she work in the organisation? What are her basic functions?
4. Why is management considered a multi-faceted concept?
5. Discuss the basic features of management as a profession.
Long Answer Type
1. Management is considered to be both an art and science. Explain.
2. Do you think management has the characteristics of a full fledged profession?
3. Coordination is the essence of management. Do you agree? Give reasons.
4. “A successful enterprise has to achieve its goals effectively and efficiently.” Explain.
5. Management is a series of continuous interrelated functions. Comment.
Multiple Choice
1. Which is not a function of management of the following
(a) planning (b) staffing (c) cooperating (d) controlling
2. management is
(a) an art (b) a science (c) both art and science (d) neither
3. the following is not an objective of management
(a) earning profits (b) growth of the organisation (c) providing employment (d) policy making
4. policy formulation is the function of
(a) top level managers (b) middle level managers (c) operational management (d) all of the
above
5. coordination is
(a) function of management (b) the essence of management (c) an objective of management
(d) none of the above.

ARUNA KUMAR
LECTURER IN BUSINESS STUDIES
GPUC-RIPPONPET
SHIMOGA(D) HOSANAGAR(T)
CELL NO 8722242205/9448628462
EMAIL—[email protected]

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