SIDDHI VINAYAK TUITION CLASSES

BUSINESS STUDIES
Nature and Significance of Management

Definition
“Management means managing activities. It is defined as the process of designing and maintaining an
environment in which individuals work together in groups for achievement of organisational goal efficiently
and effectively”

„„Management is a process wherein various activities and functions are performed to achieve the various
goals and objectives of an organisation in an effective and efficient manner.‟‟

Difference between Effectiveness and Efficiency

Basis Effectiveness Efficiency
Meaning It refers to the completion of It refers to the completion of
work on time. work correctively with
minimum cost and maximum
profit
Objective To achieve end results on time Performing task with least
wastage of time and effort(cost)
Main element Time Cost

Characteristics of Management
a) Goal Oriented Process: Every organization has its own set of objectives to achieve as an end result.
It is through management that the efforts of the people working in the organization are directed
towards accomplishment of these objectives. Hence, we can say management is a goal oriented
process. It is fruitless to operate if an organization doesn't have a set goal.

b) All Pervasive: Management is a universal process. It is necessary in all types of organization

whether big or small and is performed at every level of authority;top, middle or lower. The five
activities of management are the same for all the organizations irrespective of economic, social or
political boundaries. Its just that the methodology differs but the basics and foundation remains the
same.

c) Multidimensional: Management has three important dimensions. These are asfollows:

 Management of work: Every enterprise has a purpose behind its existence. The major purpose is
performance of certain works for accomplishment of end results. Management converts the work to
be performed in terms of goals and helps in achieving them.For example: A hospital operates for the
treatment of patients. A super market exists for the fulfillment of day to day demands of people.
 Management of people: Management unites the efforts of the group of individuals working in the
enterprise so that they can work together as a team. Human resource or manpower is said to be the
biggest asset of an organization. The task of a management is to get things done by individualsas well
as groups of people.
 Management of operations: Every enterprise has some basic product or service to deliver which
requires a production process, and a set of operations where the inputs are converted to final product,
this is management of operations.

d) Continuous Process: Management is a continuous process as it consists of a series of interrelated

activities. These functions should be performed in a systematic and orderly manner and in a proper
sequence. It is a never ending process. The activities include functions like planning, organizing,
directing, staffing and controlling.
 e) A Group Activity: Management is a group activity as it is concerned with the efforts of a group of
individuals. It unites the efforts of the members in the group and directs them towards attainment of a
common objective.

f) A Dynamic Function: The business policies and practices of the organization needs to be changed
according to the business environment. The world is changing dynamically in all aspects so new
practices and conventions must be followed to meet to the changing needs of the environment.

g) Intangible Force: Management is an invisible force. It cannot be seen and touched, but it can be felt
by the way the organisation works.

Objectives of Management
Objectives are the desired results that drive the management to work towards it.There are three objectives of
management:

1. Organizational Objectives: Organizational Objectives are those objectives that are set by the
management of an organization within a predetermined time period. An organization has different
types of objectives to be achieved, these objectives are determined in consideration to the different
interests of the stakeholders. The main objective of an organization is optimum utilisation of
resources in the most effective and efficient manner. It is further divided into three parts- survival,
profit and growth.
 Survival: Earning enough revenues to cover cost. Management by taking positive decisions with
regard to different business activities ensures survival of business for long term.
 Profitability: Earning adequate profit in order to survive and grow. Profits provide a vital incentive
for the continued successful operation of the enterprise
 Growth: Growth indicates how well it exploits the potential opportunities. Growth of a business can
be measured in terms of sales volume increase, number of employees, products etc.

2. Social Objectives: Any organization that operates, doesn't solely have an objective of profit making.
It also has some social obligations or social objectives to fulfill towards the society. This may differ
from organization to organization. For example: Some aim at providing basic infrastructure to the
people living around, some aim at providing maximum employment, some aim at producing
products that are environment friendly.

3. Personal Objectives: Each and every individual joins an organization for pursuing their personal
objectives. Some join for a good package of salary, some join for greater recognition, some just for
survival. So, this depends upon individual to individual. It is important for an organization to identify
the personal objectives to integrate it with the organizational objectives to bring harmony in the
organization .

Importance of Management
a) Achievement of group objectives: Management creates coordination and team spirit in the group of
individuals. Management also inspires the members of the groups to make their best contribution
towards the achievement of the common objective. This common objective is set by the management
itself.

b) Optimum utilization of resources: Management brings together men, money,material, machine in the
right proportion to reduce cost and maximize production.

c) Creates dynamic organization: Management helps the employees to adapt as per changing situation
in the organisation.

d) Social development: Management increases the standard of living of the people by providing good
quality products and services at minimum cost. It also helps in generating employment opportunities
 and adopting new technologies.

e) Achievement of personal objectives:Management plays an important role in identifying the

personal objectives so as to integrate it with the organizational objectives to fulfill the personal
objectives of the individuals and maintain harmony in the organisation.

Nature of Management
Management can be an art, science or a profession.

Management as an Art
Art is a skill based creativity. It involves use of theoritical knowledge, observation and experiences with
creativity and personal touch to achieve desired results.

Management can be called as an art because of following characteristics present in management:-

1.Existence of Theoritical Knowledge

To pursue art, an artist requires basic theoritical knowledge in the specific field. Similarly in management,
managers need to specialised in the areas like marketing, finance, production, HR etc The theoritical
knowledge can be acquired by reading books, joining a coarses, etc.

2.Personalised Application
Every artist may acquire the same theoritical knowledge but they apply the knowledge as per their personal
skill, taste and preferences. Similarly, a manager may follow the same principles but the application of such
principle may differ from situation to situation, individual to individual.

3.Based on Practice and Creativity

To be perfect in art, continuous and creative practice of theoritical knowledge is a must. Creativity lies in the
personal interpretation of an artist. Similarly, a manager while handling complex issues, solving diverse
problems gains experiences and improves managerial skills.

Management as a Science.
Science is a systematised body of knowledge that explains certain general truth or the operation of general
laws. It is based on logically observed facts and findings.

Management can be called as science due to presence of following characteristics:-

1.Systematic Body of knowledge

Science is systematic body of knowledge and its principles are based on a cause and effect relationship(if a
principle is applied on a situation then what will be its likely effect). Similarly,management is also based on
theories and principles developed over a period of time .Like science, management also follows its own
concept and terminology / methodology.

2.Principle Based on Experimentation

Scientific principles are developed through observation and then tested through repeated experimentation
under different conditions. Management principles are also a result of experimentation and observation
gathered while performing diverse activities in different types of organisation.

3.Universal Validity
Scientific principles are universely valid and applicable. The principles of management do provides
standardised techniques to manage and handle different situation but this principle need modification to be
suitable to a given situation.

Management As Profession
Management can be called as profession due to presence of certain characteristics of profession present in it.
They are:
1.Well defined Body of Knowledge
Each professional may be a lawyer, chartered accountant or a doctor is required to gain specialised
knowledge of the profession. Similarly, management also requires specialised knowledge, which can be
gained through books or courses available in various universities.

2.Restricted Entry
To be a professional ,it is a must that an individual acquire the educational degree. But there was no such
requirement in the field of management. However, individual having the management degree have an edge
over other individuals without degree in the field of management.

3.Professional Associations
Every professional are affliated to their respestive professional associations; which regulate their entry, grant
certificate, formulate and enforces a code of conduct. There are management associations, which have set
membership rules and ethical codes, but it is not compulsory for managers to be a part of them.

4.Ethical code of Conduct

Behaviour of each professional is bounded by the code of conduct laid by the proffesional organization they
belong to. Similarly, All India Management Association (AIMA)management body has devised a code of
conduct for managers.

5. Service Motive
The basic motive of a profession is to serve their client‟s interests by rendering dedicated and committed
service. All professionals are also anticipated to serve society rather than simply earn profit.

Levels of Management
Management is universal term used for certain functions performed by individuals in an enterprise who are
bound together in a hierarchy of relationships. Generally, there are three levels in hierarchy of an
organisation

Top Level Management

This level of management includes all such individuals who are responsible for taking care and crucial
decisions for the organisations.

For eg:- The Chairman, The Chief Executive officer, Chief Operating Officer, President,etc.

Following are the functions performed by top level managerient

1. Setting up of main objectives of organisation.

2.Coordinating the resources and activities of all the departments.
3. Formulation of plans and policies.
4. Managing human resources.
5.They are responsible for survival & welfare of organisation.

Middle Level Management

Middle level management is responsible for implimentation & controlling the plans and strategies developed
by top level management. In the process, they act as a link between top level managers and lower level
managers.
For eg:- Head of Department, Factory Head, Operation managers, etc.

Following are the functions performed by Middle level managers.

1) 1.Interpretation of plans and policies framed by top management.

 2) 2.Ensuring that their department has the necessary personnel.
3) Assigning necessary to their (personnel) duties and responsibilities.
4) Motivating the persons to achieve their desired objectives / ability.

Supervisory or Operational Level Management

Foreman and supervisor comprise the lower level in the hierarchy of organisation. Supervisor directly
oversees the efforts of the workers. Supervisory management plays a very vital role since they interact with
actual work force and passes on instructions of middle management to the workers.

Functions of Supervisory or Operational Level:

1) Representing grievances of workers to top level.

2) Providing good working conditions.
3) To takecare about safety of workers.
4) Maintaining quality standards.
5) Boosting the moral of workers.

Functions of Management
 Planning : Setting objectives and targets and formulating an action plan. It bridges the gap between
where we are and where we want to reach.
 Organising: Involves assigning duties, grouping tasks, establishing authority and responsibility
relationships and allocating the resources required to perform a specific plan.
 Staffing: Finding and placing the right person for the right job at the right time. It involves
recruitment, selection, placement, induction and development of employees.
 Directing: Refers to leading, influencing, motivating the staff chosen to perform the assigned task
efficiently and effectively.
 Controlling: Refers to monitoring organizational activities towards the attainment of organizational
goals. It involves setting standards measuring current performance, comparing with the standards,
and taking corrective action for any deviations.

Coordination:-

 Coordination is the force that binds all the other functions of management.
 Coordination is the essence of management for achieving harmony among individual efforts towards
the achievement of organisational goals.
 Coordination is the process by which a manager synchronises (to make something happen or work at
the same time or speed) the activities of different departments towards achievement of common a
goal.
 Thus, coordination is the common thread that run through all the activities to ensure continuity in the
working of organisation.

Features of coordination:-
a) Coordination Integrates Group Effort: It is an orderly arrangement of group effort to ensure
that performance is as per plans and schedules.
b) Coordination Ensures unity of action: It is a binding force between various departments and
ensures that all efforts are focused towards achieving the organizational goal.
c) Coordination is a Continuous Process: It is a never-ending process as its needs are felt at all
levels and in all activities in the organisations. It begins at the planning stage and continues until
controlling.
d) Coordination is the responsibility of all managers: coordination is equally important at all
levels of management. It is the responsibility of all the individuals in an organisation to carry out
their work in a responsible manner and coordinate with each other to achieve organizational
goals.
 e) Coordination is a deliberate function: A manager has to coordinate the efforts of different
people in a conscious and deliberate manner. In other words, coordination is never established by
itself rather it is a conscious effort on the part of every manager.
f) Coordination is all pervasive function: It is needed in all departments and at all levels. Lack of
coordination can lead to overlapping of activities.

Importance of coordination:-
a) Growth in the Size: An organisations growth results in the increase in the number of people
employed with varied individual aspirations and culture. So it is important to harmonize individual
goal with the organizational goals through coordination.
b) Functional Differentiation: All the departments and divisions may have their own, objective,
policies and their own style of working. However all departments and individuals are interdependent
and cannot work in isolation. Thus, coordination is necessary for linking the activities of various
departments.
c) Specialization: Mostly specialists have a feeling of superiority and prioritize their zone of activities.
Coordination seeks to sequence and integrate all the specialists‟ activities into a wholesome effort.

Co-ordination is known as essence of management:-

1. Co-ordination in planning
 Between plan of organisation and departments.
 Beteween objectives and available physical and human resources.

2. Co-ordination in organising
 Between resources and activities of organisation.
 Among authority,responsibility and accountability.

3. Co-ordination in staffing
 Between skills and job assigned.
 Between efficiency and the compensation.

4. Co-ordination in directing
 Among orders, instructions, guidelines, suggestions.
 Between superiors and subordinates.

5.Co-ordination in controlling
 Between standard and actual performance.
 Between correction in deviations and achievements of objectives.