Nature and Significance of Management notes for CBSE Class ...

BUSINESS STUDIES Nature and Significance of Management

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Nature and Significance of Management Topics Covered

Concept of Management

Characteristics of Management

Objectives of Management

Importance of Management

Nature of Management

Levels and Functions of Management

Coordination

Concept of Management

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.

According to Robert L. Trewelly and M. Gene Newport, ‘Management is the process of planning,

organising, actuating and controlling an organisation’s operations to achieve coordination of the human

and material resources essential in the effective and efficient attainment of objectives.’

The definition of the term management comprises three important concepts:

Process refers to the performance of various functions of the management, namely planning,

organising, staffing, directing and controlling.

Effectiveness implies successfully completing the given task in the stipulated time. It focuses on

the end result. On the other hand, efficiency implies completing the task with minimum possible

resources or more benefits can be derived with the use of the given resources. For an organisation,

both effectiveness and efficiency are equally important.

While effectiveness implies actual achievement of goals, efficiency implies reduction in cost.

However, in the achievement of one, the organisation has to often compromise on the other. In

other words, if it aims at effectiveness, it may have to compromise on efficiency to some extent and

vice versa.



Characteristics of Management

1) Goal-oriented process: Management always aims at achieving the goal of the organisation. For

example, if the plan of a company is to sell 100 flats in a month, then the company will chalk out a

plan, motivate its employees and organise its resources keeping in mind its goals.

2) Pervasive: Management is pervasive in the sense that various functions of management are

performed by every organisation irrespective of its nature, size, characteristics and

geographical location. In other words, every organisation needs management. For example, a

corporate firm must be managed as much as a non-profit organisation. Similarly, an organisation in

India must be managed as much as an organisation in Japan. The only difference lies in the way the

management is practised by different organisations.

3) Continuous process: Management is said to be a continuous process in the sense that managers

perform several functions simultaneously. However, it may happen that at a particular point of

time, one function is accorded greater priority than the other. For instance, on a certain day,

greater time is devoted towards planning, while on another day, the controlling function is given

priority.

4) Dimensions of Management

Management is regarded as multi-faceted as it involves numerous dimensions which render

complexity to the process of management. Three main dimensions of management:

Managing work: An organisation exists with the objective of performing a defined function.

Management helps in translating this work in terms of the objectives and goals which are to

be achieved. It also defines how they are to be achieved.

Managing people: It is the people in the organisation who work towards the goals and

objectives defined by the organisation. Accordingly, managing people forms another important

dimension of management.



Managing operations: In every organisation, there is a production process wherein the inputs

are converted to the desired product or service. Management is required to ensure that

production operations are carried out smoothly.

5) Group activity: Management is a group activity as it unifies individual effort towards the

achievement of a common organisational goal.

6) Dynamic: Management is dynamic in the sense that it must continuously adapt to the changing

business environment. As the economic, social or political environment changes, the goals and

objectives of the organisation must also change accordingly.

7) Intangible: Management cannot be seen but its presence can be felt. Indicators of good management

can be felt by seeing proper coordination in the working environment, happy and satisfied

employees and achievement of targets/goals.

Objectives of Management

Objectives Meaning

Organisational objective of management refers to the

objective of using various resources of the

organisation optimally and efficiently such that they

yield maximum advantage. In other words, it must

be able to fulfil the economic objective. .

3 important organisational objectives:

o Survival: The need of every organisation is to

survive and exist in the competitive market for a

longer duration of time.

o Profit: Every organisation is able to earn sufficient

amount of profit.

o Growth: Every organisation must grow and

expand their business activities.

Every organisation exists for

doing some work

Management converts this

work to goals to be

accomplished

It provides ways to achieve

goals in terms of

Solving problems

Making decisions

Preparing budgets

Assigning responsibilities

Management deals with

employees as individuals as

well as a group of people

Management needs to take

care of employees

It also has a task to unite the

efforts of individuals towards

the accomplishment of

organisational goals

Combination of management

of work and management of

people

It involves decision making in

terms of

Work to be done

Way/method of doing

work

Allocating work



Social objective is the creation of benefits for society

or doing something for society. Organisation being

a part of society must give back to it in the sense that

it creates economic value for it.

Social objectives include

o Providing quality products at reasonable prices

o Using eco-friendly methods of production

o Giving employment opportunities to the weaker

section of society

o Providing basic facilities to employees

o Avoiding unfair trade practices such as charging

higher price and selling adulterated goods

o Creating various social amenities such as

schools, hospitals etc.

Management must fulfil the personal objectives of

individuals so that employees feel satisfied and

motivated and work wholeheartedly for the

organisation.

Individual objectives are

o Competitive salary

o Personal growth & development

o Peer & social recognition

o Good & healthy working conditions

Importance of Management

1) Achievement of goals: An organisation requires management for the achievement of its various

goals and objectives. The management unifies the activities and efforts in an organisation

towards the achievement of common goals and objectives.

2) Efficiency in work: Through management in the form of planning, organising, directing, staffing and

controlling, efficiency and productivity can be increased in the organisation.

3) Creating dynamism: Every organisation must adapt itself to the continuously changing business

environment. Management helps employees to comfortably adapt to these changes.

4) Achievement of personal objectives: In addition to achieving organisational goals, management

helps in achieving personal goals of individuals in the organisation. This is done with motivation

and leadership by managers.

5) Serving society: In the process of achieving various organisational goals, the management helps in

the development of society as well. For instance, producing high-quality goods and services,

creating employment opportunities, adopting efficient and environment-friendly techniques of

production, and helping society to grow and develop.

Include creation of benefits

for society



Nature of Management

1) Management as a Science

As a science, management fulfils the following criteria:



Systematic body of knowledge: Various disciplines of science are based on a specified and

defined body of knowledge which is based on the cause and effect relationship. Similarly,

management has a host of theories and principles which were developed over the years. In

addition, similar to other disciplines, management has its own unique vocabulary.

Theories based on experimentation: The principles and theories of science are developed with

continuous observation and experimentation over the years. Similarly, the principles of

management have also been developed by continuous observations and experiments over

the years in varied situations. However, unlike science, no exact cause and effect relationship can

be established in management. This is because management primarily deals with human

behaviour which is dynamic and cannot be predicted. So, the outcome of the theories and

principles cannot be predicted accurately.

Universal validity: The principles of science are universally valid. Similarly, the theories and

principles of management are also valid to some extent (if not universally valid). The theories

and principles act as guidelines for managerial actions in different situations.

2) Management as an Art

Criteria for management to be called an art:

Existing literature: Similar to various other art forms such as music and dance, management also

has an existing body of knowledge in the form of various theories and principles. For example,

Henry Fayol’s Principles of Management and Taylor's Scientific Management Theory.

Dynamic application: Art is the application of the knowledge in a personalised and creative

manner. For example, the basic steps in a dance form are performed by each dancer in a unique

creative manner. Similarly, managers apply the basic principles and theories of management

in a creative manner according to the need of the situation.

Practice and creativity: Under art, there is continuous practice and innovation on the part of the

artists. This gives rise to unique interpretations of similar situations. Similarly, in management, with

continuous practice, the manager uses his own creativity and imagination to formulate new

and unique ways to deal with a situation.

3) Management as a profession

Basic features based on which management can be regarded as a profession:

Systemised knowledge: Professionals require a systematic body of knowledge in order to acquire

the specialised skills of a profession. Similarly, management can be called a discipline in the sense

that it has a systemised and well-defined body of knowledge. One can gain this knowledge

through colleges, institutes and books. Nowadays, various institutions are set up primarily with the

objective of providing education in management. So it can be asserted that this feature of

profession is present in management.

Professional association: Similar to other professions (For example, chartered accountants are

affiliated to the Institute of Chartered Accountants of India), management is also affiliated to a

professional association which regulates the functions of its members. They define the

ethical code of conduct for managers and regulate their activities. For example, in India, AIMA (All

India Management Association) regulates the functioning of its member managers. However, it

is not mandatory for a manager to be a member of the association.

Restriction to entry: Unlike other professions, no specific qualifications or degrees are

mandatorily required to be a manager; however, preference is always given to those who

possess professional knowledge in terms of degrees and diplomas. In a way, this helps in

restricting the entry of people in management as a profession.



Code of conduct: All professionals are bound by a code of conduct of its profession. For example,

company secretaries are guided by the code of conduct laid down by the Institute of Company

Secretaries of India. Similarly, in management as a profession, there is an ethical code of conduct

which guides the behaviour of its members. Many management associations like AIMA (All India

Management Association) lay down an ethical code of conduct. However, it is not mandatory for a

manager to be a member of such organisations.

Motive to serve society: Nowadays, profit maximisation is not the only goal of management,

rather they also strive to serve society. This is done by producing good quality goods and

charging reasonable prices.

Levels of Management

Levels Meaning and its functions Example

Top Level Management Includes managers from different

functional areas and they have

maximum authority

Functions

Formulates the objectives of the

organisation

Frames plans and policies to

achieve the set objectives

Organises activities to be

performed by persons at the

middle level

Is responsible for survival &

growth of the organisation

Arranges finance and other

resources to carry out day-to-day

activities

Maintains contact with the outside

world

o Chairman

o Board of Directors

o Managing Director

o General Manager

o President

o Vice-President

o Chief Executive Officer

(CEO)

o Chief Operating Officer

(COO)

o Chief Financial Officer (CFO)

Middle Level Management Acts as a link between the top and

lower levels of management

Performs the functions of the top

level for their respective departments

Functions

Interprets the policies framed by

top level management to lower level

management

Organises activities for their

respective departments

Recruits/selects employees for

their respective departments

Motivates employees by providing

them with incentives

Controls employees

o Purchase Department Head

o Sales Department Head

o HR Manager

o Marketing Manager

o Operations Manager

o Regional Manager

o Production Manager

o Finance Manager

o Plant Superintendent

o Divisional Manager

o Executive Officer



Cooperates with other departments

for achieving organisational

objectives

Implements plans framed by top

management

Lower Level Management Performs the work as per the

directions received by top and

middle levels of management. They

have limited authority.

Functions

Passes the problems and

grievances of workers to middle

level management

Maintains proper

working/environmental conditions

Ensures safe and secure work

environment for workers

Helps middle level managers in

recruitment, selection,

appointment and promotions of

workers

Communicates with workers,

welcoming suggestions and

feedback

Maintains quality standards of

output

Develops team spirit in employees

and boosts their morale

o Supervisors

o Superintendent

o Foreman

o Clerk

o Section Officer

o Sub-department Executive

Functions of Management

The terms planning, organising, directing, staffing and controlling are the primary functions of

management which every manager performs. It must be remembered that these functions are

performed simultaneously, the only difference being the priority given to each function at a particular point

of time. Moreover, these functions are interrelated in the sense that one cannot be completed without the

other. For example, for organising to be appropriate, it is necessary that the required planning is done.

Similarly, for direction to be successful, correct staffing is necessary.



1) Planning: Planning means taking decisions regarding what is to be done, by whom and how. In

other words, it involves the setting of goals and objectives and devising suitable means of achieving

them in an effective and efficient manner. Planning forms the stepping stone for effective

management.

2) Organising: After planning, the next step in management is organising. It involves identifying the

various tasks and resources which would be required for the implementation of the plans

framed. Under the organising function, the manager assigns the duties and tasks to various groups

and departments. Authority relationships are also defined.

3) Staffing: Staffing refers to hiring appropriate personnel according to the requirements of the

work. Staffing includes functions such as hiring, training and development of people.

4) Directing: Directing involves guiding the people in various tasks and activities in the

organisation. It comprises two important aspects—motivation and leadership. Motivation involves

providing the right encouraging environment for the personnel to work towards the goals and

objectives of the organisation. Leadership, on the other hand, implies effectively getting the work

done by appropriately praising and providing criticism.

5) Controlling: It is very important to ensure that the work is carried out in the right direction towards the

set goals and objectives. Controlling involves setting standards for tasks and measuring the actual

performance against the set standards. It ensures that there is minimum diversion from the set

targets. In addition, it involves taking appropriate corrective measures in case of any deviation from

the standards.

Coordination

Coordination refers to the process through which the various functions of management are

synchronised towards the common goals and objectives of the organisation. It is said to be the

essence of management. It acts as a binding force in the organisation in the sense that it unifies the



efforts of various individuals in the organisation towards the achievement of common goals and

objectives of the organisation.

According to E.F.L. Brech, ‘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’.

Features of Coordination

1) Integrates group efforts: Unification of individual effort from different backgrounds and with different

styles of working in one common direction.

2) Ensures unity of action: All the departments in an organisation coordinate with each other so that

the goal of the organisation can be achieved.

3) Continuous process: Coordination is an ongoing process, starts at planning and continues till

controlling.

4) All-pervasive function: Coordination is required at all levels and in all departments so that all the

functions can be performed as activities of various departments are interdependent on each other.

5) Responsibility of all managers: Top level managers coordinate plans and policies of the

organisation, middle level managers coordinate departmental activities.

6) Deliberate function: Coordination is deliberately performed by all managers as managers always try

to coordinate the activities of the organisation.

Importance of Coordination in Management

1) Size of the organisation: When the size of the organisation increases, the need for coordination

also increases. This is because many people are working in a large organisation and individuals have

their own requirements and objectives. So, it is necessary to bring all their efforts jointly to achieve the

common goal of the organisation. In this situation, organisational efficiency is important to harmonise

the objectives of employees and employers through proper coordination.



2) Functional differentiation: In an organisation, there are different inter-linked and inter-related

departments. Coordination is required to bring together the activities of different departments

towards one common organisational goal. Also, it helps to minimise the differences among

departments.

3) Specialisation: As there are number of specialists working in the organisation, employees work in

their own way. This results in chaos and misunderstanding in the work place. So, coordination helps in

coordinating the activities of all the specialists in the right direction and enables the

achievement of the organisational goal.

Management in the 21st Century The management in the 21st century is a global management. The entire world is a global village where

exchange of technologies, goods, services and labour among countries takes place.

Role as a Global Manager

In the capacity of country manager: Capacity to meet international bodies, clients and government

offices for international operations

In the capacity of functional manager: Skills to select the right techniques, resources and

manpower across the globe

In the capacity of business leader: Able-bodied to make changes in the business as per

developments and trends in the global environment

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Nature and Significance of Management notes for CBSE Class ...

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