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PRINCIPLESOF
MANAGEMENT
Dr. S. Ramachandran, M.E., M.B.A., Ph.D., R. Parameshwari, M.Com, M.B.A.,
Dr. G. Bhuvaneshwari, M.B.A., Ph.D.,
Professor-Department of Management Studies,Sathyabama University, CHENNAI - 119
Course Plan
Module Contents HoursSem. Exam
MarksI Introduction to Management: Definitions,
managerial roles and functions; Science orArt perspectives – External environment –Global, innovative and entrepreneurialperspectives of Management (3 Hrs.) –Managing people and organizations in thecontext of New Era – Managing forcompetitive advantage – Challenges ofManagement. (3 Hrs.)
6 15%
II Early Contributions and Ethics inManagement: Scientific Management -Contributions of Taylor, Gilbreths, HumanRelations Approach-Contributions of Mayo,McGregor’s Theory, Ouchi’s Theory Z (3Hrs.) - Systems Approach, the ContingencyApproach, The Mckinsey 7-S Framework -Corporate Social responsibility - ManagerialEthics. (3 Hrs)
6 15%
FIRST INTERNAL EXAMINATIONIII Planning: Nature and importance of
planning - Types of plans (3 Hrs.) - Stepsin planning - Levels of planning - ThePlanning Process - MBO (3 Hrs.)
6 15%
IV Organising for decision making: Nature oforganising – organisation levels and span ofcontrol in management - Organisationaldesign and structure – Departmentation, lineand staff concepts (3 Hrs.) – Limitations ofdecision making - Evaluation and selectingfrom alternatives - Programmed andnon-programmed decisions - Decision undercertainty, uncertainty and risk - Creativeprocess and innovation (3 Hrs.)
6 15%
SECOND INTERNAL EXAMINATION
Syllabus S.1
Module Contents HoursSem. Exam
MarksV Staffing and Related HRD Functions:
Definition -Empowerment - Staff -Delegation - Decentralization andRecentralisation of authority - EffectiveOrganizing and cultrure-Responsiveorganizations - Global and entrepreneurialorganizing (3 Hrs.) Manager inventorychart-Matching person with the job-Systemapproach to selection (3 Hrs.) Jobdesign-Skills - Personal characteristicsneeded in managers - Selection process -Techniques and instruments (3 Hrs.)
9 20%
VI Leading and Controlling: Leading VsManaging - Trait approach and Contingencyaproaches to leadership - Dimensions ofLeadership (3 Hrs.) - Leadership Behaviorand styles - Transactional andTransformational Leadership (3 Hrs.) Basiccontrol process - Control as a feedbacksystem - Feed Forward Control -Requirements for effective control - Controltechniques - Overall controls and Preventivecontrols - Global controlling (3 Hrs.)
9 20%
FINAL SEMESTER EXAM
S.2 Principles of Management - KL - www.airwalkpublications.com
Contents
Chapter 1
INTRODUCTION TO MANAGEMENT1.1 Definitions of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
1.1.1 Different Definitions of Management . . . . . . . . . . . . . . . . . . . 1.1
1.2 Managerial Roles – Personal Characteristics Needed In Manager . 1.2
1.3 Managerial Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
1.3.1 Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
1.3.1.1 Objectives of Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
1.3.1.2 Steps Involved in Planning / Hierarchy of plans . . . . . . . . . 1.6
1.3.2 Organising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
1.3.2.1 Steps involved in organising . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
1.3.2.2 Principles of organising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9
1.3.3 Staffing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10
1.3.4. Co-ordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
1.3.5. Directing (Leading) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
1.3.6 Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
1. Establishing standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.13
1.4 Managing : Science (or) Art . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.14
1.4.1 Management and Administration. . . . . . . . . . . . . . . . . . . . . . 1.14
1.5 External Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.15
1.5.1 Micro Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.15
1.5.2 Macro Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.16
1.6 Global Perspective of Management . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17
1.6.1 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17
1.6.2 Drawbacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17
1.7 Innovative Perspective of Management. . . . . . . . . . . . . . . . . . . . . . . 1.18
1.8 Entrepreneurial Perspective of Management . . . . . . . . . . . . . . . . . . . 1.18
1.9 Managing People And Organisations In The Context of New Era1.20
1.10 Competitive Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20
1.10.1 Managing For Competitive Advantage. . . . . . . . . . . . . . . . 1.20
Contents C.1
1.11 Challenges In Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.22
Chapter 2
EARLY CONTRIBUTIONS AND ETHICS INMANAGEMENT
2.1 Scientific Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Contributions of F.W.Taylor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
2.2 Henri Fayol’s Contribution To The Management . . . . . . . . . . . . . . . 2.4
2.2.1 Principles of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
2.3 Contributions of Gilbreths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
2.3.1 Time study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
2.3.2 Motion study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
2.3.3 Gilbreths’ Micro-motion study . . . . . . . . . . . . . . . . . . . . . . . . 2.9
2.3.4 Therbligs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
2.3.5 Micro-motion study procedure. . . . . . . . . . . . . . . . . . . . . . . . 2.11
2.4 Human Relations Approach – Contributions of Mayo . . . . . . . . . . 2.12
2.4.1 Hawthorne studies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
2.4.2 Conclusions of Hawthorne Experiments. . . . . . . . . . . . . . . . 2.14
2.4.3 Important factors analysed in Hawthorne Experiments . . . 2.15
2.5 Motivation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
2.5.1 Important things to be noted for motivation . . . . . . . . . . . . 2.16
2.5.2 Types of motivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.17
2.5.3 Motivation Theories - Human Relations Approach -
Contributions of Maslow, Mc Gregor, Ouchi, Herzberg, Mc Clelland,
Vroom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.19
2.5.4 Early Contributions in Management – Development of
Management Thought - Overall view . . . . . . . . . . . . . . . . . . . . . . 2.26
2.6 Systems Approach To Management . . . . . . . . . . . . . . . . . . . . . . . . . 2.28
2.7 Contingency Approach To Management . . . . . . . . . . . . . . . . . . . . . . 2.28
2.8 Mckinsey 7s Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.29
2.8.1 7s factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.31
2.9 Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.32
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2.9.1 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.32
2.9.2 Need for CSR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.33
2.9.3 Significance of Corporate Social Responsibility to sustainability
of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.33
2.10 Managerial Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.34
2.10.1 Ethical Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.34
2.10.2 Approaches to Management Ethics. . . . . . . . . . . . . . . . . . . 2.36
2.10.3 Need for Business Ethics. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.37
2.10.4 Barriers to Management Ethics . . . . . . . . . . . . . . . . . . . . . . 2.38
2.10.5 Solutions to Barriers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.38
2.10.6 Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.39
Chapter 3
PLANNING3.1 Nature of Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
3.2 Purpose of Planning (or) The Need For Planning . . . . . . . . . . . . . . 3.2
3.3 Importance of Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2
3.4 Types of Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4
3.5 Steps Involved In Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11
3.6 Levels of Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.15
3.7 The Planning Process – Managing By Objectives (MBO). . . . . . . 3.16
3.7.1 Features of MBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16
3.7.2 Process of MBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17
3.7.3 Effective MBO System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20
3.7.4 Steps in MBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.21
3.7.5 Advantages of MBO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.22
3.7.6 Disadvantages of MBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23
Contents C.3
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Chapter 4
ORGANISING AND DECISION MAKING4.1 The Nature of Organising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
4.2 Formal And Informal Organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
4.2.1 Formal Organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
4.2.1.1 Characteristics of Formal Organisation . . . . . . . . . . . . . . . . . . 4.4
4.2.2 Informal Organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
4.2.3 Salient Points of Informal Organisation . . . . . . . . . . . . . . . . . 4.5
4.2.4 Types of informal group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
4.2.5 Characteristics of Informal Organisation . . . . . . . . . . . . . . . . 4.7
4.2.6 Advantages of Informal organisation . . . . . . . . . . . . . . . . . . . 4.7
4.2.7 Disadvantages of Informal Organisation . . . . . . . . . . . . . . . . 4.7
4.2.8 Difference Between Formal and Informal Organisation. . . . 4.8
4.3 Organisation levels and the span of control in management . . . . . . 4.9
4.3.1 Organisation Levels with narrow spans . . . . . . . . . . . . . . . . . 4.9
4.3.2 Organisation Levels with wide spans . . . . . . . . . . . . . . . . . . 4.10
4.3.3 Problems with Organisation Levels . . . . . . . . . . . . . . . . . . . 4.10
4.3.4 Factors Influencing the Span of Control in Management . 4.11
4.4 Organisation Charts And Manuals . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12
4.4.1 Definition of Organisation Chart. . . . . . . . . . . . . . . . . . . . . . 4.12
4.4.2 Contents of Organisation Charts . . . . . . . . . . . . . . . . . . . . . . 4.12
4.4.3 Organisation manuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13
4.4.4 Meaning of Organisation Manual . . . . . . . . . . . . . . . . . . . . . 4.14
4.4.5 Contents of Organisational Manual. . . . . . . . . . . . . . . . . . . . 4.14
4.5 Departmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
4.5.1 Types of departmentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
4.6 Line And Staff Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.28
4.6.1 The Nature of Line and Staff Relationships . . . . . . . . . . . . 4.28
4.6.2 Functional Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.30
4.6.3 Delegation of Functional Authority . . . . . . . . . . . . . . . . . . . 4.30
4.6.4 Benefits of Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.31
4.6.5 Limitations of staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.31
4.7 Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.33
4.7.1 Rationality in Decision Making . . . . . . . . . . . . . . . . . . . . . . 4.33
4.7.2 Development of alternatives and the limiting factor –
Limitations of decision making. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.33
4.7.3 Evaluation of Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.35
4.7.3.1 Quantitative and Qualitative Factors . . . . . . . . . . . . . . . . . . . 4.35
4.7.3.2 Marginal Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.35
4.7.3.3 Cost Effectiveness Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 4.35
4.7.4 Selecting from Alternatives: Three approaches . . . . . . . . . . 4.36
4.8 Programmed And Non-programmed Decisions . . . . . . . . . . . . . . . . 4.38
4.8.1 Comparison Between Programmed and Non-Programmed
Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.39
4.9 Decision Making Under Certainty, Uncertainty, And Risk . . . . . . 4.39
4.10 Creative Process And Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.40
4.10.1 Creative Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.40
4.10.2 Brainstorming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.41
4.10.3 Limitations of Traditional Group Discussion. . . . . . . . . . . 4.42
4.10.4 The Creative Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.42
Chapter 5
STAFFING AND RELATED HRD FUNCTIONS
5.1 Staffing - Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
5.1.1 The systems approach to staffing (Human Resources
Management) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
5.1.2 Elements of staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
5.1.3 Processes of staffing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
5.2 Empowerment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
5.2.1 Authority and power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
5.3 Decentralization of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
5.3.1 Advantages of Decentralisation . . . . . . . . . . . . . . . . . . . . . . . . 5.8
5.3.2 Disadvantages of Decentralisation. . . . . . . . . . . . . . . . . . . . . . 5.9
5.4 Delegation of Authority*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9
Contents C.5
5.4.1 Process of Delegation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10
5.4.2 Importance of delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10
5.4.3 Elements of delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
5.4.4 Splintered Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
5.4.5 Recovery of Delegated Authority . . . . . . . . . . . . . . . . . . . . . 5.12
5.4.6 The art of delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
5.4.7 Advantages of delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14
5.4.8 Delegation and Decentralisation–A Comparison . . . . . . . . . 5.15
5.4.9 Problems of delegation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.16
5.5 Effective Organising And Culture - Responsive Organisations . . . 5.18
5.5.1 Organisation culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.18
5.5.2 Cultural Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.19
5.5.3 Implementing Culture Change . . . . . . . . . . . . . . . . . . . . . . . . 5.19
5.5.4 Models on organisational culture . . . . . . . . . . . . . . . . . . . . . 5.20
5.5.5 The seven elements of culture . . . . . . . . . . . . . . . . . . . . . . . 5.23
5.5.6 Types of culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.25
5.5.7 Managing cultural diversity . . . . . . . . . . . . . . . . . . . . . . . . . . 5.26
5.6 Global And Entrepreneurial Organizing . . . . . . . . . . . . . . . . . . . . . . 5.28
5.7 Recruitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.29
5.7.1 Sources of recruitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.29
5.8 Selection Process, Techniques And Instruments . . . . . . . . . . . . . . . 5.36
5.8.1 Stages of selection process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.36
5.8.2. Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.44
5.9 Human Resource Development (HRD) . . . . . . . . . . . . . . . . . . . . . . . 5.45
5.9.1. Job analysis- Matching person with the job . . . . . . . . . . . 5.46
5.9.2 Human Resource Planning - Manager Inventory chart . . . 5.47
5.9.3 Recruitment and Selection System approach to selction . 5.49
5.9.4 Training and Development. . . . . . . . . . . . . . . . . . . . . . . . . . . 5.49
5.9.5 Management Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.50
5.9.6 Performance appraisal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.51
5.9.7 Management by Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.53
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5.9.8 Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 5.53
5.10 Job Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.54
5.10.1 Nature of Job Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.54
5.10.2 Designing Efficient Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.54
5.10.3 Designing Jobs that Motivate . . . . . . . . . . . . . . . . . . . . . . . 5.55
5.10.4 Techniques of Job Design . . . . . . . . . . . . . . . . . . . . . . . . . . 5.56
5.11 Personal Characteristics Needed In Manager . . . . . . . . . . . . . . . . . 5.59
Chapter 6
LEADING AND CONTROLLING6.1 Leading (or) Directing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
6.2 Human Factors In Managing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
6.3 Individual Behaviour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
6.3.1 Personality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
6.3.2 Behavioural differences of individual . . . . . . . . . . . . . . . . . . . 6.2
6.3.2.1 Individual variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
6.3.2.2 Situational variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
6.4 Group Behaviour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
6.4.1 Why Groups Are Formed? . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
6.4.2 Group standards of behaviour . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
6.4.3 Group attitudes and values . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
6.4.4 Pressures to confirm group standards. . . . . . . . . . . . . . . . . . . 6.7
6.5 Leadership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
6.5.1 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
6.5.2 Leadership for managerial effectiveness. . . . . . . . . . . . . . . . . 6.8
6.6 Leadership Behaviour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
6.7 Leadership Styles (or) Types of Leadership. . . . . . . . . . . . . . . . . . . 6.12
6.8 Leaders Vs Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15
6.9 Trait Approach To Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.16
6.9.1 Strengths/Advantages of Trait Theory . . . . . . . . . . . . . . . . . 6.16
6.9.2 Limitations of Trait Theory . . . . . . . . . . . . . . . . . . . . . . . . . . 6.17
6.9.3 Implications of Trait Theory . . . . . . . . . . . . . . . . . . . . . . . . . 6.17
Contents C.7
6.9.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.17
6.10 Contingency Approach To Leadership . . . . . . . . . . . . . . . . . . . . . . 6.18
6.11 The 8 Dimensions of Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . 6.20
6.12 Transformational Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.22
6.12.1 A Comparison of Transactional and Transformational
Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.23
6.13 Basic Control Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.24
6.13.1 Steps in control process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.24
6.13.2 Critical Control Points, Standards and Benchmarking . . . 6.27
6.14 Control as A Feedback System . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.29
6.15 Feed Forward Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.30
6.16 Requirements of Effective Controls. . . . . . . . . . . . . . . . . . . . . . . . . 6.31
6.17 Control Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.35
6.18 Overall Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.40
6.18.1 Profit and Loss Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.41
6.18.2 Control Through Return on Investment (ROI) . . . . . . . . . 6.41
6.19 Direct Control And Preventive Control . . . . . . . . . . . . . . . . . . . . . 6.42
6.19.1 Direct control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.42
6.19.2 The Principle of Preventive Control. . . . . . . . . . . . . . . . . . 6.43
6.20 Global Controlling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.44
6.21 The Budget As Control Technique . . . . . . . . . . . . . . . . . . . . . . . . . 6.44
6.21.1 Type of Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.45
6.22 Marketing Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.47
6.22.1 Test Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.47
6.22.2 Marketing Ratios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.48
6.23 Human Resource Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.48
6.23.1 Performance Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.48
6.23.2 Human Resource Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.49
6.24 Operations Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.49
6.25 Purchase Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.51
6.26 Maintenance Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.53
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INDEX
AAdvertisement, 5.32
Authority and power, 5.5
Autocratic (or) Authoritarian leader, 6.13
BBenchmarking, 6.29
Benevolent Autocrat, 6.13
Brainstorming, 4.41
Break-even analysis, 6.36
Budget, 3.10
Budgetary control, 6.40
Budgets, 1.7
CCentralisation, 2.6
Certainty, 4.39
Character, 6.10
Co-ordination, 1.11
Communication, 6.12
Contingency Approach To Leadership,6.18
Contributions of Gilbreths, 2.8
Control Techniques, 6.35
Controlling, 1.12
Cost accounting and cost control, 6.36
Creative Process, 4.40
Critical control points, 6.27
Cultural Factors, 5.19
Customer service, 1.22
DDecentralization of Authority, 5.7
Decision Making, 4.33
Delegation of Authority*, 5.9
Democratic leader, 6.13
Direct Control and Preventive Control,6.42
Directing (Leading), 1.12
Discipline, 2.5
Disseminator Role, 1.3
Disturbance Handler Role, 1.4
Division of work, 2.4
EEconomic environment, 1.16
Economic pressure, 1.22
Effective MBO System, 3.20
Elements of staffing, 5.2
Employee satisfaction, 1.23
Employment exchange, 5.33
Empowerment, 5.5
Entrepreneur Role, 1.4
Espirit de corps, 2.7
Ethical Activities, 2.34
External Environment, 1.15
Extrinsic Motivation, 2.18
FFeed Forward Control, 6.30
Figure head Role, 1.2
Formal Organisation, 4.3
Friendship Group, 4.7
GGantt milestone chart, 6.39
Gate applicants, 5.32
Global Controlling, 6.44
Globalisation, 1.22
Group Behaviour, 6.4
Group, 2.15
HHandling people, 6.12
Index I.1
Henri Fayol, 2.4
Horizontal Clique, 4.6
Human Resource Development (HRD),5.45
Human Resource Control , 6.48
Human Relations Approach –Contributions of Mayo, 2.12
IInclusive Leader , 6.21
Individual Behaviour, 6.1
Informal Organisation, 4.4
Innovation, 1.22
Interest group, 4.6
Interview, 5.40
Intrinsic Motivation, 2.18
JJapanese Leadership styles, 6.14
Job Design, 5.54
Job Enlargement, 5.59
Job Enrichment, 5.57
Job analysis, 5.46
Job Rotation, 5.56
Judgemental Appraisal Methods, 5.52
KKnowledge, 6.11
LLaissez-Faire or Free Rein Leader, 6.14
Leader Role, 1.2
Leader, 2.15
Leadership, 6.8
Leadership Styles, 6.12
Leadership Behaviour, 6.9
Leading (or) Directing, 6.1
Legal environment, 1.16
Levels of Planning, 3.15
Liaison Role, 1.3
Line And Staff Concepts, 4.28
MMacro Environment, 1.16
Maintenance Control, 6.53
Management information system, 6.39
Management Development, 5.50
Management audit, 6.37
Management by Objective, 5.53
Managerial Ethics, 2.34
Managerial statistics, 6.38
Managerial Functions, 1.5
Managing by Objectives (MBO), 3.16
Marginal Analysis, 4.35
Marketing Control, 6.47
Micro Environment, 1.15
Micro-motion study procedure, 2.11
Mixed or Random Clique, 4.6
Monitor Role, 1.3
Motion study, 2.8
Motivation, 2.16
NNegotiator Role, 1.4
OObjective Appraisal Method, 5.51
Objectives (or) Goals, 3.5, 1.6
Operations Control, 6.49
Organisation ethics, 1.23
Organisation culture, 5.18
Organising, 1.8
Overall Controls, 6.40
PPeople Oriented leaders, 6.14
Performance appraisal, 5.51
Personal observation, 6.36
Personality, 6.1
Personnel consultant, 5.33
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Policies, 1.7, 3.5
Political environment, 1.16
Principles of Management, 2.4
Procedures, 1.7, 3.6
Process of Interview, 5.42
Production control, 6.39
Profit and Loss Control, 6.41
Programmes, 1.7, 3.9
Promotion, 5.44
Purchase Control, 6.51
Purpose or missions, 1.6
Purposes (or) Missions, 3.4
RRecommendations, 5.32
Recruitment, 5.29, 5.49
Resource Allocator Role, 1.4
Return on investments, 6.38
Risk, 4.40
Rules, 1.7, 3.6
SScalar Chain, 2.6
Selflessness: (Unselfishness orSelf-Sacrifice), 6.10
SIMO Chart, 2.11
Social responsibility, 1.23
Social environment, 1.16
Social Media, 5.32
Special control reports, 6.37
Spokesman Role, 1.3
Staffing - Definition, 5.1
Staffing, 1.10
Standard costing, 6.37
Standards, 6.27
Statistical Control Reports, 6.35
Strategies, 1.7, 3.5
TTask or Production Oriented leaders,
6.14
Technical environment, 1.16
Test, 5.37
The Deliberate Leader, 6.22
The Energizing Leader, 6.20
The Affirming Leader , 6.21
The Pioneering Leader , 6.20
The Creative Manager, 4.42
The Humble Leader , 6.21
The Resolute Leader, 6.22
The Commanding Leader , 6.22
Therbligs, 2.9
Time study, 2.8
Tough autocrat, 6.13
Training and Development, 5.49
Trait Approach To Leadership, 6.16
Types of motivation, 2.17
Types of Plans, 3.4
UUncertainty, 4.40
Unity of direction, 2.6
Unity of Command, 2.5
VValues, 2.39
Vertical Clique, 4.6
ZZerobase budgeting, 6.40
Index I.3
Chapter 1
INTRODUCTION OF MANAGEMENT
Introduction to Management: Definitions, managerial roles and
functions; Science or Art perspectives – External environment – Global,
innovative and entrepreneurial perspectives of Management – Managing
people and organizations in the context of New Era – Managing for
competitive advantage – Challenges of Management.
1.1 DEFINITIONS OF MANAGEMENT:
“Management is the process of designing and maintaining an
environment in which individuals working together in groups, efficiently
accomplish selected aims” - by Harold Koontz and Heinz Weihrich.
The Meaning of the above definition is as follows.
1. Managers carry out the managerial functions of planning, organising,
staffing, leading and controlling.
2. Management applies to any kind of organisation.
3. It applies to managers at all organisational levels.
4. The aim of all managers is to create Surplus. Surplus means profit in
business organisation. In charitable organisations, surplus means the
satisfaction of needs. In universities, surplus means generation and
dissemination of knowledge as well as providing service to the
community or society.
5. Managing is concerned with productivity; this implies effectiveness and
efficiency.
1.1.1 Different Definitions of Management:
Management is a process undertaken by one (or) more persons to
co-ordinate the activities of other persons to achieve results not attainable
by any one person acting alone.
Management is the art of knowing what you want to do and then
seeing that it is done in the best and cheapest way. – F.W. Taylor
Introduction of Management 1.1
Management is a task of planning, organising, co-ordinating,
motivating and controlling the efforts of others towards a specific objective.
Management is the effective utilization of human and material
resources to achieve the enterprise.
In general, management is a process of effective accomplishment oftasks through others.
1.2 MANAGERIAL ROLES – PERSONAL CHARACTERISTICSNEEDED IN MANAGER
Henry Mintzberg studied the activities of top executives of a major
corporation and determined that when business organisations confer authority
on its executives, they also convey a certain measures of status.
The executives may then use this status to facilitate interpersonal
relationships with seniors, subordinates peers and individual outside the
organisation.
He concluded that these relationships do not adequately capture the
reality of what managers do. He developed a model of ten related roles that
he called as “Managerial Roles”. These can be also called as “Personal
characteristics needed in Manager”.
The ten managerial roles are discussed here:
Interpersonal Roles: The first three managerial roles are classified as
interpersonal roles, as they deal with interpersonal relationships both inside
and outside the organisation.
1. Figure head Role:
Every manager has to perform some duties of a ceremonial nature,
such as greeting the touring dignitaries, attending wedding of an employee,
taking an important customer to lunch and so on.
2. Leader Role:
Every manager must motivate and encourage his employees. He must
also try to reconcile their individual needs with the goals of the organisation.
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3. Liaison Role:
Every manager must cultivate contacts outside his vertical chain of
command to collect information useful for his organisation.
Informational Roles: These roles mainly involve the management of
information. As a figure head, a leader and a liaison, the manager is placed
in a strategic position to obtain and disseminate critical information.
4. Monitor Role:The manager has to perpetually scan his environment for information,
interrogate his liaison contacts and his subordinates and retrieve unsolicited
information much of it as a result of the network of personal contacts he has
developed.
5. Disseminator Role:The manager passes some of his privileged information directly to his
subordinates who would otherwise have no access to it.
6. Spokesman Role:The manager informs and satisfies various group and people who
influence his organisation. Thus he advises shareholders about financial
M an age m ent R o le s
In te rpe rsonal R o le s
In fo rm ational R o le s
D e cision al R o les
1 F ig ure H ead2 L ead er3 L ia ison
4 M o nitor5 D isse m ina to r6 S pokesm an
7 E ntrep reneur8 D is turb ance H an dler9 R esource A llocato r
10 N ego tia to r
Fig: 1.1 M anagerial Roles
Introduction of Management 1.3
performance, assures consumer groups that the organisation is fulfilling its
social responsibilities and satisfies government that the organisation is abiding
by the law.
Decisional Roles: As the manager performs the interpersonal and
informational roles, certain decisional roles emerge as a part of the manager’s
day to day activities.
7. Entrepreneur Role:
The manager constantly looks out for new ideas and seeks to improve
his unit by adapting it to changing condition in the environment.
8. Disturbance Handler Role:
The manager has to work like a fire fighter. He must seek solution
of various unanticipated problems - a strike may loom large, a major
customer may go bankrupt, a supplier may renege on his contract and so
on.
9. Resource Allocator Role:
The manager must divide work and delegate authority among his
subordinates. He must decide who will get what.
10. Negotiator Role:
The manager has to spend considerable time in negotiations. For eg:
The president of a company may negotiate with the union leaders on a new
strike issue, the foreman may negotiate with the worker on a grievance
problem and so on.
It is important to recognise that these ten roles are highly interrelated,
as suggested in the Fig. 1.1. At any given point of time, the manager is apt
to be engaged in several activities simultaneously.
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1.3 MANAGERIAL FUNCTIONS:
Functions of Management:
The (functions of managers) managerial functions provide a usefulstructure for organising management knowledge.
The various managerial functions are given here: Refer Fig 1.2.
1.3.1 Planning:
Planning is the process of thinking and deciding in advance for the futurecourse of action. Without proper planning, the activities of an organisation maybecome ineffective.
Planning is a decision making process to decide in advance what is tobe done, when it is to be done, where it is to be done, how it is to be doneand by whom it is to be done.
1.3.1.1 Objectives of Planning:1. To forecast the future course of action
2. To adjust the changes and uncertainties in the system
3. To utilise the available resources effectively
M a n ag e ria l Fu n c tion s
P la n nin g O rg a n is in g S ta ffin g C o -O rd in a tio n D irec tin g C o ntro lling
In te rna l E x te rn a l
M o tiva tio nL ea d ers h ip C o m m un ica tio n
Fig. 1.2 Functions of a Manager
Introduction of Management 1.5
4. To determine the quality of products
5. To take correct decision making
6. To facilitate effective control in the management
7. To avoid bottlenecks in the production
8. To help the firm to remain more competitive and secure good name
1.3.1.2 Steps Involved in Planning / Hierarchy of plans:
The various steps in planning function (Purpose or missions, objective,strategies etc.) are shown in Fig. 1.3
1. Purpose or missions:Generally the purpose of any industry is to produce and distribute more
number of goods. Like that, each business will have their own purpose. Thereforea clear definition of purpose is necessary in order to formulate the objectives
2. Objectives:
P urposeor
m ission
O bjectives
S trateg ies
P olic ies
P rocedures
R ules
P rogram s
B udgets
Fig. 1.3 H ierarchy of P lans
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Objectives or goals are the end results to be achieved. Managers at
the top level formulate the objectives for the organisation as a whole. These
over-all goals are broken down into number of specific targets and each target
is assigned for each department. For example, the goals of production
department is to produce more number of units with lowest costs at the right
time. In any organisation management objectives and each departments
objectives should be same.
3. Strategies:Strategies are defined as a course of action in order to attain the
objectives. The general plans of action or programmes of action are called
strategies.
4. Policies:Policies are general guidelines in the decision making process. Policies
are the rules for action and it should not be confused with objectives. For
example, decision about running one shift or two shifts, giving over time to
the workers, wage incentives etc. are policies.
5. Procedures:Procedure is the sequence of steps involved for completing any task.
This gives guidelines for action. Procedure tells how and in what order, the
job is to be done. eg. Procedure for placing a purchase order.
6. Rules:It is a simple type of plan. A rule clearly tells what action one should
do and what action one should not.
7. Programmes:A programme is a sum total of goals, policies, procedures, rules etc.
which is designed to carryout a course of action. It may be a major
programme or a supporting programme. Good programming leads to better
co-ordination among the different departments.
8. Budgets:A budget is a numerical programme and it is referred in “financial
terms.” A budget is defined as a statement of anticipated results. A plan
always has a budget which is essentially a control device. To achieve the
Introduction of Management 1.7
objectives of the company, the following resources are used. They are men,
machines, materials, etc. The financial statement which is to be used for the
utilisation of the above resources is called budget.
The Planning function is clearly explained in Chapter 3.
1.3.2. Organising:Organising is defined as the process of “identifying and grouping of
activities required to attain the objectives, defining and delegating authority,
creating responsibility and establishing relationship for the people to work
effectively.”
1.3.2.1 Steps involved in organising:
The process of organising involves the following steps
1. Establishment of objectives
2. Departmentation
3. Defining authority and responsibility
4. Delegation of authority
5. Establishment of structural relationship
1. Establishment of objectives:The nature of any organisation mainly depends upon the objectives.
Hence it should be very clear. Therefore, it is very essential for a manager
to be familiar with the objectives and plans of the organisation.
2. Departmentation:Grouping of activities is called as departmentation. Grouping is
done on the basis of (1) functions (2) processes (3) location (4)products (5) customers etc., Most generally, grouping is done on the basisof functions. This consists of grouping of all similar activities into majordepartment in a manufacturing industry. Production, sales, marketing,purchase, accounting, finance, inspection etc., are the examples ofdepartmentation by function.
3. Defining Authority and Responsibility:Authority and Responsibility of any person should be clearly described in
writing so that he can do his work efficiently. If a manager has to work efficiently,he must know what type of job he has and how much authority he has.
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4. Delegation of authority:Delegation is the distribution of work to another person with necessary
rights and responsibility. A manager cannot do all the work by himself. Heneeds help from others. So he should delegate sufficient authority to thesubordinates in order to carryout work.
5. Establishing Structural relationship:The relationship between different departments and different individuals
must be clearly established. The structual relationship in the organisation mustbe clearly shown with the help of organisation charts and manuals. Anorganisation structure will clarify the position, role and relationship of allpersonnels.
1.3.2.2 Principles of organising:The principles of organising are
1. Principle of objective
2. Principle of efficiency
3. Principle of span of control
4. Principle of unity of command
5. Principle of unity of direction
6. Principle of scalar chain
7. Principle of division of work
8. Principle of authority and responsibility
9. Principle of flexibility and continuity
10. Principle of stability
1. Principle of objective:In any organisation, the action and aim of every individual in the
department and the aim of management both must be same to attain the finalobjective. The organisation structure should help better co-operation amongthe employees.
2. Principle of efficiency:The organisation structure will be efficient when it achieves its final
objective with minimum cost. It should provide job satisfaction and work facilitiesfor the individuals.
Introduction of Management 1.9
3. Principle of span of control:Span of control means the number of subordinates can be controlled
by a superior. At top level management, the span will be narrow where asthe lower level management, the span can be broad. The span depends upon(1) the nature of work (2) level of management (3) type of organisationand (4) type of subordinates.
4. Principle of unity of command
5. Principle of unity of direction
6. Principle of Scalar chain
7. Principle of division of work
8. Principle of authority and responsibility(For all the above, Refer Henri Fayol’s principles of management in
Chapter 2).
9. Principle of flexibility and continuity:An organisation structure should be made flexible in such a way that
it can be changed easily. After changes, the organisation can be able to workefficiently.
10. Principle of stability:Management should not depend only on a few individuals. If it is so,
if any one leaves from the factory, it will lead to instability. Thereforemanagement should train the subordinates in order to take over the superior’swork at short notice. This will lead to stable management.
1.3.3 Staffing:
In organising function, all the activities are determined and assigned
to different personnel. For this, the man power is required at various levels
of the organisation. The main motto of staffing is to recruit “Right man forthe right job”. Staffing includes recruitment, selection, placement, training,
promotion, demotion, transfer and termination etc., During expansion and
growth, additional manpower is required. For this, employees can be recruited
and also the subordinates can be trained. To achieve the organisational goals,
every manager should ensure that high quality personnels are available in an
organisation at all levels.
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The organising and staffing functions are clearly explained in Chapter4 and Chapter 5.
1.3.4. Co-ordination:
Co-ordination may be defined as “the process of uniting and
synchronizing all activities of an organisation to achieve harmony of
individual efforts towards the achievements of objectives.”
Co-ordination is not co-operation as often confused. Co-operation
means employees should work together in order to achieve the common
objective. Co-ordination means putting things and actions in proper order (ie)
deciding who has to do, what and when. It is the duty of a manager to see
that the individuals in the organisation should work as team. The process of
co-ordination can be explained by the following example.
Take the case of cricket team. Players are placed in different positions
when they are fielding. Depending upon the opponent team, batsman’s style
of batting, the players must move to the correct position. There is a captain
to co-ordinate the fielder’s activities with good understanding in order to win
the match.
In an industry, there are many activities like production, purchase, sales,
finance etc., All these activities should take place at right sequence and at right
place for achievement of objectives. Therefore, the manager has to co-ordinate
the above activities of individuals in order to achieve the required results.
The following factors must be considered for achieving better
co-ordination.
1. Unity of direction.
2. Effective co-ordination among the employees and also between the
manager and his subordinates.
3. Good industrial relationship.
4. Harmonising employees goals with organisation goals.
Co-ordination may be external co-ordination or internal co-ordination
in an organisation.
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1. External Co-ordination:The management has to co-ordinate the activities to be carried out
by the various persons outside the factory such as suppliers, customers,
government, community and other related agencies.
2. Internal Co-ordination:Co-ordination existing between the group of employees of the same
department, managers level and the personnels from various departments
inside the factory is called internal co-ordination.
1.3.5. Directing (Leading):
Directing is another function of management. It is defined as the
process of guiding and supervising the subordinates towards the achievement
of organisational goals. Directing is the inter-personnel aspect of managing.
By directing, the manager makes the subordinates to perform clearly with
their work as per the plan. The directing function can be successfully carried
out through the following.
1. Effective communication
2. Proper motivation
3. Good leadership
The above three are explained in Chapter 6
1.3.6 Controlling:The function ‘controlling’ is explained in detail in Chapter 6.
Controlling means to check whether the things are done as per the
plan or not. Planning and controlling should go together. It is a performance
and correction of activities in order to achieve the desired plans. Controlling
function consists of the following steps.
1. Establishing standards
2. Measuring the actual
3. Comparing the actual with the standard
4. Analysing the deviation
5. Taking corrective action
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1. Establishing standards:
To measure the actual performance, it is necessary to establish the
standards. The types of standard are.
Quantity standard:
Defining the volume of production, sales volume are the examples of
quantity standards.
Quality standards:
Defining the surface finish, tolerances of a product, dimension and life
of the product etc.,
Cost standard:
This is a monetary based standard. It defines the amount of money to
be spent for raw material, advertisement, labour and other expenses.
1. Time standard:
Setting up a time schedule to be followed in order to complete thework is time standard.
2. Measuring the actual performance:
After establishing the standards, the performance must be measured
actually. Measurement can be done by personal observation at regular intervals
(or) at random intervals.
3. Comparing the actuals with the standards:
The actual performance measurement should be compared with theestablished standards to improve the performance.
4. Analysing the deviation:
The difference of actual performance with the established standard iscalled deviation. The reason for this should be analysed for furtherdevelopment.
5. Taking Corrective action:
Once the reason is found out, then corrective action should be takenimmediately to avoid losses. Action should be taken in such a way that the
Introduction of Management 1.13
same should not come in future. Corrective action may be rescheduling theplan, change the standards etc.,
Types of controls:
The various types of controls are
1. Production control 2. Budgetory control 3. Inventory control 4.Cost control 5. Labour control 6. Quality control 7. Material control.
1.4 MANAGING : SCIENCE (OR) ART:
Managing – like all other field ie., medicine, engineering,
accountancy - is an art. It is know how. It is doing things in light of
realities of a situation.
However, managers can work better by using the organised knowledge
about management. This organised knowledge constitutes a science.
Thus, managing by practice is an art. The organised knowledge
underlying the practice may be referred to as a science.
Physicians without practice will kill so many people. Also, physicians
without the advantage of science will be a witch doctors.
Similarly, managers who try to manage without management science
must trust luck and intution. Also, managers without having past experience,
may fumble things.
Management knowledge will improve managerial practice and
vice-versa. So managing is “Science and Art”.
1.4.1 Management and Administration:
Eventhough management and administration are used interchangeably
in practice, there are some difference between these two items.
Administration is the overall determination of policies and major
objectives. It aims for framing major policies, formulation of general
procedure, listing out of the board programme and approval of major
projects etc.
Management is the function of executing the policies within the limits
setup by the administration. It has the function of planning, organising,
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co-ordinating, directing, motivating and controlling. Administration is
determinative and management is executive.
The Fig 1.4 shows that there will be more administrative function in
the top level management. And there will be less administrative function and
more management function in the bottom level management.
1.5 EXTERNAL ENVIRONMENT
It refers to the environment that indirectly influences business. It
includes factors which are uncontrollable by the business. Two types of
external environment are Micro Environment and Macro Environment.
1.5.1 Micro EnvironmentMicro environment is also called the task environment and
operating environment because the micro environmental forces directly
affect the operations of the firm.
1. Suppliers:
Those who supply the inputs like raw materials and components to the
company. Suppliers are an important force in the micro environment of the
company.
2. Customers:
The most important task of business is to create and sustain customers.
A business exists only because of customers.
TO P LEVEL M ANAG EMENT
M IDDLE LEVEL M ANAG EMENT
MANAG
EMENT
BO TTO M LEVEL M ANAGEM ENT
Introduction of Management 1.15
3. Marketing intermediaries:
They include middlemen such as agents and merchant that help the
company find customers. Financiers are also part of internal environment.
1.5.2 Macro Environment
Macro environment is commonly known as General environment.Macro factors are more uncontrollable than micro environment factors. The
success of the company depends upon its adaptability to the macro
environment.
1. Economic environment:
It refers to the nature of the economic system of the country, business
cycles, the socioeconomic infrastructures etc.
2. Social environment:
The social dimension or environment of the nation determines the value
system of the society which affect the business. Sociological factors such as
cost structure, customs and conventions, mobility of labor etc have far
reaching impact on the business.
3. Political environment:
The political environment of a country is influenced by the political
organisations such as philosophy of political parties, ideology of government
or party in power, nature and extent of bureaucracy, influence of primary
groups etc.
4. Legal environment:
This includes flexibility and adaptability of law and other legal rules
governing the business.
5. Technical environment:
The business in a country is greatly influenced by the technological
development. The technology adopted by the industries determines the type
and quality of goods and services to be produced and the type and quality
of plant and equipment to be used.
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1.6 GLOBAL PERSPECTIVE OF MANAGEMENT
Today’s fast-paced, Internet-driven business environment calls for more
than just at local perspective of management. Highly effective managers need
to see things based on how their company functions in the big picture of the
new global economy.
A global perspective is when someone can think about a situation as it
relates to the rest of the world. It may seem silly to some that every business
should be concerned with what goes on in another country, but today we’re all
connected in a lot of ways. With the use of the Internet as a means of reaching
customers, every store on the corner can now compete on a global scale.
1.6.1 Benefits
Outsourcing is when companies do not do all of the work themselves
but hire another company (often overseas) to complete some part of the work
based on cheaper labour or material costs. Managers with a global perspective
are able to research where materials originate in the world and seek to take
advantage of cost savings by purchasing them right from the source. Labour
costs are often one of the largest considerations when it comes to
manufacturing products. There are many other countries that have much lower
labour costs than the developed countries.
1.6.2 Drawbacks
There are also some drawbacks that global managers must be aware of
when it comes to using the entire world as office. Each country has its own rules
for international trade, in the form of tariffs, trade restrictions, or government
regulations that are meant to protect the host country’s companies and resources.
Even though a nation might have the cheapest cost for a particular mineral, the
costs of getting it out of the country may not be worth it in the end.
Costs involved in transporting the products to their final assembly
point, on to the warehouses, and then to the final stores, referred to as
logistics, have to be taken into account as well. Additionally, all of this work
takes a lot of people of different cultures (who need to be paid) in order to
coordinate the flow of goods and services.
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1.7 INNOVATIVE PERSPECTIVE OF MANAGEMENT
Innovation has never only been about creative ideation. Successful
innovation is the combination of creative ideas and sustainably profitable
business models. So beyond ideation is
� A systematic process of searching for the right business model to
support the organisation.
� This involves understanding customer needs and their
jobs-to-be-done. It involves figuring out the right solution for
customers,
� The right channels to reach them.
� The right customer relationships to have.
� It also involves figuring out the right price points and cost
structures for profitability.
The innovative perspectives of management are company’s
management processes, which are designed to drive operational efficiency and
productivity. Translating a novel management idea into new and deeply rooted
management practices requires a sustained and broad-based effort, but the
payoff can be substantial. While there is no defined rule for innovation in
management, some of the essential components are
� Fresh thinking to redefine the solutions for problems.
� Novel principles or paradigms that have the power to illuminate
new approaches
� A careful deconstruction of the conventions that constrain creative
thinking.
1.8 ENTREPRENEURIAL PERSPECTIVE OF MANAGEMENT
Entrepreneurial perspective covers the concepts of creation, risk-taking,
renewal or innovation inside or outside an existing organization. The business
process includes
� The identification and assessment of opportunities
� The decision to exploit them oneself or sell them
� Efforts to obtain resources and the development of the strategy
and organization of the new business project.
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It has recently been claimed that if the managers and businessmen of
firms are to adopt entrepreneurial behaviour when developing their strategies,
firms would be facing a much brighter future than current perceptions.
The entrepreneurial perspectives which apply to management are:
1. Economic and dynamic activity:
Entrepreneurship is an economic activity because it involves the
creation and operation of an enterprise with a view to creating value or wealth
by ensuring optimum utilisation of scarce resources. Since this value creation
activity is performed continuously in the midst of uncertain business
environment, entrepreneurship is regarded as a dynamic force. Since
management is also goal oriented and includes factors of production the
attitude of managers is always entrepreneurial in nature.
2. Related to innovation:
Entrepreneurship involves a continuous search for new ideas. It
compels an individual to continuously evaluate the existing modes of business
operations so that more efficient and effective systems can be evolved and
adopted. Management like entrepreneurship strives for optimization of
performance in organizations.
3. Profit potential:
Profit potential is the likely level of return or compensation to the
entrepreneur for taking on the risk of developing an idea into an actual
business venture. Management is thus a professional and process oriented
activity which focuses on reaping the optimum profits.
4. Risk bearing:
The essence of entrepreneurship is the ‘willingness to assume risk’
arising out of the creation and implementation of new ideas. New ideas are
always tentative and their results may not be instantaneous and positive.
Managers are also system oriented but the focus is on group activity
thoroughly lead by competent authority who are responsible for the results.
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1.9 MANAGING PEOPLE AND ORGANISATIONS IN THE CONTEXT OF NEW ERA
Innovative concepts continue to emerge to address managementchallenges in today’s world. Organisations experiment with new ways ofmanaging according to the demand of the present environment and customers.Two current innovations in managerial thinking are
1. The shift to a learning environment and
2. Managing a technology driven work place.
To promote learning based organisations, the managers must knowstrategy and business for building a sustained competitive advantage. Thethree important aspects involved are team based structure, empoweringemployees and sharing of information. Ideas, information and relationshipsare now more important than physical assets. Managing a technology drivenwork place is based on relationships often built through flexible e-linksbetween a company and its employees, suppliers, partners and customers.These are important than the production oriented physical assets and theserequire new approaches to management. Today’s best managers valueemployees for their ability to think, build relationships and share knowledgefor a sustained competitive advantage of their business.
1.10 COMPETITIVE ADVANTAGE
Competitive advantage is the favourable position than an organisationseeks in order to be more profitable than its competitions. This involvesproviding greater value to a target market than the competitors. This can beachieved through many avenues including offering a better quality product orservice, lowering prices and increasing marketing efforts. Sustainablecompetitive advantage refers to maintaining a favourable position in themarket over a long term, which can help boost a company’s image in themarket among competitors, its valuation and future earning potential.
1.10.1 Managing For Competitive Advantage
With the advancement in technologies like internet, people can easily share
their information by adapting modern way of business communication.
E-commerce and digital marketing are the recent trends which are also successful
in business. To survive and win in this age of globalization, organisations must
adapt the fundamental success drivers to gain sustainable competitive advantage
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over their rivals. The competitive advantage is considered as an asset for the
organisation to survive and complete in the industry.
The four fundamental success drivers are
1. Cost competitiveness
2. Quality
3. Speed
4. Innovation
1. Cost competitiveness:Cost competitiveness is about keeping the price low and realizing
profits. Low cost attracts more buyers but it is not easy to manage low cost.
It involves managing resources, labour, manufacturing and marketing at low
costs. Eg. Dell computers. They manufacture computers at affordable prices
with required technology attractive to a large customer base.
2. Quality:Quality refers to the excellent features of the product including
attractiveness, lack of defects, reliability and long term dependability.
Irrespective of costs of products sold, organisations sustain their market share
only through providing quality.
Eg. Intel Corporation is a leading Computer Hardware manufacturer
preferred for reliability and durability of the processors which satisfies the
customers.
3. Speed:Fast and timely manufacturing and delivery of the products is the key
requirement in business. Knowing the market condition, quickly incorporating
changes and delivering novel products even before the competitors is the key
to business success.
4. Innovation:
Creation of new devices, objects, ideas or procedures is very important
in business. Companies must make use of the potential of their manpower
by unlocking their expertise in innovation.
Introduction of Management 1.21
Procter and Gamble produces different new tooth pastes according to
the use of the customers. It has all the types that a customer prefers in a
toothpaste.
1.11 CHALLENGES IN MANAGEMENT
Management in all business and organisational activities is the act of
getting people together to accomplish desired goals and objectives using
available resources efficiently and effectively. It applies to any kind of
organisation and at all levels. But it is very difficult for organisations to
remain successful admist severe competition. The various challenges are
1. Economic pressure:
As long as the company is making profits, management is not
bothersome. In stiff financial conditions if not managed properly, it may lead
to ultimate failure of business. Nintendo a Japanese multinational consumer
electronics company spent money even when they were not making profits,
for releasing their gaming product Wii.Nintendo started as a playing card
company which redefined gaming, music etc and eventually survived the
economic crisis.
2. Globalisation:
Globalisation makes it possible for companies to find economies with
cheaper costs. Companies can benefit through outsourcing and off-shoring.
Talent from all over the world is recruited. There is also a global reach thus
increasing potential customers.
3. Innovation:
It refers to the use of better novel idea or method in product or service
offered. Eg. Apple is the leader in the tablet market. Yahoo couldn’t keep
pace with the changing requirement and therefore got out of the race.
4. Customer service:
Organisations don’t exist without customers. Meeting the required
needs and demands of the customers is a challenge. In this internet era, to
maintain and enhance the personal experience while making use of the
efficiencies of e-commerce is a big challenge.
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5. Employee satisfaction:
Happy workers produce more to the company. Employee satisfaction
increases productivity and loyalty of the employees towards the company.
Companies are employing new management techniques to keep their
employees satisfied.
Eg. Google allows employees to use upto 20% of their week at google
to pursue special projects.
6. Organisation ethics:
Behaving ethically in business is a mandate for every organisation.
Eg. Johnson and Johnson had to withdraw sale of Tylenol pain relieving
capsules which accounted for 18% of the company’s income due to
unexpected deaths of 3 consumers. Public welfare and the company’s
reputation are protected by ethical decision making.
7. Social responsibility:
Social responsibility is a duty that every individual or organisation has
to perform to maintain a balance between the economy and ecosystem.
The Tata Medical Centre is not for profit. Its initiative aimed
specifically at helping cancer patients from the north east. It also houses as
shelter to provide free stay and food for patients and relatives.
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