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Principles of Management 

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The basic aim of this book is to help the students of commerce and management. The book of "Principles of Management" covers the syllabi of all the Indian unversities at the maximum. It meets students' needs by explaining the concepts in a detailed manner.

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1.1. Introduction to Management

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Chapter

1.1.

1

BASICS

OF

MAN

AGEMENT

ANA

INTRODUCTION TO MANAGEMENT

The managers achieve organizational objectives by getting work from others and not performing in the tasks themselves.

Management is an art and science of getting work done through people. It is the process of giving direction and controlling the various activities of the people to achieve the objectives of an organization.

1.2.

DEFINITION OF MANAGEMENT

There are numerous definitions of management. Different experts have defined different points of view.

According to Mary Parker Follett, “Management is the art of getting things done through people.”

Harold Koontz defined as, “Management is the art of getting things done through and with people in formally organized groups. It is the art of creating an environment in which people can perform and individuals could cooperate towards attaining of group goals.”

In view of Joseph Massie, “Management is defined as the process by which a cooperative group directs actions towards common goals.”

 

1.2. Definition of Management

PDF

Chapter

1.1.

1

BASICS

OF

MAN

AGEMENT

ANA

INTRODUCTION TO MANAGEMENT

The managers achieve organizational objectives by getting work from others and not performing in the tasks themselves.

Management is an art and science of getting work done through people. It is the process of giving direction and controlling the various activities of the people to achieve the objectives of an organization.

1.2.

DEFINITION OF MANAGEMENT

There are numerous definitions of management. Different experts have defined different points of view.

According to Mary Parker Follett, “Management is the art of getting things done through people.”

Harold Koontz defined as, “Management is the art of getting things done through and with people in formally organized groups. It is the art of creating an environment in which people can perform and individuals could cooperate towards attaining of group goals.”

In view of Joseph Massie, “Management is defined as the process by which a cooperative group directs actions towards common goals.”

 

1.3. Nature/Characteristics of Management

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2

PRINCIPLES

OF

MANAGEMENT

According to this definition, management is a process a systematic way of doing things.

The four management functions included in this process are planning, organizing, directing and controlling.

Planning refers manager’s think of their actions in advance. Their actions are usually based on some method, plan or logic, rather than on a hunch.

Organizing refers manager’s coordinate the human and material resources of the organization.

Actuating refers managers motivate and direct subordinates

Controlling refers attempts to ensure that there is no deviation from the plan or norms.

This definition also indicates that managers use people and other resources such as finance, equipment’s etc. in attaining their goals.

Finally, the definition states that the management involves the act of achieving the organization’s objectives. These objectives will, of course, vary with each organization.

The following chart clearly presents this definition of management.

Basic Resources (6M)

Fundamental Functions

 

1.4. Scope of Management

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BASICS

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M ANAGEMENT

3

6. Management involves decision-making. It is a decision-making process and the decisions are involved in all the functions of management.

7. Management coordinates all activities and resources. It is concerned with coordination of all activities and resources to attain the specific objectives.

8. Management is a universal activity. The techniques and tools of management are universally applicable.

9. Management is an integrating process. It integrates the men, materials and machines for achieving stated objectives.

10. Management is concerned with direction and control. It is concerned with direction and control of human efforts to attain the specific objectives.

11. Management is intangible. It is abstract and cannot be seen. It is evidenced by the quality of organization and through its results.

12. Management is both science and an art. Management has certain universally applicable principles, laws etc. Hence, it is a science. It is also an art, because it is concerned with application of knowledge for the solution of organizational problems.

 

1.5. Functions of Management

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PRINCIPLES

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MANAGEMENT

Inventory control and quality control

Research and development etc.

(ii) Marketing Management. It refers to the identification of consumer’s needs and supplying them the goods and services, which can satisfy those, wants. The activities are as follows:

Marketing Research to determine the needs and expectations of consumers

Planning and developing suitable products

Setting appropriate prices

Selecting the right channels of distribution

Promotional activities like advertising and salesmanship to communicate with the customers.

(iii) Financial Management. Financial management seeks to ensure the right amount and type of funds to business at the right time and at reasonable cost. The activities are as follows:

Estimate the volume of funds requires for long term and short term needs of business

Selecting the appropriate sources of funds

Raising the required funds at the right time

Ensuring proper utilization and allocation of raised funds

Administration of earnings.

(iv) Personnel Management. It involves planning, organizing, directing and controlling the procurement, development, compensation, maintenance etc. of the human resources in an enterprise.

 

1.6. Management Process

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Warren Haynes and Joseph Massie classifies management functions into decision-making, planning, organizing, staffing, directing, controlling, and communicating.

Luther Gulick, states seven such functions under the catch word “POSDCORB”

Which stand for

P

Planning

O

Organizing

S

Staffing

D

Directing

Co

Coordinating

R

Reporting

B

Budgeting

As per managers are concerned, the following five functions are essential. They are Planning,

Organizing, Staffing, Directing, and Controlling. In addition to above five functions, the two functions such as Innovations and representation are also necessary for managers.

1.6. MANAGEMENT PROCESS

There is enough disagreement among management writers on the classification of managerial functions. Some classify these functions into four types, some into six or seven. The terminology is also not always alike, different authors offering different names for the same functions of management. For managerial purpose, the following five functions are very essential for managers. They are planning, organizing, staffing, directing and controlling.

 

1.7. Levels of Management

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Two broad categories of motivation are financial and non-financial. Financial motivation takes the form of salary, bonus, profit sharing, etc., while non-financial motivation takes the form of job security, opportunity of advancement, recognition, praise, etc.

(v) Controlling. The manager must ensure that everything occurs in conformity with the plans adopted, the instructions issued and the principles established.

Three elements are involved in the controlling function.

Establishing standards of performance.

Measuring current performance and comparing it against the established standards.

Taking action to correct any performance that does not meet those standards. In the absence of sound control, there is no guarantee that the objectives, which have been set, will be realized. The management may go on committing mistakes without knowing them. Control compels events to conform to plans.

Controlling function has the following sub functions. They are

1.7.

Fixation of standards,

 

1.8. Skills of Managers

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(iii) Supervisory/Operating Management. This is the lowest or first level of management in an organization. It consists of supervisors, foremen, sales officers, accounts officer, purchase officer etc. They maintain close contacts with the ranks and white colour workers and supervise dayto-day operations. They serve as the channel of communication between management and the workforce. They are concerned with the mechanics of jobs.

Functions

1.8.

To plan day-to-day production within goals laid down by higher officials

To assign jobs to workers and to make arrangements for their training and development

To issue orders and instructions

To supervise and control workers’ operations and to maintain personal contact with them

To arrange materials and tools and to maintain machinery

To advise and assist workers by explaining work procedures, solving their problems

To maintain discipline and good human relations among workers

To report feedback information and workers’ problems to the higher authorities.

 

1.9. Role of Managers

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MANAGEMENT

and motivates them. In this regard, he is expected to know general tendencies of human behaviour and factors influencing it. By using human skills, he may establish good rapport, warmth relationships and conductive interpersonal relations with his subordinates. It is needed for providing dynamic and effective leadership and building a team spirit among employees.

Since, managers at all levels in the enterprise are supposed to deal with human beings in a subordinate position; all managers from the top to the lowest levels in the management hierarchy equally need human skill.

(iii) Conceptual Skills. Conceptual skill comprise the ability to see the whole organization and the inter relationships between its parts. These skills refer to the ability to visualize the entire picture or to consider a situation in its totality. Such skills help the manager to conceptualize the environment, to analyse the forces working in a situation and to take a broad and farsighted view of the organization. Conceptual skills also include the competence to understand a problem in all its aspects to use original thinking in solving the problem. Such competence is necessary for rational decision-making.

 

1.10. Evolution of Management Thought

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7. Entrepreneur

It involves initiating change or acting as a change agent. For example, a manager decides to launch a feasibility study for setting up a new plant.

8. Disturbance handler

This refers to taking charge when the organization faces a problem or crisis. For example, a strike, a feud between subordinates loss of an important customer. A manager handles conflicts, complaints and competitive actions.

9. Resource allocator

In this role a manager approves budgets and schedules, sets priorities and distributes resources.

10. Negotiator

As a negotiator, a manager bargain with suppliers, dealers, trade union, agents, etc. For example, the manager may negotiate with the union leaders regarding strike issues.

1.10. EVOLUTION OF MANAGEMENT THOUGHT

To get proper and balanced perspective of theory and practice of management, all developments taking place since the beginning of the 20th century may be placed under three main categories.

They are as follows:

Classical or traditional Management approach

 

1.11. Difference between Management and Administration

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PRINCIPLES

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MANAGEMENT

1.11. DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION

Sl.No

Point of Distinction

Administration

Management

1

Definition

Administration means overall determination of policies, settings of major objectives, the laying out of broad programmes, major projects and so forth.(ie., Administration means determination of goals, formulation of plans and policies of the organization.)

Management means essentially an executive function, the active direction of human efforts getting things done.(i.e., Management is considered as an operative function of carrying out plans and policies for achieving objectives.)

2

Nature

Deterministic or thinking function

Executive or doing function

3

Scope

It is concerned with the determination of major objectives and policies

It is concerned with implementation of policies

4

Level

It is mainly a top-level function

It is largely a middle and lowerlevel function

5

Influence

Administrative decisions are influenced mainly by public opinion and other outside forces.

Managerial decisions are influenced mainly by objectives and policies of the organization

 

1.12. Management as a Science or an Art

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20

PRINCIPLES

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MANAGEMENT

1.11. DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION

Sl.No

Point of Distinction

Administration

Management

1

Definition

Administration means overall determination of policies, settings of major objectives, the laying out of broad programmes, major projects and so forth.(ie., Administration means determination of goals, formulation of plans and policies of the organization.)

Management means essentially an executive function, the active direction of human efforts getting things done.(i.e., Management is considered as an operative function of carrying out plans and policies for achieving objectives.)

2

Nature

Deterministic or thinking function

Executive or doing function

3

Scope

It is concerned with the determination of major objectives and policies

It is concerned with implementation of policies

4

Level

It is mainly a top-level function

It is largely a middle and lowerlevel function

5

Influence

Administrative decisions are influenced mainly by public opinion and other outside forces.

Managerial decisions are influenced mainly by objectives and policies of the organization

 

1.13. Difference between Managers and Entrepreneurs

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BASICS

OF

MANAGEMENT

21

Systematic means the recorded and analyzed data or being ordered and unbiased. All scientific information collected as raw data and finally ordered and analysed with the help of statistical tools. It thus becomes communicable and intellectual. Communication of results also permits repetition of the study, if need, by the investigator or others. When the study is repeated and the second try provides results similar to the first one, which derives much more confidence in those results.

On the basis of the above definition of science we may perceive the management is also a science. The word ‘science’ is used to denote two types of systematic knowledge: natural or exact and behavioural or inexact. Some more explanation of the scientific nature of management is needed.

Management is not like the exact or natural sciences such as physics, chemistry, etc. Management is a behavioural/social science. It is possible for us to study the effects of any one of the factors affecting a phenomenon individually by making the other factors in operative for the time being.

 

1.14. Distinguish between the Manager and the Leader

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PRINCIPLES

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MANAGEMENT

Decision-making by the entrepreneur is mainly with regard to the following

Goals and objectives of the enterprise and broadly how these are to be accomplished.

The kind of image the enterprise is to project of itself and how it is to conduct it self in general.

The kind of products to be manufactured whether top quality and useful products, or low quality and not so useful products.

The concern’s attitude towards its employees, the government, society and so on.

Manager

A manager is an employee of the entrepreneur. His job is to work for the accomplishment of the goals and objectives set by the entrepreneur.

There may be cases where a person is both an entrepreneur and a manager at the same time as, for example, in the case of the sole proprietor or the managing partner of a firm. Even so the managerial functions performed by him in this capacity are the same as those of any non-owner manager.

Difference between Entrepreneur and Manager

The main difference between an entrepreneur and a manager is with regard to the degree of freedom enjoyed in his work. Being the owner of the undertaking, the entrepreneur is free to determine the objectives based on his own assessment, beliefs and values. Limitations imposed by the external environment and, to a certain extent, availability of resources will also influence him in this regard.

 

2.1. Meaning

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Chapter

2.1.

2

PLANNING

MEANING

Planning is the fundamental/primary function of management. Planning is the function that determines in advance what should be done. It is looking ahead and preparing for the future. It is a process of deciding the business objectives and charting out the methods of attaining those objectives. In other words, it is the determination of what is to be done, how and where it is to be done, who is to do it and how results are to be evaluated. Plans made by top management of the organizations whole may cover periods as long as five or ten years. Also, plans made by middle or first line managers, cover such shorter periods. Such plans may be for the next days or weeks, or months, etc… for example, for a two-hour meeting to take place in a week.

2.2. DEFINITION OF PLANNING

There are numerous definitions of planning. Different experts have defined different points of view.

“Planning is an intellectual process, the conscious determination of course of action, the basing of decision on purpose, acts and considered estimates”.

 

2.2. Definition of Planning

PDF

Chapter

2.1.

2

PLANNING

MEANING

Planning is the fundamental/primary function of management. Planning is the function that determines in advance what should be done. It is looking ahead and preparing for the future. It is a process of deciding the business objectives and charting out the methods of attaining those objectives. In other words, it is the determination of what is to be done, how and where it is to be done, who is to do it and how results are to be evaluated. Plans made by top management of the organizations whole may cover periods as long as five or ten years. Also, plans made by middle or first line managers, cover such shorter periods. Such plans may be for the next days or weeks, or months, etc… for example, for a two-hour meeting to take place in a week.

2.2. DEFINITION OF PLANNING

There are numerous definitions of planning. Different experts have defined different points of view.

“Planning is an intellectual process, the conscious determination of course of action, the basing of decision on purpose, acts and considered estimates”.

 

2.3. Nature of Planning (Characteristics/Features of Planning)

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PLANNING

29

2.3. NATURE OF PL ANNING (CHARACTERISTICS/FEATURES OF

PLANNING)

1. Planning is goal-oriented. Planning involves setting the objectives of an organization for achieving the business targets well in time. Objectives can easily be achieved by a sound planning process.

2. Planning is a primacy. Planning precedes other functions in the management process. It is the primary requisite before other managerial functions step in. The other managerial functions, viz., organizing, staffing, directing & controlling can be performed only after the necessary planning has been done. So it gets primary everywhere.

3. Planning is all-pervasive. Planning is a pervasive activity covering the entire enterprise with all its segments and every levels of management. It is equally important for large and small firms.

4. Planning is an intellectual/rational process. Planning is a mental exercise involving imagination, foresight and sound judgement. It is not guesswork or wishful thinking. Managers take the necessary steps to fight against future events. So it is a process of looking ahead.

 

2.4. Importance of Planning

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PLANNING

29

2.3. NATURE OF PL ANNING (CHARACTERISTICS/FEATURES OF

PLANNING)

1. Planning is goal-oriented. Planning involves setting the objectives of an organization for achieving the business targets well in time. Objectives can easily be achieved by a sound planning process.

2. Planning is a primacy. Planning precedes other functions in the management process. It is the primary requisite before other managerial functions step in. The other managerial functions, viz., organizing, staffing, directing & controlling can be performed only after the necessary planning has been done. So it gets primary everywhere.

3. Planning is all-pervasive. Planning is a pervasive activity covering the entire enterprise with all its segments and every levels of management. It is equally important for large and small firms.

4. Planning is an intellectual/rational process. Planning is a mental exercise involving imagination, foresight and sound judgement. It is not guesswork or wishful thinking. Managers take the necessary steps to fight against future events. So it is a process of looking ahead.

 

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