MBA SEM-1

SUBJECT:PRINCIPLES OF MANAGEMENT

MEANING OF MANAGEMENT
Management is the art of getting things or works done by a group of no. of people with the effective utilization of available resources. These resources may be in the forms of men, money, materials & machines. Two or more persons form the body of managing any organization, which perform jointly various functions in order to achieve the common objectives of the business organization.

Based on above discussion and definitions given by many authors, we may summarize :
1). Management is a set of activities, 2). Management is performed by group of people, 3). This set of activities is executed by inputting various resources like men, money, materials, machines, technologies and many more, 4). Management serves the achievement of common and specified goals of the group of people, 5). Management is a dynamic process of understanding various functions like Planning, Organizing, Staffing, Directing, Co-ordinating, Reporting, Budgeting (POSTCORB) and many more.

DEFINITIONS
Peter F. Drucker defines it as Management is an organ; organs can be defined and described only through their functions.
According to Terry, Management is not people, it is an activity like walking, reading, swimming or playing. People who perform management can be designated as managers, members of management or executive leaders. Henry Feyol defines as, To manage is to forecast and plan, to organize, to compound, to coordinate and to control.

William Spriegal defines Management as the functions of an enterprise which concerns itself with direction and control of various activities to attain business objectives. Management is essentially an executive function; it deals with the active direction of the human efforts.
F. W. Taylor defines, Management is the art of knowing what you want to do and then seeing that it is done in the best and cheapest way. Koontz and ODonnell defines, Management is the creation of and maintenance of an internal environment in an enterprise where individuals, working in group, can perform efficiently &effectively towards the attainment of group goals. It is the art of getting the work done through and with people in formally organized group.

IMPORTANCE OF MANAGEMENT
(1). ACCOMPLISHMENT OF COMMON GOALS:
As discussed earlier, an organization has predetermined specific goals or objectives. The execution of various functions to achieve such goals also leads to establish the common objectives among those persons executing these functions. Management provides an environment to accomplish such common goals by three factors as under. (i). Proper planning and availability of required resources. (ii). Trying to adjust the business activities to the surrounding external environment. (iii). Effective decision making process and controlling activities of business enterprise.

(2). EFFECTIVE UTILIZATION OF RESOURCES: Management has to control 6 Ms to be considered as resources wise Men, Machines, Money,

Materials, Methods and Markets.

Management tries to utilize all these resources in very effective and efficient way.

Management decides and takes actions to arrange & utilize very appropriate alternative of each
of these resources.

3). MANAGEMENT INTEGRATES VARIOUS INTEREST GROUPS: Each person in an organization has his personal interest of working in that organization. But the organization has its own set of objectives. Management takes initiatives to integrate various interests of all individuals working in a group to achieve organizations common objectives.

(4). EFFECTIVE FUNCTIONING OF ORGANIZATION:

Ability, experience, mutual understanding, co-ordination, motivation and supervision are some of the factors responsible for some of the effective functioning of business activities of an organization. Management ensures that the skills of managers and abilities of workers are effectively used and co-operation is obtained with the help of mutual understanding. Thus effective functioning of an organization is possible only with the efficient management.

5). STRUCTURING THE ORGANIZATION: Management segregates different activities and tasks to be performed by different skills level of people.

Management determines and assigns various responsibilities to perform these tasks separately but in such an established channel so that entire group of people is included.
Thus, sound organization structure clearly defines the authorities and responsibilities to be distributed and assigned among such group of people in an organization.

(6). INCORPORATING INNOVATION: In the competitive phenomenon of changing technologies and social structure, management develops new ideas.

Such new ideas require to be incorporated to keep the organization alive and efficiently operating its business activities.
Management achieves better performance by incorporating new ideas and innovation and that is how management is also called as dynamic.

Features of management

Management is an activity Management is a process It is required for every type of organization Management is required at all levels of organization Management is goal oriented Management is intangible Management is dynamic Management is discipline

Objectives of management

To achieve goal of organization Promote effectiveness Develop the ability of managers Human welfare Social welfare Interaction with environment

Management as an activity

Interpersonal role Informational role Decisional role

Management as a process

Planning Organizing Leading Controlling

Other aspects of management

Management as a discipline Management as a group Management as an economic resource

MANAGEMENT- A SCIENCE OR AN ART

Management As Science : Management as Science believes that there are ideal managerial practices for certain situations
Manager

with scientific approach will expect that there is a rational and objective way to determine the correct course of action for any problem
They

follow general principles and theories

cont..

Clarity of concept Scientific methods Clarity of theory Casual relationship Systematized theory of knowledge Universal application

Management as an Art
Managers Use

are likely to rely on social & political environment surrounding the managerial issues. their knowledge and skills for a particular situation determines course of action
Requires

more than a mastery of techniques and skills

Requires

managers to understand individual their motivation and help them achieve their goal
Combining

management and leadership into practice

It

is such as it deals with fundamentals of knowledge, wisdom and leadership, but because it is also concerned with practice and application
Management

is more of an art as scientific facts do not remain stable over time.

Cont..

Artists vision Knowledge Communication Creativity Skilled performance Practice

Management is both a science and an art

As science, it is based on principles & theories, on the basis of which managers act, and as Art, it deals with decision making process through application of practical & personal skills

The art of management begins where science of management ends

ADMINISTRATION & MANAGEMENT

This conflict was 1st raised by Oliver Sheldon in his book the Philosophy of Management in 1923. Three approaches: -Administration is above Management -Administration is a part of Management

-Administration & Management are same

ADMINISTRATION IS ABOVE MANAGEMENT

Administration is that phase of a business enterprise that concerns itself with the overall determination of institutional objectives & the policies necessary to be followed in achieving those objectives. Management on other hand, is an executive function which is primarily concerned with carrying out broad policies laid down by administration. -- Spriegel

ADMINISTRATION IS PART OF MANAGEMENT

Management is process of executive control in commerce, entailing responsibility for the effective and planning & regulation of the operation of an enterprise, in fulfilling of given task. while Administration is that part of management which is concerned with installation & carrying out of the procedures and process of activities regulated & checked against plans-- Brech

MANAGEMENT. & ADMINISTRATION ARE SAME

Both involve same functions, principles & objectives.
-administrative management -operative management All undertakings require planning, organizing, commanding, coordinating & controlling in order to function properly.--- Henry Fayol.

Org-al levels

Administration
Mgmt

Functions in Organization

Difference between Adm & Mgmt

Basis of Diff
Level of Org Major focus Scope of functions Factors affecting decisions Qualities require

Administration Mgmt
Top level Policy formulation Middle or lower level Policy execution

Broad & conceptual Narrow & operational External Internal Administrative Technical

Levels of management
The term levels of management refers to a line of demarcation between various managerial positions. In a large organisation, three levels of management are usually identified:

(i) (ii) (iii)

Top level management Middle level management and Lower level management.

Levels of management: Difference

Point of Distinction

Top Level Management

A small group of policy makers deciding the fate of an organisation.

Middle Level Management

Act as a connecting link between top and lower level people and manage activities of other managers. Functional Heads (Marketing Manager, Personnel Manager, etc.) and immediate subordinates. Middle managers, compared to supervisors, are far less physically active and far more involved in paper work and meetings. Their job is less hectic, more reflective and more frustrating.

Lower Level Management

These managers are in direct contact with employees.

Action focus

Representation

Chief Executive Officer, President, Chairman, Managing Director, bod etc. They generally spend most of their time with peers, outsiders and to a lesser extent, subordinates. A top managers schedule is typically hectic.

Section Head, Supervisor, First-Line manager, etc.

Nature of work

Generally physically active, experience frequent interruption, often shift back and forth between tasks and spend most of their time with subordinates and peers caring for monetary problems.

Time Spent in Carrying Out Managerial Functions

Skills and Management Levels

Managerial skills

In order to be effective, a manager must possess and continuously develop several essential skills. Basic types of skills which are needed by all managers Technical skill Human skill Conceptual skill

Functions of Management
Planning Organizing

Staffing
directing Controlling

Management theories

Pre scientific management theory classical theory

-Taylors scientific management theory -Fayols administrative management theory -webers bureaucracy theory

Behavioral theory -Human relation theory -behavioral science theory

Modern management theory -Quantitative theory -system theory -contingency theory -operational theory

Pre scientific theory

charles babbage, forrunner of scientific management emphasised on work specialization
James montogmery focused on importance of planning, organizing and controlling of business

18th century emphasis on systematic adm & effective utilisation of resources

19th century Robert Owens emphasised on personal aspects in Mgmt. & advocate no. of benefits to employees. he is considered as a father of personnel management Andrew Ure believed that managers could learn morale by imparting them training and morale education

Charles Dupin said that it is not enough to provide only technical

Cont..

EVALUATION: Mgmt practice is as old as human civilizations

Belief that managersrs are born & not made

World war I people started thinking of solution to the problem of how ltd resources could be applied in better way. Further- growing competition & complexity of managing large business there is no any single universally accepted management theories

1,Classical theory

It is oldest theory of management It is foundation of study of business management With increase in size and complexity of organization , the need for systematic approach became inevitable Finanacial incentives were viewed as important contributors Viewed organization as closed system Develop a set of management principles, which are universally applicable.

Features of classical theory

Foundation of modern management Attempts to increase employee output Financial incentives Structure of jobs and work schedule Organization as a closed system Set of management principles

SCIENTIFIC MANAGEMENT THEORY

Introduced by frederick Winslow Taylor in USA in beginning of 20th Century. S.M. is concerned with knowing exatly what you want men to do and then see in that they do it in the best & cheapest way. Taylor. Concerned with improving the operational efficiency at the shop floor level

Focus on time & work study

ELEMENTS OF S.M.
Separation of planning & doing Standardisation

Scientific selection of working system

Financial incentives Economy & profit Mutual co-operation

PRINCIPLES OF S.M.
Replacing rule of thumb with science
Harmony in group action Co-operation not individualism Maximum output not a restricted

Development of workers to their fullest capacity

CRITICS
More relevant for engineer point of view rather than management point of view Workers opposed

Human aspect were ignored, aggressive mechanical view of production

Strict following of standards to raise production

Exploitation of workers by introduction of piece wage rate system.

Administrative management
Introduced by father of modern management, a French industrialist, Henry Fayol in 1916 Looked at the problems of managing an organization from top management point of view He emphasized that POM are flexible and not absolute. Opposed principle managers were born not made

ACTIVITIES OF AN ORG.
Technical (prod) Commercial(buying, selling & exchanging finished goods) Financial (search for capital & its use) Security (protection of resources)

Accounting & statistics

Managerial (pl, organising, command, co-ordiantion & control)

MANAGERIAL QUALITIES
Physical Mental Moral Educational Technical experience

PRINCIPLES OF MGMT.
Division of Work Authority & responsibility Discipline Unity of command Unity of direction

Subordination of Individual to General Interest

Remuneration of personnel Centralization Scalar chain Orderly arrangements Equity

Stability of tenure
Initiative Esprit de corps

SIMILARITIES
Overcome managerial problems in systematic way. Develop some principles for solving problems Emphasized on effective mgmt actions Managerial qualities are acquirable by training Harmonious relationship between mgmt & workers.

DISSIMILARITY
Basis of Diff
Perspective Focus

Taylor
Shop floor level

Fayol
Higher mgmt

Efficiency through Efficiency by simplification & observing certain std principles

Orientation
Results Overall contributions

production
Scientific obs & measurement Accomplishment of production line

Managerial
Personal exp -> universal truths Systematic theory of mgmt.

Webers bureaucracy theory

He is a German sociologist rather than charismatic & traditional focused on RATIONAL approach Rational defines formal authority,responsibility structure and aimed to achieve organizations predetermined goals Authority by designation and bound to follow well defined rules & regulations

Features

Division of labor Scalar chain Appointment based on merit Formal rules & procedure Impersonal Professional officials Official records

Limitations

Much Emphasize on formal rules & regulation Hampers human creativity Procedure oriented Delays in working process works against human nature closed system

Limitations of classical theory

Helps when organization has very stable structure Universality of concepts does not always hold good Employees are considered as tools Task oriented Focus on monetary rewards Overemphasize on rules & regulations

2, Behavioral theory

Focus on human relation approach Attributed to organizational goals & satisfaction of human needs Shifted from work place condition to human relation side Production oriented jobs are shifted to people oriented jobs

Human relation theory

management doesnt do it gets others to do Human being & human relation Increase in morale of workers Defines way of interacting to subordinates Elton mayo(1880-1949) father of human relation approach Known as a Hawthorne study

Conducted various experiments

-test room studies -interviews

-observation

Features

workers are not rational man but social man group activity work like one family less chance of conflicts Production norms set by social norms not by official structure

Limitations

Design of theory Analysis of theory Interpretation of theory Human relation philosophy Scientific method & human relation approach

Behavioral science theory

Lack of scientific vision in human relation approach This theory applied concept of social science(psychology,sociology,anthropology) motivate people as per their need perception managers understand their needs and satisfy them through motivators and synchronize their individual goals with organizational goals

Features

emphasize on participative & group decision making Self direction & self control Positive measures Informal groups complex man rather than social man

3, Modern management
Characteristics: Responsive to environmental changes Organizations are dynamic institutions Business have multiple objectives Management is multi-disciplinary Management is future oriented

Theories of modern management

Quantitative theory Systems theory Contingency theory Operational theory

Quantitative theory
Quantitative, scientific and systematic explanations gained popularity during World War II. The quantitative viewpoint focuses on the use of mathematics, statistics, and information aids to support managerial decision-making and organizational effectiveness.

Three main branches have evolved over the years: management science, operations management management information systems.

Features
Offers quantitative aids to decision-making; develops quantitative tools to assist in providing products and services. The primary focus is on decision-making. Managerial choices in any situation depend on criteria such as costs, revenues, return on investment, impact on other areas etc. Heavy emphasis is put on computers and their processing capabilities. Final solutions to problems are reduced to mathematical formulae and these are subjected to further analysis and processing to find viable alternatives.

Systems theory
It attempts to view the organisation as a single unified, purposeful entity, composed of interrelated parts. Rather than dealing separately with the various parts of an organisation, the systems theory gives managers a way of looking at an organisation as a whole and as a part of the larger, external environment.

Features

consider organization as a sub system consider both near & distant future goals integrates goals of different parts of organization with whole organization promotes business & social objectives

Components of a system

Sub-system
Synergy Open and closed system

System boundary
Flow Feedback

Contingency(situational) theory
Contingency theory is based on the premise that situations dictate managerial action; that is, different situations call for different approaches. No single way of solving problems is best for all situations. According to contingency theory, effective management varies with the organisation and its environment. This approach is both analytical and situational, with the purpose of developing a practical answer to the question at hand.

Features
1. Managerial actions are contingent on certain actions outside the system or sub-system as the case may be. Organizational efforts should be based on the behavior of actions outside the system so that the organization gets smoothly integrated with the environment. Managerial actions and organizational design must be appropriate to the given situation. A particular action is valid only under certain conditions. There is no one best approach to management. It varies from situation to situation.

2.

3.

Operational theory
The operational approach to management
theory and science draws together the pertinent knowledge of management by relating it to the managers job that managers do.it tries to integrate the concepts,principles and technique that underlie the task of managing

Social responsibility of bss

Business organizations are looked forward to solve a broad range of social problems like poverty,crime pollution,raise the level of education,create better job opportunities,uplift weaker and minority sections etc... It refers to the business organizations obligation to look after the interest of the society An enterprise is responsible for its impact on all relevant stake holders It is the continuing commitment by business to behave fairly & responsibly to contribute the economic development

Definitions of social responsibility

Social responsibility is an organizations obligation to benefit to the society in the ways that transcend the primary objective of maximizing profit It is the obligation of an organization to seek that protect and improve the welfare of the society along with its own interest

Nature of social responsibility

Focus on business firms It deals with morale issues Commensurate with the objective of profit maximization Pervasive activity Continuing activity

Levels of social responsibility

Obeyance of law Catering to public expectation Anticipation of public expectation Creation of public expectation

Historical perspective

Profit maximization Trusteeship management Quality of life management

Various stake holders

Shareholders Employees Customers Competitors Government Society at large

Arguments for social involvement

Public
long

expectations

run survival

profitable obligation image of further governmental regulation

Ethical Public

Discouragement Stakeholder Possession

interests of resources with economic objective

complementary

Arguments against social involvement

Violation Dilution Cost Sub-optimal Lack

of profit maximization

of purpose

utilization of resources

of skills of social benefits

Quantification

Ethics in managing

It is governed by set of principles or code of conduct It is generally determined by socially accepted norms Ethics is the discipline dealing with what is good and bad and with moral duty and obligation. Business ethics is concerned with truth and justice. Business ethics is set of morale principles that governs the actions of individuals or groups It is application of ethical principles to business relationships and activities

Ethical activities

Organizational effectiveness Profit maximization & stake holders interest

Attending customers
Integrity Meet organizational standards

Factors affecting ethical decisions

Legal concerns Government regulations

Industry & company ethical codes

Social pressures Tension between personal standards and organizational standards

Approaches or theories of ethics

The utilitarian theory suggests that plans and actions should be evaluated by their consequences. The theory based on rights holds that all people have basic rights. The theory of justice demands that decision makers be guided by fairness and equity, as well as impartiality.

Tools of ethics

Values Rights & duties Moral rules Human relationships Common morality

Promise keeping Non malevolence Mutual aid Respect for others Respect for property

The morality of care

Types of business organization

As As As As As As As As

per per per per per per per per

size of the enterprise ownership purpose style of management decision making sources of finance listing on the stock exchange reach of market