NATURE AND

SIGNIFICANCE OF
MANAGEMENT
Chapter - 1
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
• Describe the characteristics of management and its
importance in an organization;
• Explain the nature of management as an art, science and
profession;
• Explain the functions of management; and
• Appreciate the nature and importance of coordination
 Introduction
MANAGEMENT = MANAGE + MEN + T
• Management is required in all kinds of organisations
whether they are manufacturing computers or
handlooms, trading in consumer goods or providing
hairstyling services and even in non-business
organisations.
• Management is essential for all organisations big or
small, profit or non-profit, services or manufacturing.
• Management is necessary so that individuals make their
best contribution towards group objectives.
Definition
"Management is the art of
knowing exactly what you want
your men to do and then seeing
that they do it in the best and
cheapest way.” - JAMES
Concept
Management, has therefore, been defined as a
process of getting things done with the aim of
achieving goals effectively and efficiently.
PROCESS
The following pictorial presentation highlights the achievements of
two production managers: Ramesh and Shyam.
 HOTS
Identify the characteristic of management in the following:

(i) It creates an environment of productive relationships, keeps all stakeholders

happy and satisfied.

Ans. Intangible force

(ii) All regional sales managers of Achieve Best Ltd. worked towards achievement of
company's annual sales target of 50 m toys.

Ans. Group activity

(iii) After every three months, Mr. Ramakant offers new schemes to its distributors.
He tries to bring in changes keeping in mind the needs of a customer and offers
from his competitors. This gives him an edge over his competitors.

Ans. Dynamic
(iv)A owner of company not only sets goals for the
company but also organises resources, appoints
suitable people and ensure that all plans are
implemented properly
Ans. Multi-dimensional
(v) Management sets targets and unites efforts of all
individuals to accomplish them
Ans. Goal-oriented
(vi)A business needs to manage all activities from its start
to finish.
Ans. Continuous.
OBJECTIVES OF MANAGEMENT
1. Organisational/Economic Objectives

2. Social Objectives
3. Personal Objectives
 IMPORTANCE OF MANAGEMENT
• Management helps in achieving group goals:
Organization sets goals and management accomplishes
them. Positive direction of a manager unites the efforts
of individuals and helps to achieve the targets
effectively and efficiently.
Example : Director of ABC Lights Mr. R has set a target
to export 80% of its production capacity. To achieve
the target Mr. R has to provide opportunities to his
sales director to visit overseas markets and in turn, the
sales director will prepare the strategies, train, guide
and direct his sales team so that the target is achieved.
 IMPORTANCE OF MANAGEMENT
• Management increases efficiency. A manager can
maximize the productivity and minimize the cost with
better planning, organising, directing, staffing, and
controlling business activities. Effective process of
management improves efficiency.
Example: The purchase manager of Dayal Medicos does
stock taking every week. It helps him to place orders
well in advance. This way he is able to save on delivery
cost and maintain his stock levels. He is always ready to
meet customers' demand well in time.
 IMPORTANCE OF MANAGEMENT
• Management creates a dynamic organisation. With the changing
business environment, management reviews its goals, changes its
business strategies and adopts new technologies. It provides
opportunities to its employees to adapt to the changes. A
dynamic management is able to maintain competitive edge and
meet its customers' demand at all times.

Example: Ultra-Fast, a Pvt. Ltd. company introduced mobile chargers.

Soon they realized that there was tough competition in the market. The
production head Mr. khush made changes in the basic design and offered
them in the form of stuff toys to attract young girls and boys. The sales team
focused on selling the product to young generation and in no time, the
product became popular. Few changes helped business to earn huge profits.
Thus, being dynamic always pays.
 IMPORTANCE OF MANAGEMENT
• Management helps in achieving personal objectives. A manager's
main aim is to achieve the maximum productivity from his/her
team members. A good manager delegates work to his/her team
members as per their ability, provides them opportunities for
growth and development, recognizes each member's contribution
and motivates them to do their best. He/she ensures that the
financial and social needs of individuals are met. A happy,
motivated and financially satisfied workforce works with team
spirit, cooperation and commitment.

Example: HP Ltd., at the end of each financial year organises a review meet. In
this meet, they discuss the next year's business targets, hold motivational and
team building workshops and at the end, they announce awards for the high
achievers of the company. Continuous development and recognition motivates
workers to perform better.
 IMPORTANCE OF MANAGEMENT
• Management helps in the development of society.
Management of an organization directly and indirectly
works towards development of society. While fulfilling the
aim of greater profits and bigger market share, it provides
good quality products at reasonable prices. Business
expansions create employment opportunities, use of latest
technology leads to growth and development. Big Business
enterprises also divert share of their profits towards social
causes like education, medical services, child care etc.
Example: Azim Premji chairman of Wipro runs Azim Premji
Foundation a non-profit organization with an aim to provide
quality and equity of education in India.
 Management as an Art
Art is a skill-based creativity. Art involves use
of theoretical knowledge, observation and
experiences with creativity and personal touch
to achieve desired results effectively and
efficiently.
For management to be an art it is a must
that it has characteristics of 'ART'. Let us
examine the characteristics of Art present in
management.
 Existence of Theoretical Knowledge
Art Management
• To pursue Art, an artist • In management,
requires basic theoretical managers need to
knowledge in the specific specialize in the areas
field. like marketing, finance,
production, HR etc. The
theoretical knowledge
can be acquired by
reading books, joining a
course etc.
 Personalized Application
Art Management
• Every artist may • A manager may follow
acquire the same the principles as laid
theoretical knowledge down in management
but they apply the books but the
knowledge as per their application of such
personal skills, taste and principles may differ
preferences. from situation to
situation, individual to
individual.
 Based on Practice and Creativity
Art Management
• All art is practical. Art • A manager applies this
involves the creative acquired knowledge in a
practice of existing personalized and skillful
theoretical knowledge. We manner in the light of the
know that all music is based realities of a given situation.
on seven basic notes. He is involved in the activities
However, what makes the of the organisation, studies
composition of a musician critical situations and
unique or different is his use formulates his own theories for
of these notes in a creative use in a given situation. This
manner that is entirely his gives rise to different styles of
own interpretation. management
 Management as a Science
Science is a systematized body of knowledge
that explains certain general truths or the
operation of general laws. It is based on
logically observed facts and findings. For
management to be a science it must have basic
characteristics of SCIENCE. So, let us check if
management shares features of Science.
 Systematized Body of Knowledge
Science Management
• Science is a systematic • Management has a
body of knowledge. Its systematized body of
principles are based on a knowledge. It has its own
cause and effect theory and principles that
relationship. For example, have developed over a period
the phenomenon of an of time, but it also draws on
apple falling from a tree other disciplines such as
towards the ground is Economics, Sociology,
explained by the law of Psychology and Mathematics.
gravity.
 Principles based on Experimentation
Science Management
• Scientific principles • The principles of management have
evolved over a period of time based
are first developed
on repeated experimentation and
through observation observation in different types of
and then tested organisations. However, since
through repeated management deals with human
beings and human behaviour, the
experimentation under outcomes of these experiments are
controlled conditions. not capable of being accurately
predicted or replicated. Therefore,
management can be called an
inexact science.
 Universal Validity
Science Management
• Scientific principles • Since the principles of
have universal validity management are not as exact
as the principles of science,
and application.
their application and use is
not universal. They have to be
modified according to a given
situation.
 Management as a Profession
Well-defined body of knowledge
Profession Management
• All professions are based on • Management also
a well-defined body of requires specialized
knowledge that can be
knowledge, which can
acquired through instruction.
be gained through books
or courses available in
various universities.
 Restricted entry
Profession Management
• The entry to a profession is • There is no such
restricted through an requirement in the field of
examination or through management. However
acquiring an educational degree. individuals may acquire a
For example, to become a
management degree from
chartered accountant in India a
reputed universities through
candidate has to clear a
specified examination an examination to have an
conducted by the Institute of edge over other individuals
Chartered Accountants of India. in the field of management.
 Professional association
Profession
• All professions are affiliated
to a professional association
which regulates entry, grants
certificate of practice and
formulates and enforces a
code of conduct. To be able
to practice in India lawyers
have to become members of
the Bar Council which
regulates and controls their
activities.
Management
• There are management
associations, which have
set membership rules
and ethical codes, but it
is not compulsory for
managers to be a part
of them.
 Ethical code of conduct
Profession Management
• All professions are bound • AlMA, a management
by a code of conduct body has devised a code
which guides the of conduct for
behaviour of its managers. However, at
members. All doctors, present it is not
for example, take the compulsory for
oath of ethical practice managers to take its
at the time they enter membership.
the profession.
 Service motive
Profession Management
• The basic motive of a • Management of an
profession is to serve organisation aims to
their client’s interests by earn maximum profits
rendering dedicated and while selling quality
committed service. The products at reasonable
task of a lawyer is to prices to its customers.
ensure that his client
gets justice.
 LEVELS OF
MANAGEMENT
 Top Management
Top management of an
organization includes all such
individuals who are responsible
for taking core and crucial
decisions for the organization.
They are usually the senior most
executives of the organization.
Though they carry out all the
functions of management but
they are largely responsible for
planning and organizing for the
entire organization. They are the
face of the company.
 Functions of Top Management
• Top management defines the main objectives of the organization and
sets the short term and long term targets.
• It is the responsibility of top management to integrate diverse
elements and coordinate the activities of all the departments to
achieve organizational goals.
• They formulate plans, policies and strategies to achieve organizational
goals and meet the challenges of ever changing market demands.
• They constantly lead, direct, and control the efforts and performance
of all individuals working in the organization.
• Top level management is not only responsible for the survival and
growth of the organization but also for the welfare of all its
stakeholders.
Middle Management
Middle level
management is
responsible for
implementation and
controlling the plans
and strategies
developed by top-level
management. In the
process, they act as a
link between top
managers and lower
level managers.
 Functions of Middle Level Management
• The middle level managers interpret the plans and policies framed by top
management and explain them to line managers for effective
implementation.
• The middle level managers ensure that their departments have personnel
with adequate qualification and experience to perform functions expected
from them.
• The middle level managers assign necessary duties and responsibilities to
first line managers. They maintain discipline, control all the activities and
evaluate performance of each workforce.
• Middle level managers make sure that all the departments work as a
team and co-operate with each other for smooth functioning of the
organization.
 Supervisory or
Operational Management
The lower level management is
directly responsible for
implementation of plans
developed by top management
and instructions given by middle
level management. They are the
lowest level in the hierarchy of
the organization with very
limited authority. The lower level
of management mainly focuses
on directing and controlling.
 Functions of Lower Level Management
• First line managers interact with actual work force and transfer the information
and instructions provided by the top and middle level management.
• They oversee the efforts of the workforce to achieve the maximum output at
minimum cost of production.
• The first line managers supervise and monitor the production process closely to
ensure that there is minimum wastage of resources and best quality of output is
achieved.
• They are responsible to maintain safety standards and provide proper working
conditions to the workforce.
• The first line managers lead, direct and motivate workforce to achieve the
organizational goals most effectively. They appraise the performance of their
subordinates and recognize efforts their in the form of rewards, incentives or
promotions.
• The first line managers are responsible to maintain discipline and loyalty among the
entire workforce.
 COORDINATION-THE ESSENCEOF
MANAGEMENT
It is the force that binds all the other functions of
management being performed in various departments to
provide continuity in the working of the organization.

“Coordination is balancing and keeping together the team by

ensuring suitable allocation of tasks to the various members
and seeing that the tasks are performed with harmony among
the members themselves.” -E.F.L. BRECH
 Coordination in Planning

Top level management needs to coordinate

the organizational objectives and resources
available to set business targets, develop
strategies etc. Coordination between the
master plan and departmental plans is
extremely important to achieve overall
organizational goals.
 Coordination in Organising

Top level and middle level management

needs to coordinate with all departments
so that adequate resources are organized,
appropriate responsibilities, authority and
accountability is assigned to ensure
effective implementation of plans.
 Coordination in Staffing

Middle level management and lower

level management need to coordinate
the selection, recruitment, training,
growth etc. of all the personnel
required to achieve the organizational
goals.
 Coordination in Directing

The middle level management and lower

level management need to coordinate for
transfer of information, instructions,
orders or suggestions so that all activities
are performed as planned.
 Coordination in Controlling
At each level of management, the actual
performance is compared with planned
performance and corrective actions are taken
to ensure that desired results are achieved.
Each manager needs to coordinate with his/her
seniors about the deviations and the corrective
measures to be taken.
 Nature of Coordination
1. Coordination integrates group efforts. It provides common
focus to all individuals and unifies the efforts of individuals
towards achievement of organisational goals.
2. Coordination ensures unity of action. It acts as a binding
force among all departments and ensures that all actions
are towards achieving organisational goals. Coordination
ensures unity of action among all the departments.
3. Coordination is a continuous process. Coordination is an on-
going process. It begins at the planning stage and continues
until the activity is completed or the targets are achieved.
4. Coordination is an all-pervasive function. Coordination is
required at all the levels of management, for all the
activities performed so that desired results are achieved.
5. Coordination is the responsibility of all managers.
Coordination among all managers at all levels of
management is a must for effective planning,
implementation and achievement of organizational goals.
6. Coordination is a deliberate function. All managers need to
make conscious efforts to direct and coordinate efforts of
all individuals towards achievement of organizational
goals.
Activity
Do you remember the farewell you organized
for your seniors? I am sure you must have
planned for it at least a month before the
scheduled date. Just go back in time and list
down what all you did, how did you plan for
the event, how the funds were raised, and
most importantly, did everything happen the
way it was planned ?
 If once again we analyse the farewell party you organized for your
seniors you will realize that you performed all the functions of
Management :
(i) When you discussed about the farewell party as a group - you were
Planning.
(ii) When you collected all the things/funds required - you were
Organising.
(iii) When you created teams to perform specific tasks - you were
Staffing.
(iv) When you assigned duties to each team about what to do and how
to do - you were Directing.
(v) When you organised the rehearsals for the entire show - you were
Co-Ordinating.
(vi) When you were constantly checking that everything was happening
as planned or making changes as required - you were Controlling.
 Higher Order Thinking Skills Based Questions
Identify the functions of management in the following:

 Short listing, interviewing and selecting people to perform specific tasks in the
organisation.
Ans. Staffing
 Giving instructions, leading and motivating employees to accomplish desired goals.
Ans. Directing
 Arranging physical and human resources, assigning responsibilities and authorities for
effective implementation of pans.
Ans. Organising
 Establishing business objectives, setting targets, drafting policies and plans to achieve the
set goals.
Ans. Planning
 Comparing the actual results with plans and taking corrective actions if expected results
are not achieved.
Ans. Controlling
From the following pictorial presentation, identify the
objective violated by the management.

Social Objective