Plus Two Business Studies Notes Chapter 1 Nature and Significance of Management

Kerala Plus Two Business Studies Notes Chapter 1 Nature and Significance of Management

Management – Meaning & Definition

Management is a group activity which co-ordinates human resources and non – human resources in order to attain the objectives of an organization. It includes ‘ planning, organizing, staffing, directing, coordinating and controlling.

Definitions:
“Management is the art of getting things done through other people.” – Mary Parker Follet
“Management is what a manager does.” – Peter F. Drucker
Management is Essential for the success of an organization. It ensures proper use of factors of production like men, material, machinery, methods and money.

Efficiency and Effectiveness of Management

Efficiency and effectiveness are both commonly used management terms. Efficiency means whatever we produce or perform; it should be done in a perfect way. Efficiency refers to doing things in a right manner. It is defined as the output to input ratio and focuses on getting the maximum output with minimum resources. Effectiveness has a broader approach, which means the extent to which the actual results have been achieved to fulfill the desired outcome, ie, doing accurate things. Being Effective is about doing the right things, while being efficient is about doing things right.

Difference between Efficiency and Effectiveness:

Characteristics/Nature of Management

1. Management is goal oriented.
2. Management is universal in character.
3. Management is multidimensional, which include

• Management of works
• Management of people
• Management of operations

4. It is a continuous process.
5. It is a group activity.
6. It is a dynamic function
7. It is an intangible force.

Objectives of Management

Management fulfills three basic objectives like organisational, social and personal.
1. Organisational Objectives: Management is responsible for setting and achieving objectives forthe organisation. It includes:

• Survival: Management must strive to ensure the survival of the organization.
• Profit: Management has to ensure that the organization makes reasonable profit.
• Growth: management must exploit fully the growth potential of the organization.

2. Social objectives: Social objectives are defined as the fulfillment of responsibility of an organisation towards society. They are:

• Providing quality goods to consumers at reasonable price.
• Using environmental friendly methods of production.
• Giving employment opportunities to the society.
• Providing basic amenities like hospitals, schools, etc., to the employees and general public.
• Payment of taxes to the government.

3. Personal objectives: It refers to the objectives to be determined with respect to employees of the organisation. They are:

• Giving adequate remuneration.
• Providing good working environment.
• Participation in management and providing a share in the profit.
• Opportunities for training and development.

Management has to reconcile personal objectives with organisational objectives for harmony in the organisation.

Need and Importance of Management

1. Achieving Group Goals: Efficient management co-ordinates all the activities for the achievement of organisational goals.
2. Increases Efficiency: Management helps to reduce costs and increase productivity through better planning, organising, directing, staffing and controlling the activities of the organisation.
3. Creates Dynamic Organisation: A good management enables the business to adapt and adjust according to the changes in the business environment.
4. Achieving Personal Objectives: Through motivation and leadership, the management helps individuals to develop team spirit, co-operation and commitment to group success.
5. Development of Society: Management helps to provide good quality products and services, creates employment opportunities, adopts new technology, etc., for the good of the people and the society.

Management as an Art

Management is an art. Art is the skilful and personal application of existing knowledge to achieve desired results.
The basic features of an art are as follows:

1. Existence of theoretical knowledge
2. Personal skill
3. Based on practice and creativity

Management can be said to be an art since it satisfies the following criteria.

• There is a lot of literature available in various areas of Management like marketing, finance etc. which gives the critical knowledge.
• A manager uses his personal skill and knowledge in the area of management.
• Management is one of the most creative arts as it is concerned with getting work done through others by motivating them.
• Like other arts, managerial efficiency is developed through practice.

That is why management can be said as an art.

Management as a Science

Science is a systematised body of knowledge that is based on general truths. The features of science are as follows.

1. Science is a systematic body of knowledge.
2. Scientific principles are developed through experiments.
3. Universal validity and application.

Management can be treated as a science because:

• Management has a systematized body of knowledge.
• Management principles are developed after scientific enquiry, experimentation and observation.
• Management principles are applicable to all types of organizations.

So management is also called a science.

Management as a Profession

Profession means an occupation for which specialized knowledge and skills are required. The main features of profession are as follows.

1. Well defined body of knowledge
2. Formal education and training
3. Professional Associations

Management is a profession because:

• Management is based on a systematic body of knowledge comprising well defined principles.
• A manager acquires management skills through formal education and training.
• All professions are affiliated to a professional association which regulates entry and frame code of conduct relating to the profession.

Levels of Management

There are three levels in the hierarchy of an organisation. They are:

1. Top-Level Management
2. Middle-Level Management
3. Lower-Level Management

1. Top Management: It consists of chairman, the Chief Executive Officer, Board of Directors, Managing Director, etc.

Functions of Top Level Management:

• Lays down the objectives of the business
• Prepares strategic plans and policies
• Appoint middle level managers
• Issues necessary instructions to departmental heads.
• To maintain relations with outside agencies like govt, public, trade unions, etc.
• Co-ordinate and control all the departments in the organisation

2. Middle Management: All the functional department heads and branch managers come under the category of middle level managers. E.g. Production manager, Sales manager, Finance manager, etc.,

Functions of Middle Level Management:

• Carry out the plans formulated by the top managers.
• To act as a link between Top Level Management and Lower Level Management.
• Assign necessary duties and responsibilities to the subordinates.
• Motivate them to achieve desired objectives.
• Co-operate with other departments.
• Reporting to top level management.

3. Lower/Supervisory/Operational Management: This level includes foremen, supervisors, finance and accounts officers, sales officers, etc. This level of managers have direct contact with employees.

Functions of Lower Level Management:

• Plan day-to-day production activities.
• Assign workers to different jobs
• Solve the problems of workers
• Provide job training to workers
• Looking after safety of workers.
• Send periodical reports to middle level management.
• Act as a link between management and employees.

Functions of Management

1. Planning: Planning is the function of determining in advance what is to be done and who is to do it.
2. Organising: It is the management function of assigning duties, grouping tasks, establishing authority responsibility relationship and allocating resources required to carry out a specific plan.
3. Staffing: Staffing means finding the right people with the right qualifications to accomplish the goals of the organisation. It involves activities such as recruitment, selection, placement and training of personnel.
4. Directing: Directing involves leading, supervising, communicating and motivating the employees to perform the tasks assigned to them.
5. Controlling: It means monitoring organizational performance towards the attainment of organisational goals.

Co-ordination

The process by which a manager synchronises the activities of different departments is known as co-ordination. Co-ordination is the force that binds all the other functions of management.

Characteristics of Co-ordination:

• Co-ordination integrates group efforts of different departments
• Co-ordination ensures unity of action
• Co-ordination is a continuous process
• Co-ordination is an all pervasive function
• Co-ordination is the responsibility of all managers
• Co-ordination is a deliberate function

Importance of Co-ordination:

• It increases efficiency: Co-ordination increases organisational efficiency.
• Key to other functions: Co-ordination is the key to other managerial functions. Co-ordination makes planning more effective, organisation more well-knit and control more regulative.
• Functional differentiation: The process of linking the activities of various departments is accomplished by co-ordination.
• Unity in diversity: In an organization, there are large numbers of employees with different ideas, culture, etc. Co-ordination brings unity in diversity.
• Specialisation: Co-ordination helps to co-ordinate the efforts of various specialists in ah organisation.

Plus Two Business Studies Notes