Management has been progressively evaluated through the following three stages.

The Classifcation theory of management

It has three streams:-
1. Bureaucracy : !""
2. #cientifc management: !""-!$"
3. %dministrative & 'perational management: !(-!)"
The *eo-classical Theory of management
It has two streams:-
1. +uman ,elations: !$"-!-"
2. Behavioral %pproach: !)"-!-"
Modern Theory of management
It has three streams:-
1. .uantitative %pproach: !-"-!("
2. #ystems %pproach: !("s on words
3. Contingency %pproach: !/"s on words
Scientifc Management
(Contribution of F.W. Taylor)
Frederick Winslow Taylor was first person who gave Scientific Management in 1911. He also called the father of scientific
management. Scientific Management was concerned to improving the operational efficiency at the shop-floor level.
According to Taylor !scientific management means knowing e"actly what yo# want men to do and seeing that they do it
in the $est and cheapest way.
Scientific management is $ased on the analysis planning and control f#nctions. %nd &o$ accomplished $y analy'ing and
works can selected and trained scientifically. (n this management role is to determine the kind of work for which an employee
s#ited and hire and assign workers accordingly. Management is not responsi$le for e"ec#tion of work $#t they are responsi$le for
how the work is done. )o-operation $etween management and workers can enhance the work and achieve the ma"im#m o#tp#t.
Taylor called it as Mental Revolution $eca#se it creates the m#t#al #nderstanding tr#st and confidence $etween the
management and workers for achieving goal *higher prod#ction+.
Principle of cientific Manage!ent
,nder scientific management Taylor developed the following parameters for organi'ation.
Scientific work st#dy
Task planning
Tools and materials
Selection and Training
Standardi'ation
Worker management interrelationships
-ifferential piece wage system
"b#ective of $cientific Manage!ent
Scientific #tili'ation of vario#s reso#rces like h#man power material etc.
To provide trained and efficient work force.
To provide standardi'e methods of work.
To provide a scientific $ase for selecting material and e.#ipment.
To provide e"tra wages to the worker for higher prod#ction.
/eplace old r#le of th#m$s to new scientific methods.
To develop a good rapport $etween management and workers.
To achieve higher prod#ction with red#ce costs and ma"im#m efficiency.
0ess wastage.
Administrative Management (Contribution of %enri Fayol)
Henri Fayol was real father of modern Management. Henri Fayol is the French industrialist in 1841-1925. He was a mining engineer
in. Henri Fayol spent his entire woring career in French industry! French cool and iron com"ine of commentary fourcham"ault. Henri Fayol
de#eloped a general theory of $usiness %dministration.
Henri Fayol was concerned the principles of organi&ation and the function of management. Fayol laid the foundation of management
as a separate "ody of nowledge. He always insisted that if scientific forecasting and proper methods are used in management than company can
get satisfactory results. %ccording to Fayol' management was not personal talent! it is a nowledge "ase sill.
Henri Fayol(s %dministrati#e Management is "ased on si) admin acti#ities. *hey are-
1. Technical : +roduction and manufacture
2. Managerial : +lanning' controlling' co-ordination
,. Commercial : +urchasing and selling
4. Financial : -se of capital
5. Accounting : %sset' .ia"ilities' cost' profits
/. Security : +rotection of goods and +erson
Fayols fourteen Principles of management
Fayol deri#ed the following fourteen principles.-
Division of work: 0i#ision of wor means speciali&ation. 1ach 2o" and wor should "e di#ided into small tas and should "e assigned to specialist
of it.
Authority an responsi!ility: %uthority means right to gi#e order and command while responsi"ility means to accomplish o"2ecti#e.
Discipline: 0iscipline is re3uired at e#ery le#el in e#ery organi&ation. Fayol stated discipline in terms of o"edience' application' and respect to
superiors.
"nity of comman: % su"ordinate should recei#e order from only one "oss.
"nity of irection: 4t means that all the wors of an organi&ation must wor together to accomplish a common o"2ecti#e in under one plan and
head.
Su!orination of iniviual interest to common interest: 5orer follows the common interest of organi&ation rather than indi#idual.
#emuneration: 6emuneration should "e fair and ade3uate. 4t includes "oth types of incenti#es financial as well as non financial.
Centrali$ation: *here should "e one central point in organi&ation which e)ercises o#erall direction and control of all the parts.
Scalar Chain: 7calar chain is the chain or line of command from superior to su"ordinates.
%rer: 8nly proper order can gi#e an efficient management.
&'uity: 13uity creates loyalty and de#otion among the employees.
Sta!ility of tenure personnel: 7ecurity of 2o" for an employee in an organi&ation is #ery important and pre-re3uisite condition. 6etaining
producti#e employee should always a higher priority of management.
&sprit e corps: Management should encourage harmony and proper understandings "etween worers. Fayol said that in union there is strength.
5hole organi&ation should wor as a team.
(nitiative: Manager should "e encouraged the employees 4nitiati#e for creati#e woring.
)"#&A"C#AC* MA+A,&M&+T -Ma. /e!er012334
$ureaucracy management is a stream of classical theory of management. Ma) 5e"er was the first of management theorists who
were concerned the management structure with the sets of rule and regulations. $ureaucracy management depends upon
administration de#ices. Ma) 5e"er presents the ideal organi&ation structure. *here are four ma2or characteristics of organi&ational
structure.-
Hierarchical positions
6ules of system
0i#ision of la"our for speciali&ation
4mpersonal relationship
Avantage of !ureaucracy management:
Hierarchy of authority.
1mployment is "ased on the technical efficiency.
1liminate managerial inconsistencies.
% well understood system.
Maintain the consistency of woring.
6ules and regulation of the duties are followed "y the employees.
6ecords are ept for future references.
+eople are gi#en authority according to their position in organi&ation.
Disavantage of !ureaucracy management:
Human resources are not tacled.
4nter personal relations are discarded.
4t does not allow for personal growth and de#elopment.
4t does not possess ade3uate.
8rgani&ation "ecomes static and change is not anticipated.
0ifficult to eep co-ordination and communication "etween employees.
4t is a 9closed system:.
&eo' Claical T(eory
1eo- classical theory is also referred to as $ehavioral science approach to modifying and improving the classical
theory. While classical theories foc#sed more on str#ct#re and physical aspects of the worker and 1eo-classical
theory gives importance to h#man and social aspects of the worker and his relations in the organi'ation.
The neo-classical theory is $ased on the Hawthrone e"periments. 2lton Mayo cond#cted the Hawthrone e"periments
at Hawthron plant of 3eneral 2lectronic )ompany *32)+ $etween 1945 and 1996 at )hicago with 67777 workers.
The Hawthron plant was man#fact#ring telephone system $ell. The o$&ective of the e"periment was to find o#t the
$ehavior and attit#de of workers at workplace #nder $etter working conditions. (n the company when management
provide the $enefits of medical allowance and pension with recreational facilities. 2ven tho#ght workers get all
facilities $#t the prod#ctivity was not #p to e"pectation. So in 1948 the professor 2lton Mayo and his research team
investigate the reasons for dissatisfaction of employees and decrease in prod#ctivity.
Four P(ae of %a)t(rone e*peri!ent+
9rof. 2lton Mayo and his team cond#cted researches in fo#r phases.
(ll#mination e"periments *1948 : 1945+
/elay assem$ly room e"periments *1945 : 194;+
Mass interviewing programme *194; -1967+
<ank wiring room st#dy *1961 : 1964+
Reult of %a)t(rone ,*peri!ent+
Motivation+ 2mployees are not motivated $y only money *$on#s scheme and incentive+.
Co!!unication+ comm#nication helps the management and employees to have $etter m#t#al
#nderstanding. Thro#gh proper comm#nication management can easily identified the pro$lem faced $y its employees
and can easily solve o#t.
$ocial factor+ Social factors are responsi$le for deciding the level of o#tp#t.
-e(avior of )[Link]+ workers are not as individ#al identity $#t as mem$ers of a gro#p in an organi'ation and
they have their own norms and $eliefs. Workers $ehavior depends #pon his mental level and emotions. Workers
$egan to infl#ence their gro#p $ehavior towards management.
Relation(ip+ 2mployees do not like order and command. They preferred to maintain amica$le relationship
with their co-workers. They want co-operative attit#de from their s#periors.
Production level+ Teamwork and 3ro#p psychology increases prod#ctivity.
Critici! of %a)t(rone ,*peri!ent+
Hawthrone e"periment was not cond#cted scientifically.
(n the e"periment vario#s format and str#ct#re are not feasi$le.
2ltone Mayo gives more importance to h#man aspect and ignoring other important aspects.
3ro#p conflict is prevalent in an organi'ation.
Hawthrone e"periment did not give any recognition to the forces which are responsi$le for prod#ctivity in the
organi'ation.
-#ring e"periment 2ltone Mayo has ass#med that a satisfied employee wo#ld $e prod#ctive. <#t the finding
was different. There is no link $etween working condition and prod#ctivity
Ma#or contributor of &eo'claical t(eory are+
C(ri Argyri' He recommended that worker sho#ld $e given freedom to make their own &#dgments.
Mary [Link] Follett+ He referred gro#p infl#ence.
/ougal Me 0orgor+ he referred two views.
1't(eory- it is $ased on classical theory and
2't(eory- it is $ased on neo-classical theory.
Abra(a! Malo)+ He referred individ#al needs.
Modern Management Theory
Management is one or the other form has e)isted in e#ery noo and corner of the world since the dawn of ci#ili&ation. Modern
Management has grown with the growth of social-economics and scientific institution. Modern #iew consists that a worer does
not wor for only money. *hey wor for their satisfaction and happiness with good li#ing style. Here ;on- financial award is most
important factor.
Modern management theories started after 195<s. Modern management theory focuses the de#elopment of each factor of worers
and organi&ation. Modern management theory refers to emphasi&ing the use of systematic mathematical techni3ues in the system
with analy&ing and understanding the inter-relationship of management and worers in all aspect.
4t has following three 7treams-
=uantitati#e %pproach
7ystem %pproach
>ontingency %pproach
5uantitative Approach:
=uantitati#e approach also called 8peration 6esearch. =uantitati#e approach is a scientific method. 4t emphasi&es the use of
statistical model and systematic mathematical techni3ues to sol#ing comple) management pro"lems. 4ts helps the management to
maing decisions in operations. 4t can only suggest the alternati#es "ased on statistical data. 4t cannot tae final decision.
4t helps the management for impro#ing their decision maing "y increasing the num"er of alternati#es and gi#ing faster decisions
on any pro"lem. Management can easily calculate the ris and "enefit of #arious actions.
Ma6or contri!utors in 5uantitative Approach are0
?ohan Mac0onald
@eorge 6. *erry
%ndrew 7&ilagyi
System approach:
7ystem approach was de#eloped inlate19/<s. Her"ert %. 7imon is the father of system theory. % 7ystem is defined as a set of
regularly interacting or inter - dependent components that create as a whole unit. *he system concept ena"les us to see the critical
#aria"les and constraints and their interactions with one another.
Accoring to Clelan an 7ing! 9 % system is composed of related and dependent elements which when in interaction
from a unity whole:.
Characteristics of system approach:
% system must ha#e some specific components' units or su" units.
% >hange in one system affects the other su"systems.
1#ery system is influenced "y super system.
%ll systems along their su"system must ha#e some common o"2ecti#es.
% system is a goal-oriented.
% system cannot sur#i#e in isolation.
Ma6or contri!utors in system theories are0
1. 0aniel Aat&'
2. 6o"ert .. Ahan'
3. 6ichard %. ?ohnson.
Contingency Approach:
>ontingency %pproach also nows as situational approach. 4n 198<s' it is recogni&ed as a ey to effecti#e management. *his
approach accepts the dynamics and comple)ities of the organi&ation structure. %n organi&ation is affected "y its en#ironment and
en#ironment is composed "y physical resources' climate' persons' culture' economic and maret conditions and their laws.
*his approach argues that there is no one uni#ersally applica"le set of rules "y which to manage organi&ation.
Ma6or contri!utors in the contingency theories are0
1. @.M. 7taler'
2. ?oan 5oodward'
3. *om $urns'
4. +aul 6. .awrence'
5. ..5. .orsch.
Conclusion
Modern management theory depends upon 7ystem approach and >ontingency approach. Management is influenced "y
4nternal and e)ternal en#ironment. %ppropriate techni3ues are determined "y situation and 1n#ironmental factors of
an organi&ation.
*hus the conclusion is that there cannot "e any fi)ed uni#ersal principles of management and organi&ations.
Level of Management
Management has vario#s activities in an organi'ation. These activities are controlled $y different people at different level. The term
!level= of management refers to a lines of demarcation $etween vario#s managerial position is an organi'[Link] levels
ofmanagement can $e classified in these $road categories.'
Top level+
Top management also called administrative level management. (t is a central management. Top management of a company is
constit#ted $y its $oard of directors and the chief e"ec#tive.
Function+
Top management form#lates o$&ectives and esta$lishesgoals and policies of company.
(t determines the $asic pattern of the organi'ation str#ct#re.
(t prepares strategic plans and policies for organi'ation.
(t prepares overall $#dgets and programs for short terms and long terms operations.
(t is responsi$le for the s#ccess or fail#re of the organi'ation.
(t is responsi$le for maintain p#$lic relations with the o#tside world.
(t provides g#idance and direction to all department of organi'ation.
Middle 3evel+
(n large organi'ation is $if#rcated into two parts #pper middle or intermediate management.
Middle management is constit#ted $y $ranch managers departmental and sectional managers.
Function+
They receive orders from top level management. and develops derivative o$&ectives and policies.
They are responsi$le for co-coordinating the activities within the $ranch and department.
They interpret policies and direction from top level management to lower level.
They motivate the day to day f#nction of the management.
They affect co-ordination $etween top management and s#pervisory management.
They linked the top level management to lower level management.
They send progress report of their work to top level management.
3o)er level+
0ower level is also known as s#pervisory or operative level. (t is constit#ted $y s#perintendents foreman and inspectors.
Function+
They g#ide and direct the worker for daily activities.
They arrange material re.#ired $y the workers.
They are responsi$le for the performance of workers.
They s#pervise and g#ide the s#$-ordinates.
They ens#re the .#ality of work completed in a given time.
They are planning and completing day to day work.
They direct contact with the workers.
PLANNING
The Importance of Planning in an Organization
Planning helps an organization chart a course for the achievement of its goals. The process begins with reviewing
the current operations of the organization and identifying what needs to be improved operationally in the
upcoming year. From there, planning involves envisioning the results the organization wants to achieve, and
determining the steps necessary to arrive at the intended destination--success, whether that is measured in
financial terms, or goals that include being the highest-rated organization in customer satisfaction.
Efficient Use of Resources
ll organizations, large and small, have limited resources. The planning process provides the information top
management needs to ma!e effective decisions about how to allocate the resources in a way that will enable the
organization to reach its ob"ectives. Productivity is ma#imized and resources are not wasted on pro"ects with little
chance of success.
Establishing Goals
$etting goals that challenge everyone in the organization to strive for better performance is one of the !ey aspects
of the planning process. %oals must be aggressive, but realistic. Organizations cannot allow themselves to become
too satisfied with how they are currently doing--or they are li!ely to lose ground to competitors. The goal setting
process can be a wa!e-up call for managers that have become complacent. The other benefit of goal setting
comes when forecast results are compared to actual results. Organizations analyze significant variances from
forecast and ta!e action to remedy situations where revenues were lower than plan or e#penses higher.
Managing Risk And Uncertainty
&anaging ris! is essential to an organization's success. (ven the largest corporations cannot control the economic
and competitive environment around them. )nforeseen events occur that must be dealt with *uic!ly, before
negative financial conse*uences from these events become severe. Planning encourages the development of
+what-if, scenarios, where managers attempt to envision possible ris! factors and develop contingency plans to
deal with them. The pace of change in business is rapid, and organizations must be able to rapidly ad"ust their
strategies to these changing conditions.
Team Building
Planning promotes team building and a spirit of cooperation. -hen the plan is completed and communicated to
members of the organization, everyone !nows what their responsibilities are, and how other areas of the
organization need their assistance and e#pertise in order to complete assigned tas!s. They see how their wor!
contributes to the success of the organization as a whole and can ta!e pride in their contributions. Potential
conflict can be reduced when top management solicits department or division managers' input during the goal
setting process. Individuals are less li!ely to resent budgetary targets when they had a say in their creation.
Creating Competitive Advantages
Planning helps organizations get a realistic view of their current strengths and wea!nesses relative to ma"or
competitors. The management team sees areas where competitors may be vulnerable and then crafts mar!eting
strategies to ta!e advantage of these wea!nesses. Observing competitors' actions can also help organizations
identify opportunities they may have overloo!ed, such as emerging international mar!ets or opportunities to
mar!et products to completely different customer groups.
There are many different types of plans and planning.
trategic planning involves analyzing competitive opportunities and threats, as well as the strengths and
wea!nesses of the organization, and then determining how to position the organization to compete effectively in
their environment. $trategic planning has a long time frame, often three years or more. $trategic planning
generally includes the entire organization and includes formulation of ob"ectives. $trategic planning is often based
on the organization's mission, which is its fundamental reason for e#istence. n organization's top management
most often conducts strategic planning.
Tactical planning is intermediate-range .one to three years/ planning that is designed to develop relatively
concrete and specific means to implement the strategic plan. &iddle-level managers often engage in tactical
planning.
!perational planning generally assumes the e#istence of organization-wide or subunit goals and ob"ectives
and specifies ways to achieve them. Operational planning is short-range .less than a year/ planning that is
designed to develop specific action steps that support the strategic and tactical plans.
$teps in Planning process
s planning is one of great importance to an organisation, the entire process of planning should be carried out in a
systematic manner. Planning is an intellectual process which an e#ecutive carries out before he does any "ob with
the help of other people. It involves the following steps 0
1. 2etermination of the ob"ectives 0
The first step in planning is to identify certain ob"ectives. The ob"ectives set must clearly indicate what is to be
achieved, where action should ta!e place, who should perform it and when it is to be accomplished. The ob"ectives
should be established for the entire organisation and for each and every department. Planning has no utility if it is
not related to certain ob"ectives.
3. 4ollection and forecasting of Information 0
$ufficient information must be collected in order to ma!e plans and sub plans. necessary information includes the
critical assessment of current status of the organisation together with a forward loo! at the environment that is
anticipated. The collection and forecasting of the information must be done in terms of e#ternal and internal
environment. The considerations of the e#ternal environments must the competitions now and in the future. The
assessment of internal environment may consist of the strong and wea! point of the organisation. This is an
important step of planning process.
5. 2evelopment of planning premises 0
The ne#t step is the establishment of planning premises. Planning premises are the assumptions and predictions
about the future. The assumptions are the basis of planning. Forecasting is important in premising. It helps in
ma!ing realistic assumptions about sales, costs, prices, products etc in future. This re*uires a collection of data on
present trends and future possibilities.
6. 2iscovering alternative courses of action 0
)sually, there are several alternatives for any plan. The manager should try to find out all the possible
alternatives.t the time of developing alternatives he should screen out most viable alternatives. $o he has to
analyse in detail a limited number of alternatives.
7. $election of best alternative 0
The various alternatives identified are evaluated and compared in terms of their e#pected costs and benefits. &any
*uantitative techni*ues are available to evaluate alternatives. after evaluating the various alternatives the best
alternative should be selected for implementation.
8. Formulation of derivative plans 0
The ne#t step is to develop detailed sub plans for its implementation. 2erivative plans are re*uired to support the
overall plans. The derivative plans are developed in the frame wor! of overall [Link] are drawn up with
respect to different areas of activity.
9. 4ommunicating the plan 0
It is very important to get the co operation of the subordinates at every stage of its implementation. For this
purpose the plans should be communicated and e#plained to them so that they can get the clear picture of what to
be done. n organisation is not benefited from planning process until they are put into action.
:. Follow up measures 0
To ensure the plans are proceeding along the right lines, the actual performance is compared with the planned
performance. In this way, any short coming can be noted and suitable remedial action can be ta!en.
LEVEL O PLANNING

Three Levels of Management
Genera!!"# t$ere are %$ree Leve!s &' Management# vi(.#
1. Administrative or Top Level &' Management.
2. Executive or Middle Level &' Management.
3. Supervisory or Lower Level &' Management.
Top Level of Management
%$e %&) Leve! Management c&nsists &' t$e *&ard &' +irect&rs ,*O+- and t$e .$ie'
E/ec0tive O1cer ,.EO-. %$e .$ie' E/ec0tive O1cer is a!s& ca!!ed Genera! Manager
,GM- &r Managing +irect&r ,M+- &r President. %$e *&ard &' +irect&rs are t$e
re)resentatives &' t$e S$are$&!ders# i.e. t$e" are se!ected 2" t$e S$are$&!ders &' t$e
c&m)an". Simi!ar!"# t$e .$ie' E/ec0tive O1cer is se!ected 2" t$e *&ard &' +irect&rs &'
an &rganisati&n.
%$e main r&!e &' t$e t&) !eve! management is s0mmari(ed as '&!!&3s 45
1. %$e t&) !eve! management determines t$e &26ectives# )&!icies and )!ans &' t$e
&rganisati&n.
2. %$e" m&2i!ises ,assem2!e and 2ring t&get$er- avai!a2!e res&0rces.
3. %$e t&) !eve! management d&es m&st!" t$e 3&r7 &' t$in7ing# )!anning and deciding.
%$ere'&re# t$e" are a!s& ca!!ed as t$e Administrat&rs and t$e *rain &' t$e &rganisati&n.
4. %$e" s)end m&re time in )!anning and &rganising.
5. %$e" )re)are !&ng5term )!ans &' t$e &rganisati&n 3$ic$ are genera!!" made '&r 5 t& 28
"ears.
9. %$e t&) !eve! management $as ma/im0m a0t$&rit" and res)&nsi2i!it". %$e" are t$e t&)
&r fna! a0t$&rit" in t$e &rganisati&n. %$e" are direct!" res)&nsi2!e t& t$e S$are$&!ders#
G&vernment and t$e Genera! P02!ic. %$e s0ccess &r 'ai!0re &' t$e &rganisati&n !arge!"
de)ends &n t$eir e1cienc" and decisi&n ma7ing.
:. %$e" re;0ire m&re c&nce)t0a! s7i!!s and !ess tec$nica! S7i!!s.
Middle Level of Management
%$e Midd!e Leve! Management c&nsists &' t$e +e)artmenta! <eads ,<O+-# *ranc$
Managers# and t$e =0ni&r E/ec0tives. %$e +e)artmenta! $eads are inance Managers#
P0rc$ase Managers# etc. %$e *ranc$ Managers are t$e $ead &' a 2ranc$ &r !&ca! 0nit.
%$e =0ni&r E/ec0tives are Assistant inance Managers# Assistant P0rc$ase Managers#
etc. %$e Midd!e !eve! Management is se!ected 2" t$e %&) Leve! Management.
%$e midd!e !eve! management em)$asi(e m&re &n '&!!&3ing tas7s 45
1. Midd!e !eve! management gives rec&mmendati&ns ,advice- t& t$e t&) !eve!
management.
2. It e/ec0tes ,im)!ements- t$e )&!icies and )!ans 3$ic$ are made 2" t$e t&) !eve!
management.
3. It c&5&rdinate t$e activities &' a!! t$e de)artments.
4. %$e" a!s& $ave t& c&mm0nicate 3it$ t$e t&) !eve! Management and t$e !&3er !eve!
management.
5. %$e" s)end m&re time in c&5&rdinating and c&mm0nicating.
9. %$e" )re)are s$&rt5term )!ans &' t$eir de)artments 3$ic$ are genera!!" made '&r 1 t& 5
"ears.
:. %$e midd!e Leve! Management $as !imited a0t$&rit" and res)&nsi2i!it". %$e" are
intermediar" 2et3een t&) and !&3er management. %$e" are direct!" res)&nsi2!e t& t$e
c$ie' e/ec0tive &1cer and 2&ard &' direct&rs.
>. ?e;0ire m&re manageria! and tec$nica! s7i!!s and !ess c&nce)t0a! s7i!!s.
Lower Level of Management
%$e !&3er !eve! management c&nsists &' t$e &remen and t$e S0)ervis&rs. %$e" are
se!ected 2" t$e midd!e !eve! management. It is a!s& ca!!ed O)erative @ S0)ervis&r" !eve!
&r irst Line &' Management.
%$e !&3er !eve! management )er'&rms '&!!&3ing activities 45
1. L&3er !eve! management directs t$e 3&r7ers @ em)!&"ees.
2. %$e" deve!&)s m&ra!e in t$e 3&r7ers.
3. It maintains a !in7 2et3een 3&r7ers and t$e midd!e !eve! management.
4. %$e !&3er !eve! management in'&rms t$e 3&r7ers a2&0t t$e decisi&ns 3$ic$ are ta7en
2" t$e management. %$e" a!s& in'&rm t$e management a2&0t t$e )er'&rmance#
di1c0!ties# 'ee!ings# demands# etc.# &' t$e 3&r7ers.
5. %$e" s)end m&re time in directing and c&ntr&!!ing.
9. %$e !&3er !eve! managers ma7e dai!"# 3ee7!" and m&nt$!" )!ans.
:. %$e" $ave !imited a0t$&rit" 20t im)&rtant res)&nsi2i!it" &' getting t$e 3&r7 d&ne 'r&m
t$e 3&r7ers. %$e" reg0!ar!" re)&rt and are direct!" res)&nsi2!e t& t$e midd!e !eve!
management.
>. A!&ng 3it$ t$e e/)erience and 2asic management s7i!!s# t$e" a!s& re;0ire m&re
tec$nica! and c&mm0nicati&n s7i!!s.
SWOT analysis
A SAO% ana!"sis ,a!ternative!" SAO% matri/- is a str0ct0red )!anning met$&d 0sed t&
eva!0ate t$e strengt$s# 3ea7nesses# &))&rt0nities# and t$reats inv&!ved in a )r&6ect &r
in a 20siness vent0re. A SAO% ana!"sis can 2e carried &0t '&r a )r&d0ct# )!ace# ind0str"
&r )ers&n. It inv&!ves s)eci'"ing t$e &26ective &' t$e 20siness vent0re &r )r&6ect and
identi'"ing t$e interna! and e/terna! 'act&rs t$at are 'av&ra2!e and 0n'av&ra2!e t&
ac$ieve t$at &26ective. %$e tec$ni;0e is credited t& A!2ert <0m)$re"# 3$& !ed a
c&nventi&n at t$e Stan'&rd ?esearc$ Instit0te ,n&3 S?I Internati&na!- in t$e 1B98s and
1B:8s 0sing data 'r&m &rt0ne 588 c&m)anies
Setting the o$&ective sho#ld $e done after the SW>T analysis has $een performed. This wo#ld allow achieva$le
goals or o$&ectives to $e set for the organi'ation.
$trengths? characteristics of the $#siness or pro&ect that give it an advantage over others.
Weaknesses? characteristics that place the $#siness or pro&ect at a disadvantage relative to others
"pport#nities? elements that the pro&ect co#ld e"ploit to its advantage
Threats? elements in the environment that co#ld ca#se tro#$le for the $#siness or pro&ect
(dentification of SW>Ts is important $eca#se they can inform later steps in planning to achieve the
o$&ective.
The Concept Of Management By O!ectives "MBO#
%$e c&nce)t &' M*O is c!&se!" c&nnected 3it$ t$e c&nce)t &' )!anning. %$e )r&cess &'
)!anning im)!ies t$e e/istence &' &26ectives and is 0sed as a t&&!@tec$ni;0e '&r
ac$ieving t$e &26ectives. M&dern managements are rig$t!" descri2ed as CManagement
2" O26ectivesC ,M*O-. %$is M*O c&nce)t 3as )&)0!ari(ed 2" Peter +r0c7er. It s0ggests
t$at &26ectives s$&0!d n&t 2e im)&sed &n s02&rdinates 20t s$&0!d 2e decided
c&!!ective!" 2" a c&ncerned 3it$ t$e management. %$is gives )&)0!ar s0))&rt t& t$em
and t$e ac$ievement &' s0c$ &26ectives 2ec&mes eas" and ;0ic7.
M*O is an a))r&ac$ ,t& )!anning- t$at $e!)s t& &verc&me t$ese 2arriers. M*O inv&!ves
t$e esta2!is$ment &' g&a!s 2" managers and t$eir s02&rdinates acting t&get$er#
s)eci'"ing res)&nsi2i!ities and assigning a0t$&rit" '&r ac$ieving t$e g&a!s and fna!!"
c&nstant m&nit&ring &' )er'&rmance.
$eatures Of Management By O!ectives MBO %&
1. S0)eri&r5s02&rdinate )artici)ati&n4 M*O re;0ires t$e s0)eri&r and t$e s02&rdinate t&
rec&gni(e t$at t$e deve!&)ment &' &26ectives is a 6&int )r&6ect@activit". %$e" m0st 2e
6&int!" agree and 3rite &0t t$eir d0ties and areas &' res)&nsi2i!it" in t$eir res)ective
6&2s.
2. =&int g&a!5setting4 M*O em)$asi(es 6&int g&a!5setting t$at are tangi2!e# verifa2!e and
meas0ra2!e. %$e s02&rdinate in c&ns0!tati&n 3it$ $is s0)eri&r sets $is &3n s$&rt5term
g&a!s. <&3ever# it is e/amined 2&t$ 2" t$e s0)eri&r and t$e s02&rdinate t$at g&a!s are
rea!istic and attaina2!e. In 2rie'# t$e g&a!s are t& 2e decided 6&int!" t$r&0g$ t$e
)artici)ati&n &' a!!.
3. =&int decisi&n &n met$&d&!&g"4 M*O '&c0ses s)ecia! attenti&n &n 3$at m0st 2e
acc&m)!is$ed ,g&a!s- rat$er t$an $&3 it is t& 2e acc&m)!is$ed ,met$&ds-. %$e s0)eri&r
and t$e s02&rdinate m0t0a!!" devise met$&d&!&g" t& 2e '&!!&3ed in t$e attainment &'
&26ectives. %$e" a!s& m0t0a!!" set standards and esta2!is$ n&rms '&r eva!0ating
)er'&rmance.
4. Ma7es 3a" t& attain ma/im0m res0!t4 M*O is a s"stematic and rati&na! tec$ni;0e t$at
a!!&3s management t& attain ma/im0m res0!ts 'r&m avai!a2!e res&0rces 2" '&c0ssing
&n attaina2!e g&a!s. It )ermits !&t &' 'reed&m t& s02&rdinate t& ma7e creative decisi&ns
&n $is &3n. %$is m&tivates s02&rdinates and ens0res g&&d )er'&rmance 'r&m t$em.
5. S0))&rt 'r&m s0)eri&r4 A$en t$e s02&rdinate ma7es eD&rts t& ac$ieve $is g&a!s#
s0)eri&rCs $e!)ing $and is a!3a"s avai!a2!e. %$e s0)eri&r acts as a c&ac$ and )r&vides
$is va!0a2!e advice and g0idance t& t$e s02&rdinate. %$is is $&3 M*O 'aci!itates
eDective c&mm0nicati&n 2et3een s0)eri&r and s02&rdinates '&r ac$ieving t$e
&26ectives@targets set.
Steps 'n Management By O!ectives (lanning %&
1. G&a! setting4 %$e frst )$ase in t$e M*O )r&cess is t& defne t$e &rgani(ati&na!
&26ectives. %$ese are determined 2" t$e t&) management and 0s0a!!" in c&ns0!tati&n
3it$ &t$er managers. Once t$ese g&a!s are esta2!is$ed# t$e" s$&0!d 2e made 7n&3n t&
a!! t$e mem2ers. In setting &26ectives# it is necessar" t& identi'" EFe"5?es0!t AreasC
,F?A-.
2. Manager5S02&rdinate inv&!vement4 A'ter t$e &rgani(ati&na! g&a!s are defned# t$e
s02&rdinates 3&r7 3it$ t$e managers t& determine t$eir individ0a! g&a!s. In t$is 3a"#
ever"&ne gets inv&!ved in t$e g&a! setting.
3. Matc$ing g&a!s and res&0rces4 Management m0st ens0re t$at t$e s02&rdinates are
)r&vided 3it$ necessar" t&&!s and materia!s t& ac$ieve t$ese g&a!s. A!!&cati&n &'
res&0rces s$&0!d a!s& 2e d&ne in c&ns0!tati&n 3it$ t$e s02&rdinates.
4. Im)!ementati&n &' )!an4 A'ter &26ectives are esta2!is$ed and res&0rces are a!!&cated#
t$e s02&rdinates can im)!ement t$e )!an. I' an" g0idance &r c!arifcati&n is re;0ired#
t$e" can c&ntact t$eir s0)eri&rs.
5. ?evie3 and a))raisa! &' )er'&rmance4 %$is ste) inv&!ves )eri&dic revie3 &' )r&gress
2et3een manager and t$e s02&rdinates. S0c$ revie3s 3&0!d determine i' t$e )r&gress
is satis'act&r" &r t$e s02&rdinate is 'acing s&me )r&2!ems. Per'&rmance a))raisa! at
t$ese revie3s s$&0!d 2e c&nd0cted# 2ased &n 'air and meas0ra2!e standards.
Organizing
Organizing is the function of management that involves developing an organizational structure and
allocating human resources to ensure the accomplishment of objectives. The structure of the organization is
the framework within which effort is coordinated. The structure is usually represented by an organization
chart, which provides a graphic representation of the chain of command within an organization. ecisions
made about the structure of an organization are generally referred to as &rgani(ati&na! design decisions.
Organi(ing at t$e !eve! &' t$e &rgani(ati&n inv&!ves deciding $&3 2est t&
de)artmenta!i(e# &r c!0ster# 6&2s int& de)artments t& c&&rdinate eD&rt
eDective!". %$ere are man" diDerent 3a"s t& de)artmenta!i(e# inc!0ding
&rgani(ing 2" '0ncti&n# )r&d0ct# ge&gra)$"# &r c0st&mer. Man" !arger
&rgani(ati&ns 0se m0!ti)!e met$&ds &' de)artmenta!i(ati&n.
Leading
Leading inv&!ves t$e s&cia! and in'&rma! s&0rces &' inG0ence t$at "&0 0se t&
ins)ire acti&n ta7en 2" &t$ers. I' managers are eDective !eaders# t$eir
s02&rdinates 3i!! 2e ent$0siastic a2&0t e/erting eD&rt t& attain &rgani(ati&na!
&26ectives.
%$e 2e$avi&ra! sciences $ave made man" c&ntri20ti&ns t& 0nderstanding t$is
'0ncti&n &' management. Pers&na!it" researc$ and st0dies &' 6&2 attit0des
)r&vide im)&rtant in'&rmati&n as t& $&3 managers can m&st eDective!" !ead
s02&rdinates. &r e/am)!e# t$is researc$ te!!s 0s t$at t& 2ec&me eDective at
!eading# managers m0st frst 0nderstand t$eir s02&rdinatesH )ers&na!ities#
va!0es# attit0des# and em&ti&ns.
Controlling
.&ntr&!!ing inv&!ves ens0ring t$at )er'&rmance d&es n&t deviate 'r&m standards.
.&ntr&!!ing c&nsists &' t$ree ste)s# 3$ic$ inc!0de ,1- esta2!is$ing )er'&rmance
standards# ,2- c&m)aring act0a! )er'&rmance against standards# and ,3- ta7ing
c&rrective acti&n 3$en necessar". Per'&rmance standards are &'ten stated in
m&netar" terms s0c$ as reven0e# c&sts# &r )r&fts 20t ma" a!s& 2e stated in
&t$er terms# s0c$ as 0nits )r&d0ced# n0m2er &' de'ective )r&d0cts# &r !eve!s &'
;0a!it" &r c0st&mer service.
%$e meas0rement &' )er'&rmance can 2e d&ne in severa! 3a"s# de)ending &n
t$e )er'&rmance standards# inc!0ding fnancia! statements# sa!es re)&rts#
)r&d0cti&n res0!ts# c0st&mer satis'acti&n# and '&rma! )er'&rmance a))raisa!s.
Managers at a!! !eve!s engage in t$e manageria! '0ncti&n &' c&ntr&!!ing t& s&me
degree.
%$e management '0ncti&ns &' )!anning# &rgani(ing# !eading# and c&ntr&!!ing are
3ide!" c&nsidered t& 2e t$e 2est means &' descri2ing t$e managerHs 6&2# as 3e!!
as t$e 2est 3a" t& c!assi'" acc0m0!ated 7n&3!edge a2&0t t$e st0d" &'
management. A!t$&0g$ t$ere $ave 2een tremend&0s c$anges in t$e
envir&nment 'aced 2" managers and t$e t&&!s 0sed 2" managers t& )er'&rm
t$eir r&!es# managers sti!! )er'&rm t$ese essentia! '0ncti&ns.
!orecasting
Forecating is the process of making statements a$o#t events whose act#al o#tcomes *typically+ have not yet
$een o$served. % commonplace e"ample might $e estimation of some varia$le of interest at some specified
f#t#re date. 9rediction is a similar $#t more general term. <oth might refer to formal statistical methods
employing time series cross-sectional or longit#dinal data or alternatively to less formal &#dgmental methods.
,sage can differ $etween areas of application? for e"ample in hydrology the terms @forecast@ and @forecasting@
are sometimes reserved for estimates of val#es at certain specific f#t#re times while the term @prediction@ is
#sed for more general estimates s#ch as the n#m$er of times floods will occ#r over a long period.
/isk and #ncertainty are central to forecasting and predictionA it is generally considered good practice to indicate
the degree of #ncertainty attaching to forecasts. (n any case the data m#st $e #p to date in order for the
forecast to $e as acc#rate as possi$le
$ormal Organisation is '&rmed 3$en t3& &r m&re )ers&ns c&me t&get$er.
%$e" $ave a c&mm&n &26ective &r g&a!. %$e" are 3i!!ing t& 3&r7 t&get$er t&
ac$ieve t$is simi!ar &26ective.
&rma! Organisati&n $as its &3n r0!es and reg0!ati&n. %$ese r0!es m0st 2e
'&!!&3ed 2" t$e mem2ers ,em)!&"ees and managers-. A '&rma! &rganisati&n $as
a s"stem &' c&5&rdinati&n. It a!s& $as a s"stem &' a0t$&rit". It $as a c!ear
s0)eri&r5s02&rdinate re!ati&ns$i). In a '&rma! &rganisati&n# t$e &26ectives are
s)ecifc and 3e!!5defned. A!! t$e mem2ers are given s)ecifc d0ties and
res)&nsi2i!ities. E/am)!es &' '&rma! &rganisati&n are45 a c&m)an"# a sc$&&!# a
c&!!ege# a 2an7# etc.
'nformal Organisation e/ists 3it$in t$e '&rma! &rganisati&n. An in'&rma!
&rganisati&n is a net3&r7 &' )ers&na! and s&cia! re!ati&ns$i)s. Pe&)!e 3&r7ing in
a '&rma! &rganisati&n meet and interact reg0!ar!". %$e" 3&r7# trave!# and eat
t&get$er. %$ere'&re# t$e" 2ec&me g&&d 'riends and c&m)ani&ns. %$ere are man"
gr&0)s &' 'riends in a '&rma! &rganisati&n. %$ese gr&0)s are ca!!ed in'&rma!
&rganisati&n.
An in'&rma! &rganisati&n d&es n&t $ave its &3n r0!es and reg0!ati&n. It $as n&
s"stem &' c&5&rdinati&n and a0t$&rit". It d&esnCt $ave an" s0)eri&r5s02&rdinate
re!ati&ns$i) n&r an" s)ecifc and 3e!!5defned &26ectives. <ere in in'&rma!
&rganisati&n# c&mm0nicati&n is d&ne t$r&0g$ t$e gra)evine.
$ormed y )hom*
A '&rma! &rganisati&n is '&rmed 2" t$e t&) !eve! management.
An in'&rma! &rganisati&n is '&rmed 2" s&cia! '&rces 3it$in t$e '&rma! &rganisati&n.
+ules and +egulations
%$e mem2ers &' a '&rma! &rganisati&n $ave t& '&!!&3 certain r0!es and reg0!ati&ns. %$ese r0!es
are avai!a2!e in 3riting ,d&c0mented-. %$e" are made 2" a '&rma! a0t$&rit" ,s0)eri&rs-. I' t$e
mem2ers '&!!&3 t$ese r0!es )r&)er!"# t$en t$e" 3i!! 2e re3arded. <&3ever# i' t$e" d& n&t '&!!&3
t$ese r0!es# t$e" 3i!! 2e )0nis$ed.
%$e mem2ers &' an in'&rma! &rganisati&n d& n&t $ave t& '&!!&3 an" r0!es and reg0!ati&ns.
,uties and +esponsiilities
In a '&rma! &rganisati&n# t$e d0ties# res)&nsi2i!ities# a0t$&rit" and acc&0nta2i!it" &' eac$
mem2er is 3e!!5defned.
In an in'&rma! &rganisati&n# t$ere are n& f/ed d0ties# res)&nsi2i!ities# a0t$&rit"# acc&0nta2i!it"#
etc. '&r t$e mem2ers.
O!ectives or -oals
In a '&rma! &rganisati&n# t$e &26ectives &r g&a!s are s)ecifc and 3e!!5defned. %$e main
&26ectives &' a '&rma! &rganisati&n are )r&d0ctivit"# gr&3t$# and e/)ansi&n.
In an in'&rma! &rganisati&n# t$e &26ectives are n&t s)ecifc and 3e!!5defned. %$e main &26ectives
&' an in'&rma! &rganisati&n are 'riends$i)# sec0rit"# c&mm&n interest# individ0a! and gr&0)
satis'acti&n# etc.
Staility
A '&rma! &rganisati&n is sta2!e.
An in'&rma! &rganisati&n is n&t sta2!e.
Channels of Communication
A '&rma! &rganisati&n 0ses '&rma! c$anne!s &' c&mm0nicati&n.
An in'&rma! &rganisati&n 0ses in'&rma! c$anne!s &' c&mm0nicati&n ,i.e. gra)evine-
Organisation Chart
A '&rma! &rganisati&n is s$&3n &n t$e &rganisati&n c$art.
An in'&rma! &rganisati&n is n&t s$&3n &n t$e &rganisati&n c$art.
Superior&Suordinate +elationship
In a '&rma! &rganisati&n# t$ere e/ist a s0)eri&r5s02&rdinate re!ati&ns$i).
In an in'&rma! &rganisati&n# t$ere is n& s0c$ s0)eri&r5s02&rdinate re!ati&ns$i).
[Link] for Memers
%$e mem2ers &' t$e '&rma! &rganisati&n get fnancia! 2enefts and )er7s !i7e 3ages &r sa!aries#
2&n0s# trave!!ing a!!&3ances# $ea!t$ ins0rance# etc.
%$e mem2ers &' in'&rma! &rganisati&n get s&cia! and )ers&na! 2enefts !i7e 'riend circ!e#
c&mm0nit"# gr&0)s# etc.
)hat is ,epartmentation*
%$e )r&cess &' gr&0)ing &' activities int& 0nits '&r t$e )0r)&se &' administrati&n
is ca!!ed de)artmentati&n. It can 2e defned Eas t$e )r&cess 2" 3$ic$ activities
&r '0ncti&ns &' enter)rise are gr&0)ed $&m&gene&0s!" int& diDerent gr&0)s.E
%$e administrative 0nits are ca!!ed divisi&ns# 0nits &r de)artments. %$e
'&!!&3ings are t$e 2asis &' de)artmentati&n4
,a- A$en de)artmentati&n is d&ne &n t$e 2as7 &' '0ncti&ns t$e de)artments
created are )r&d0cti&n# mar7eting# acc&0nting# fnance and )ers&nne!
de)artments.
,2- A$en de)artmentati&n is d&ne &n t$e 2asis &' ge&gra)$ica! area# t$e
de)artments are 7n&3n as eastern de)artment# 3estern de)artment# n&rt$ern
and s&0t$ern de)artment.
,c- +e)artmentati&n can 2e d&ne &n t$e 2asis &' c0st&mers.
,d- +e)artmentati&n can 2e d&ne &n t$e 2asis &' )r&d0ct $and!ed.