UNIT-1

Management Science
Concept of management

Management is an activity process composed of some basic functions, for getting

the objective of any enterprise accomplished through the efforts of its personnel.

Wherever and whenever objectives are to be achieved through organized and co-

operative endeavor, management becomes essential for directing and unifying the

group efforts towards a common purpose. As human aims and beliefs are mostly

realized through the establishment of diverse associations in our society, management

is universally needed for operating all such organization. Management, viewed as a

functional concept, is of equal necessity to the educational religious, charitable and

other non-business institutions as it is required for business Organizations.

Furthermore, the greatest and the most comprehensive of our social organizations,

viz., the Government of all types’ needs management as others require, perhaps more

than all other social organizations.

Management is the only activating element of any enterprise for getting things done

through it personnel. The job of management is to provide dynamic leadership that

combines the productive but passive resources into a fruitful organization. Not only

does it adapt itself to existing opportunities, restrictions and pressures, but it exercises

a positive influence as well as to make the future events favorable for the enterprise

As an activity process, management plans the future course of action, organizes

people and their work, directs the operation an controls the performance, and thus

ensures the accomplishment of enterprise objectives. Adaptations and innovations

permeate through each of these phases of the management process.

Management acts as a creative and invigorating force in the organization. It creates

result that is bigger than the sum total of efforts put in by the group. Management

adds real plus value to the operation of any enterprise by enlisting as little extra value

out of each person. It provides new ideas, imaginations and visions to the group

working an integrates its efforts in such a manner as to account for better results. It

ensures a smooth flow of work in the organization by focusing on strong points,

neutralizing weak link, overcoming difficulties and establishing team spirit.

Management strives to secure the maximum result by the use of minimum resources.

Management in all business areas and human organization activity is the act of

getting people together to accomplish desired goals and objectives. Management

comprises planning, organizing, staffing, leading or directing, and controlling an

organization (a group of one or more people or entities) or effort for the purpose of

accomplishing a goal. Resourcing encompasses the deployment and manipulation of

human resources, financial resources, technological resources, and natural resources.

Because organizations can be viewed as systems, management can also be defined as

human action, including design, to facilitate the production of useful outcomes from a

system.

Basic functions of management

Management operates through various functions, often classified as planning,

organizing, leading/directing, and controlling/monitoring.

Planning: Deciding what needs to happen in the future (today, next week, next

month, next year, over the next 5 years, etc.) and generating plans for action.

Organizing: (Implementation) making optimum use of the resources required to

enable the successful carrying out of plans.

Staffing: Job Analyzing, recruitment, and hiring individuals for appropriate jobs.
Leading/Directing: Determining what needs to be done in a situation and getting

people to do it.

Controlling/Monitoring: Checking progress against plans, which may need

modification based on feedback.

Function of management:-

Planning

The first component of managing is planning. A manager must determine what the
organizations goals are and how to achieve those goals. Much of this information will
come directly from the vision and mission statement for the company. Setting
objectives for the goal and following up on the execution of the plan are two critical
components of the planning function. For example, a manager of a new local
restaurant will need to have a marketing plan, a hiring plan and a sales plan.

Organizing

Managers are responsible for organization of the company and this includes
organizing people and resources. Knowing how many employees are needed for
particular shifts can be critical to the success of a company. If those employees do not
have the necessary resources to complete their jobs, organization has not occurred.
Without an organized workplace, employees will see a manager as unprepared and
may lose respect for that particular manager’s supervisory techniques.

Leading

Managing and leading are not the same activity. A manager manages employees; this
person makes sure that tasks are completed on time and policies are followed.
Employees typically follow managers because he or she is the supervisor and in-
charge of employees. Employees see a leader as someone that motivates them and
guides them to help meet the firm’s goals. In an ideal situation, the manager also
serves as the leader. Managers who want to lead effectively need to discover what
motivates their employees and inspire them to reach the company objectives.

CONTROLLING
Controlling involves ensuring that performance does not deviate from standards.

Controlling consists of three steps, which include establishing performance standards,

comparing actual performance against standards, and taking corrective action when

necessary. Performance standards are often stated in monetary terms such as revenue,

costs, or profits, but may also be stated in other terms, such as units produced, number

of defective products, or levels of customer service.

The measurement of performance can be done in several ways, depending on the

performance standards, including financial statements, sales reports, production

results, customer satisfaction, and formal performance appraisals. Managers at all

levels engage in the managerial function of controlling to some degree.

The managerial function of controlling should not be confused with control in the

behavioral or manipulative sense. This function does not imply that managers should

attempt to control or manipulate the personalities, values, attitudes, or emotions of

their subordinates. Instead, this function of management concerns the manager's role

in taking necessary actions to ensure that the work-related activities of subordinates

are consistent with and contributing toward the accomplishment of organizational and

departmental objectives.

Effective controlling requires the existence of plans, since planning provides the

necessary performance standards or objectives. Controlling also requires a clear

understanding of where responsibility for deviations from standards lies. Two

traditional control techniques are the budget and the performance audit. Although

controlling is often thought of in terms of financial criteria, managers must also

control production/operations processes, procedures for delivery of services,

compliance with company policies, and many other activities within the organization.
The management functions of planning, organizing, leading, and controlling are

widely considered to be the best means of describing the manager's job as well as the

best way to classify accumulated knowledge about the study of management.

Although there have been tremendous changes in the environment faced by managers

and the tools used by managers to perform their roles, managers still perform these

essential functions

Fourteen Principles of Management were developed by Henri Fayol (1841-1925) and

have been considered as one of the classical organization theory that is universally
applicable to every type of organization.

Classical organization theory was the traditional theory and remains to be the
foundation upon which other schools of organization theory have built. Therefore
many subsequent analyses presume an understanding of it.

Influenced by the industrial revolution in the 1700s and related to the professions of
mechanical and industrial engineering, the principles were developed under
fundamental assumptions as follows:

1. Organization and individuals behave in conformity with rational economic

principles.

2. One best way to organize production is through systematic and scientific

investigations.

3. Organization is established to fulfill production-related and economic goals.

We must also keep in mind that the beliefs of early management theorists, including
Henri Fayol, about how organizations worked or should worked were a direct
reflection of social values of that period. The evolution of this theory was in the era
which workers were viewed as parts of machine, not as individuals. Besides, the
equipment was expensive and hardly affordable. As a consequence, the use of workers
with their own tools to replace power-driven machines was prevailing.

Henri Fayol, a French executive engineer and a Managing Director of a large French
local mining firm, developed the first comprehensive theory of management,
Administration Industrielle et Generale (published in France in 1916), was almost
ignored in the United States until English translation, General and industrial
Management, appeared in 1949. Since then, his contributions have been widely
recognized as a foundation and significant piece of work.

In contrast to The Principles of Scientific Management, introduced in 1911 by

Frederick Winslow Taylor, one of the prominent classical theorists in the concurrent
period, which emphasized on the technology employed by individual workers in order
to improve production efficiency; Fayol underlined all of the elements necessary to
organize and manage a major corporation as a whole

Fayol’s Principles of Management

Fayol proposed that management was a common activity to all human beings who
involve in organization. His principles consist of the elements as follows:

1. Division of work. Output can be increased by specialization, making employees

more efficient.

2. Authority. The right or power to give orders to subordinates is authority.

Wherever authority exists, responsibility arises.

3. Discipline.Employees must obey the organizational rules. Good discipline must

result from an agreement between firm and employees with fairness and clear
understanding of both sides. Penalties can be applied to violations of rule.

4. Unity of Command. Each subordinate should receive orders from one superior.

5. Unity of Direction. Organizational activities that have the same objective should
be guided by one manager, using one plan.

6. Subordination of individual Interests to the General Interest. The interests of

one employee (or group of employees) should not precede over the interests of the
organization as a whole.

7. Remuneration. Employees must be paid a fair wage. Rewards should be used as a

tool of encouragement.

8. Centralization. The degree to which subordinates are involved in decision-

 making. Whether the decision is centralized or decentralized is a question of
proportion.

9. Scalar Chain. The line of authority from top to the lowest ranks of management.

Communication should go along this chain. To avoid delays, cross

communications can be allowed if agreed by all involved parties.

10. Order. Materials and people should be in right place at right time.

11. Equity. Managers should be kind and fair to their subordinates

12. Stability of Tenure of Personnel. High employee turnover causes inefficiency.

Managers should ensure replacements at hand when vacancies arise.

13. Initiative. The power of thinking out, proposing and executing. Management
should encourage employees to originate and carry out plans. This urging tends to
boost levels of effort.

14. Esprit de Corps. Fostering team spirit is the way to construct harmony and unity
among employees.

Compare Henri Fayol to Frederick Taylor

Henri Fayol Frederick W. Taylor

 1841-1925  1856-1915
 General administrative theorist  Scientific management theorist
 1916  1911
 General Principle of Management  The Principle of Scientific Management
 Underlined all elements necessary to  Emphasized on technology and
organize and manage corporation as a procedures employed by individual workers
whole.  improve efficiency.
 Top down  Bottom up

Basic Types Of Business Organization

Throughout the world, wherever business enterprises are carried on, there are to be

found three basic forms in which the ownership of these enterprises is held.

1. The individual owning outright his own business and usually managing it himself

without much cooperation or assistance.

2. A group of owners, working together under some form of partnership agreement.

3. The impersonal owner - the corporation - standing between the business and the
individuals who have various kinds and degrees of claims upon the business.

These three basic forms are combined and recombined in many different ways under

the' laws and customs of the various commercial countries, but analysis always

reveals one or the other of the three forms predominating.

Abraham Maslow’s “Need Hierarchy Theory” :

One of the most widely mentioned theories of motivation is the hierarchy of needs
theory put forth by psychologist Abraham Maslow. Maslow saw human needs in the
form of a hierarchy, ascending from the lowest to the highest, and he concluded that
when one set of needs is satisfied, this kind of need ceases to be a motivator.

As per his theory this needs are :

(i) Physiological needs :

These are important needs for sustaining the human life. Food, water, warmth, shelter,
sleep, medicine and education are the basic physiological needs which fall in the
primary list of need satisfaction. Maslow was of an opinion that until these needs
were satisfied to a degree to maintain life, no other motivating factors can work.

(ii) Security or Safety needs :

These are the needs to be free of physical danger and of the fear of losing a job,
property, food or shelter. It also includes protection against any emotional harm.

(iii) Social needs :

Since people are social beings, they need to belong and be accepted by others. People
try to satisfy their need for affection, acceptance and friendship.

(iv) Esteem needs :

According to Maslow, once people begin to satisfy their need to belong, they tend to
want to be held in esteem both by themselves and by others. This kind of need
produces such satisfaction as power, prestige status and self-confidence. It includes
both internal esteem factors like self-respect, autonomy and achievements and
external esteem factors such as states, recognition and attention.

(v) Need for self-actualization :

Maslow regards this as the highest need in his hierarchy. It is the drive to become
what one is capable of becoming, it includes growth, achieving one’s potential and
self-fulfillment. It is to maximize one’s potential and to accomplish something.

As each of these needs are substantially satisfied, the next need becomes dominant.
From the standpoint of motivation, the theory would say that although no need is ever
fully gratified, a substantially satisfied need no longer motivates. So if you want to
motivate someone, you need to understand what level of the hierarchy that person is
on and focus on satisfying those needs or needs above that level.

Maslow’s need theory has received wide recognition, particularly among practicing
managers. This can be attributed to the theory’s intuitive logic and ease of
understanding. However, research does not validate this theory. Maslow provided no
empirical evidence and other several studies that sought to validate the theory found
no support for it.

Vroom’s Valence x Expectancy theory:

The most widely accepted explanations of motivation have been propounded by
Victor Vroom. His theory is commonly known as expectancy theory. The theory
argues that the strength of a tendency to act in a specific way depends on the strength
of an expectation that the act will be followed by a given outcome and on the
attractiveness of that outcome to the individual to make this simple, expectancy
theory says that an employee can be motivated to perform better when their is a belief
that the better performance will lead to good performance appraisal and that this shall
result into realization of personal goal in form of some reward. Therefore an
employee is :

Motivation = Valence x Expectancy.

The theory focuses on three things:

1. Efforts and performance relationship

2. Performance and reward relationship

3. Rewards and personal goal relationship

This leads us to a conclusion that:

Leadership Styles

Leaders carry out their roles in a wide variety of styles, e.g., autocratic, democratic,
participatory, laissez-faire (hands off), etc. Often, the leadership style depends on the
situation, including the life cycle of the organization. The key styles, includes
autocratic, laissez-faire and democratic style

The Autocrat

The autocratic leader dominates team-members, using unilateralism to achieve a

singular objective. This approach to leadership generally results in passive resistance

from team-members and requires continual pressure and direction from the leader in

order to get things done. Generally, an authoritarian approach is not a good way to get

the best performance from a team.

There are, however, some instances where an autocratic style of leadership may not be

inappropriate. Some situations may call for urgent action, and in these cases an

autocratic style of leadership may be best. In addition, most people are familiar with

autocratic leadership and therefore have less trouble adopting that style. Furthermore,

in some situations, sub-ordinates may actually prefer an autocratic style

The Laissez-Faire Manager

The Laissez-Faire manager exercises little control over his group, leaving them to sort

out their roles and tackle their work, without participating in this process himself. In

general, this approach leaves the team floundering with little direction or motivation.

Again, there are situations where the Laissez-Faire approach can be effective. The

Laissez-Faire technique is usually only appropriate when leading a team of highly

motivated and skilled people, who have produced excellent work in the past. Once a

leader has established that his team is confident, capable and motivated, it is often

best to step back and let them get on with the task, since interfering can generate

resentment and detract from their effectiveness. By handing over ownership, a leader

can empower his group to achieve their goals.

The Democrat

The democratic leader makes decisions by consulting his team, whilst still

maintaining control of the group. The democratic leader allows his team to decide

how the task will be tackled and who will perform which task.

The democratic leader can be seen in two lights:

A good democratic leader encourages participation and delegates wisely, but never
loses sight of the fact that he bears the crucial responsibility of leadership. He values

group discussion and input from his team and can be seen as drawing from a pool of

his team members' strong points in order to obtain the best performance from his

team. He motivates his team by empowering them to direct themselves, and guides

them with a loose reign.

However, the democrat can also be seen as being so unsure of himself and his

relationship with his sub-ordinates that everything is a matter for group discussion

and decision. Clearly, this type of "leader" is not really leading at all.

Contingency Theories: Contingency Theories According to the contingency

approach of leadership, a single leadership style is not applicable to all situations.
Every leader is to carefully analyze the situation before adopting a style that best suits
the requirements of the situations. Below are the 5 contingency models of leadership
styles. Fiedler’s Contingency Model Hersey and Blanchard’s situational theory
Leader-member exchange theory Leadership-participation model Path Goal Theory

Fiedler’s Contingency Theory: Fiedler’s Contingency Theory The Fiedler

contingency model is a leadership theory of industrial and organizational psychology
developed by Fred Fiedler Fiedler (1967), differentiated situation from contingency.
He emphasised the fact that differing roles, traits and behaviours of leaders did not
just require an specific understanding of interactions with subordinate, it also required
favourable conditions. Fiedler's model assumes that group performance depends on:
Leadership style, described in terms of task motivation and relationship motivation.
Fiedler's Contingency Theory for Leadership Fiedler's Contingency Theory for
Leadership Fiedler's Contingency Theory for Leadership Fiedler's Contingency
Theory for Leadership

:Situational favorableness, determined by three factors:

1. Leader-member relations - Degree to which a leader is accepted and supported by

the group members.

2. Task structure - Extent to which the task is structured and defined, with clear goals
and procedures.

3. Position power or the leader’s position - The ability of a leader to control

subordinates through reward and punishment.

High levels of these three factors give the most favorable situation, low levels, the
least favourable. Relationship-motivated leaders are most effective in moderately
favourable situations. Task-motivated leaders are most effective at either end of the
scale.Fiedler suggests that it may be easier for leaders to change their situation to
achieve effectiveness, rather than change their leadership style.

Hersey and Blanchard’s situational theory: Hersey and Blanchard’s situational

theory The situational leadership model focuses on the fit of leadership style and
followers maturity . In contrast to Fiedler’s contingency leadership model and its
underlying assumption that leadership style is hard to change, the Hersey-Blanchard
situational leadership model suggests that successful leaders do adjust their styles.
The situational leadership model views leaders as varying their emphasis on task and
relationship behaviors to best deal with different levels of follower maturity. The two-
by-two matrix shown in the figure indicates that four leadership styles are possible.
Telling Style — giving specific task directions and closely supervising work; this is a
high-task, low-relationship style. Selling Style —explaining task directions in a
supportive and persuasive way; this is a high-task, high-relationship style.
Participating Style —emphasizing shared ideas and participative decisions on task
directions; this is a low-task, high-relationship style. Delegating Style —allowing the
group to take responsibility for task decisions; this is a low-task, low-relationship
style.

Leader-member exchange theory: Leader-member exchange theory According to

this theory, leaders often behave differently with different subordinates. They
establish close relationships with a small group of subordinates early in their
interactions. In – Group :Good relation with leaders and high frequency of
interactions. Out-Group: Formal relation with leader and less frequency of interaction
compared to in-group. The theory suggests that the leaders give promotions to the in-
group employees quickly and also that employee turnover rate in such groups is low.

Leadership-participation model :Leadership-participation model In 1973 Victor

Vroom and Philip Yetton came up with the leadership-participation model that tried to
establish relation between leadership behavior and the decision making style. As per
them leaders are required to adapt their behavior to suit changes in the situations. The
model proposed a sequential set of rules that could help the managers in taking
decisions in different situations. The model had 12 contingencies also called as
‘problem attributes’ and 5 alternative leadership styles. The Problem Attributes were
categorized into decision-quality and employee acceptance. decision-quality – cost
considerations, information availability, nature of problem structure. employee
acceptance – need for commitment, their prior approval, congruence of their goals

Path Goal Theory :Path Goal Theory This theory was developed by Robert House.
Here the leader provides the necessary support and guidance to his followers and help
them achieve organizational goals. Leader defines the individual(or groups) goals and
help them achieve them. As per the theory – Leaders are accepted by the subordinates
when They find that the satisfaction of their needs depend upon their effective
performance. They are provided with guidance ,support, and rewards needed for
effective performance. Robert House suggested 4 types of leadership by this model
Directive leadership Supportive leadership Participative leadership Achievement-
oriented leadership.

Managerial Grid
A conceptual framework combining a concern for task accomplishment and a concern

for people was created by Robert Blake and Jane Mouton called the Managerial Grid.-

An illustration of the Managerial Grid is shown in Exhibit Managerial Grid.

The concern for production dimension is measured on a nine-point scale and

represented along the horizontal dimension, while the vertical dimension measures an

individual’s concern for people, again using a nine-point scale. Blake and Mouton

assume that the most effective leadership style is a 9,9 style, demonstrating both

concern for production and concern for people. By responding to a questionnaire

developed by Blake and Mouton, individuals can place themselves in one of the

eighty-one cells on the managerial grid.

Five different grid positions are typically used to illustrate different leadership styles.

A 9,1 leader is primarily concerned with production and task accomplishment and

unconcerned about people; This person wants-to get the job - -done and wants a

schedule followed at all costs. The 1,9 leadership style reflects a maximum concern

for people with minimum concern for production. This individual is not concerned
whether the group a small produces anything, but is highly concerned about the

members’ personal needs, interests and inter-personal relationships. The 1,1

leadership style reflects minimal concern for both production and people and is

characteristic of a person who essentially abdicates the leadership role. The 55

leadership style reflects a moderate concern for both people and production, while the

9,9 leadership style reflects a maximum concern for both production and people. A 9,9

leader wants to meet schedules and get the job done but at the same time is highly

concerned about the feelings and interests of the group members.

Additional
Function of management:-
Planning

The first component of managing is planning. A manager must determine what the
organizations goals are and how to achieve those goals. Much of this information will
come directly from the vision and mission statement for the company. Setting
objectives for the goal and following up on the execution of the plan are two critical
components of the planning function. For example, a manager of a new local
restaurant will need to have a marketing plan, a hiring plan and a sales plan.

Organizing

Managers are responsible for organization of the company and this includes
organizing people and resources. Knowing how many employees are needed for
particular shifts can be critical to the success of a company. If those employees do not
have the necessary resources to complete their jobs, organization has not occurred.
Without an organized workplace, employees will see a manager as unprepared and
may lose respect for that particular manager’s supervisory techniques.

Leading

Managing and leading are not the same activity. A manager manages employees; this
person makes sure that tasks are completed on time and policies are followed.
Employees typically follow managers because he or she is the supervisor and in-
charge of employees. Employees see a leader as someone that motivates them and
guides them to help meet the firm’s goals. In an ideal situation, the manager also
serves as the leader. Managers who want to lead effectively need to discover what
motivates their employees and inspire them to reach the company objectives.

Controlling

The controlling function involves monitoring the firm’s performance to make sure
goals are being met. Managers need to pay attention to costs versus performance of
the organization. For example, if the company has a goal of increasing sales by 5%
over the next two months, the manager may check the progress toward the goal at the
end of month one. An effective manager will share this information with his or her
employees. This builds trust and a feeling of involvement for the employees