BUSINESS STUDIES

CHAPTER – 1
NATURE AND SIGNIFICANCE OF MANAGEMENT
I. DEFINITIONS: Management

1. According to Harold Koontz: “Management is the art of getting things done

through others and with formally organised groups.
2. According to F W Taylor: “Management is the art of knowing what you want to
do and then seeing that they do it in the best and the cheapest way.

II. EFFECTIVENESS Vs EFFICIENCY

Effectiveness refers to completing the job on time. Efficiency refer to doing the
job in a cost effective manner.
Management is concerned not only with getting job completed effectively but also with doing it
as efficiently as possible. For a successful manager effectiveness
and efficiency both are equally important.

DIFFERENCE

BASIS EFFECTIVENESS EFFICIENCY

Meaning It refers to completing the It refers to completing the

job on time, no matter job in the cost effective
whatever the cost. manner.

Objective To achieve end results on To conduct cost benefit

time analysis

Main Consideration To achieve end results on Cost

time

III. Features of Management

1. Management is goal oriented process:
Different organisations have different goals. Every organisation sets up itself to realise a specific
goal. Management unites the efforts of different individuals in the organisation towards achieving
these goals.
2. Management is all pervasive:
The activities involved in managing an enterprise are common to all organisations whether
economic, social or political, it is big or small, business or non-business.
3. Management is multidimensional:
Management is a complex activity and has three main dimensions.
a) Management of work: Every organisation is established for doing some work, like a school
provides education, a hospital treats patients, a factory produces etc. Management translates this
work of organisation in terms of goals to be achieved and assigns the means to achieve it.
b) Management of people: Human resources are organisations greatest asset. There are two main
issues before the management concerning its people.
i) To deal with people having different needs and interest.
ii) To deal with people taking them as one group. Management is to make people work towards
achieving the organisations goals.
c) To achieve the goals of an organisation many operations or activities need to be conducted, such
as production, sale, purchase, finance etc. Management needs to make sure that these operations
are accomplished effectively and efficiently.
4. Management is a continuous process:
The function of management like planning, organising, staffing, directing and controlling are
simultaneously performed by all managers all the time.

5. Management is a group activity:

A single person cannot do all the activities in an organisation like purchase, sale, manufacturing,
finance etc. by himself, but several persons have to join their hands together to fulfil them.
6. Management is a dynamic function:
Management is a dynamic function and has to adapt itself to the changing environment, because it
interacts with its external environment, such as social, economic and political factors.
7. Management is an intangible force
Management is an intangible force that cannot be seen but its presence can be felt in the way the
organisation functions. When the goals of an organisation are being realised in accordance with its
plans, we say the management of the organisation is good.

OBJECTIVES OF MANAGEMENT
1. Organisational objectives:
It refers to the utilisation of human and physical resources available in the organisation,
considering the interest of all stakeholders. The following are the organisations economic objectives.
a) Survival
 The basic objective of any business is to survive for long, which is done by earning enough
revenue to cover costs.
b) Profit
Management must ensure that the organisation makes adequate profit because profit is a vital
incentive for the continued successful operations of the enterprise.
c) Growth
Management must ensure growth of business. Growth can be measured by sale, number of
employees, products, capital investment etc. If all these show an increasing trend then it shows that
the business is growing.
2. Social Objective:
It refers to the fulfilment of responsibility of an organisation towards the society.
Main Social objectives of management are:
i) To make available employment opportunities.
ii) To save environment from getting polluted.
iii) To contribute in improving living standard.
Eg. Providing basic amenities like schools and enriches to employees.
3. Personal Objectives:
It refers to the objectives to be determined with respect to the employees of the organisation.
i) Financial needs:
People expect a competitive salary and other perks from the organisation.
ii) Social needs:
People want to get recognition from their peers.
iii) Higher- level needs
People want to get sufficient opportunities for personal development.

IMPORTANCE OF MANAGEMENT

1. Management helps in achieving group goals:

The task of a manager is to give a common direction to the individual effort in achieving
organisational goal.
2. Management increases efficiency:
A manager increases efficiency through the optimum utilisation of all resources such as men,
money, material and machine.
3. Management creates a dynamic organisation:
All organisations have to function in an environment which is constantly changing. Management
helps people adapt to these changes so that the organisation is able to maintain its competitive edge.
4. Management helps in achieving personal objective:
Managers make employees work using their full activities through motivation, good leadership and
open communication. As a result, they attain their individual objectives.
5. Management helps in the development of society:
Managers by fulfilling their social responsibilities help in the development of society. These
responsibilities include providing employment opportunities, preventing environment from getting
polluted, making available good quality products at reasonable price etc.

Nature of Management
Management as science
1. Systematised body of knowledge:
Management is a systematised body of knowledge because it has its own theory and
principles which are developed by the management experts after years of research.
2. Observations and Experiments:
Management knowledge has been built up through continued observations and
experiments. The methods of observation used in management are not completely objective because
management deals with human beings whose behaviour cannot be scientifically predicted.
3. Cause and Effect Relationship:
Principles of management establish a cause and effect relationship between various factors.
For eg dual subordination deals to confusion.
4. Universal validity of principles:
Scientific principles represent basic truths. These principles have universal validity and application.
Fundamental principles of management are universally applicable. Their results can be tested and
verified.
Thus management is definitely a science. It is a social science as it deals with people and
their behaviour cannot be subjected to laboratory experiments. Therefore management is an inexact
science or Applied Science.

Management as an Art
The essential features of art are as follows.
1. Existence of Theoretical Knowledge
 Art involves application of theoretical knowledge. Management is the art of getting things
done through people to accomplish the desired results. It involves putting the available knowledge
into practice so as to attain predetermined goals.
2. Personalised Application
Management is basically an individual skill. Every manager has his own style of working. He
tackles various problems on the basis of his own thinking and understanding of the situation.
3. Based on Practice and Creativity
Art requires continuous practice to gain mastery. Management also involves regular practice.
An efficient manager can convert a challenge into an opportunity through continuous decision-making
and leadership.
Thus management can be considered both as science as well as Art. Science and Art are
not mutually exclusive but complementary to each other. Therefore science and art of management
must go hand in hand.

Management as Profession
1. Specialised knowledge:
Management has a well-defined body of specialized knowledge that is transferable. It has its
principles based on experiments. This knowledge can be acquired at different educational institutes.
Hence on this basis management can be accepted as a profession.
2. Restricted Entry:
The entry to a profession is restricted through an examination or through acquiring an
educational degree. For eg to become a chartered accountant in India a candidate has to clear a
specified examination conducted by the Institute of Chartered Accountants of India.
Hence on this basis management cannot be accepted as a profession.
3. Ethical code of conduct:
All professions are bound by a code of conduct which guides the behaviour of its members.
Managers also has a code of conduct. But this code is not legally binding on managers.
On this basis it can be asserted that management is not at all a profession.
4. Service Motive:
Like other professionals managers are expected to serve society rather than simply earning
profits for the owners. From this point of view there should be no hesitation to accept management as
a profession.
5.Professional Association:
For managers All India Management Association (AIMA) has been established. But it is not
essential to be a member of AIMA in order to be a manager. Therefore, on this basis management
cannot be accepted as a profession.
Levels of Management
 In every organisation there is a chain of command or management hierarchy from top to
bottom. It consists of several levels of authority. These levels are known as levels of management.
Generally there are three levels of management in a company – top level, middle level and lower
level.
1. Top Management
They consist of the senior-most executives of the organisation. They are usually referred to as
Board of Directors, the Chief Executive officer, chairman, president, vice-president etc.
The main functions of top management are:
(i) Determining Objectives:
Top-level management sets objectives for the organisation. For example, an objective can be
set that in the following year the sales of the company has to cross Rs1, 000 crore.
(ii) Determining policies:
Only at this level policies related to the realisation of objectives are formed. For example,
it can be a sales policy of a company to just make cash sales.
(iii) Determining Activities:
Different activities to be performed for the fulfilment of an objective are fixed, such as
sales, purchase, advertisement etc.
(iv) Assembling Resources:
Needed resources are assembled for the realisation of an objective like capital, raw material,
fixed assets etc.
(v) Controlling the work performance:
The work-in-progress is closely monitored in a company to get the desired results.
(vi) Approving Budgets:
Budgets prepared by different managers are given final shape i.e., approval is given to the
budgets.

2. Middle-level Management;
Middle-level management lies between top-level and lower-level management. They are usually
known as division heads like departmental heads, plant superintendents, and operational managers.
Following are the main functions
(i) Interpreting policies:
At this level, policies framed by top-level managers are interpreted.
(ii) Preparing Organisational Set-up:
Every middle-level manager prepares outline of his respective department in accordance
with the objectives of the organisation.
(iii) Appointing Employees:
Every departmental manager appoints employees to fulfil the activities of his department.
(iv) Issuing Instructions:
Departmental managers direct their subordinates about what to do and how they have to do it.
(v) Motivating Employees:
Middle-level managers motivate their employees by various means so that they work most
efficiently to achieve organisational objectives.
(vi) Creating Cooperation:
Cooperation among different divisions is required to successfully achieve company’s
objective and this is done by middle level managers.

3. Lower-level or Operational management:

It is also known as Supervisory Management. Under this, various formen and
supervisors are included. They are called First Line Managers.
Following are the functions of lower-level managers
(i) Submitting Worker’s Grievances:
Lower-level managers are in direct contact with the workmen who are directly engaged in
the completion of work. They submit the worker’s serious grievances to the middle-level managers.
(ii) Ensuring Proper Working Environment:
Lower-level managers ensure that proper arrangement of water, electricity,
ventilation, cleanliness etc is made at the work place.
(iii)Ensuring Safety of Workers:
Probability of accidents can be eliminated by building fences around machines.
(iv) Helping Middle-level Management:
They help middle-level managers in recruiting, training and promoting employees.
(v) Inviting Suggestions:
They invite suggestions from their subordinates as to how the quality of work can be improved.
(vi) Creating Better Human Relations:
They create better human relations so that altercations can be avoided at the work place.

COORDINATION

Coordination is to synchronize the various activities of the organization. In the context of business
unit,the meaning of coordination is to balance its various activities(purchase, sales, production,
finance, personnel etc.)so that the objective of business can be easily achieved.Lack of coordination
results in overlapping, duplication, delay and chaos.
Characteristics of Coordination
1. Coordination integrates group efforts: It integrates diverse business activities into purposeful
Group activity ensures that all people work in one direction to achieve organizational goals.
2. Coordination ensures unity of action: It directs the activities of different departments and
Employees towards achievement of common goals and brings unity in individual efforts.
3. Coordination is a continuous process:It is not a specific particular,it is required at all
levels, in all departments till the organization continues its operations.
4. Coordination is all pervasive function:It is universal in nature. It synchronizes the activities of all
Levels and departments as they are interdependent to maintain organizational balance.
5. Coordination is the responsibility of all managers: It is equally important for all the three-Top,
Middle and Lower levels of management. Thus it is the responsibility of all managers that they
make an effort to establish coordination.
6. Coordination is a deliberate function: Coordination is never established by itself rather it is
Conscious effort on the part of every manager. Cooperation is the voluntary effort of employees to
help one another. Effective coordination cannot be achieved without the cooperation of group
members.
COORDINATIONISTHEESSENCEOFMANAGEMENT.
Coordinationis not a separate function of management. It is the force that binds all the functions
&thus, called the essence of management.
It is needed in all management functions:
Planning–Coordination between the masterplan anddepartmental plan.
Organising–required between authority, responsibility and accountability
Staffing–Achieve balance between job requirement and qualities of personnel
Directing–Required between supervision, motivation and leadership.
Controlling–Ensure actual result conform to expected results.
Needed at all levels of management
Top level–needs coordination to integrate activities of the organisation for accomplishing the
Organizational goals.
Middle level–Coordination of the efforts of different sections and sub-sections
Lower level–Coordinationintheactivitiesofworkerstoensureworkprogressesasperplans
NEED FOR COORDINATION
The reasons that bring out the importance or the necessity for coordination are:
•Growth in the size of the organization results in the increase in varied quality of manpower too
With varied individual aspirations. Coordination seeks to match individual goals with the
Organizational goals.
•Functional Differentiation arising out of departmentalization and division brings forth a motive
For achievement of individual objectives, in isolation from other objectives leading to departmental
clashes. Coordination seeks to iron out these variations.
•Specialisation can give rise to the feeling of superiority and prioritizing of their zone or activities.
Coordination seeks to sequence and integrate all the specialist of activities into a wholesome
Effort.
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