Management and Entrepreneurship


Chapter ± 1 Management


‡ To expose the students to a number of important concepts of management ‡ To throw light on the complex set of roles performed by the managers ‡ To understand the skills required to perform various management roles ‡ To provide an overview of several influential approaches that have shaped managerial thinking during the past century.

‡ ³Management is the art of getting things done through and with the people in formally organised groups´«..Koontz H.
‡ ³Management is the process of planning, organising, actuating and controlling to determine and accomplish the objectives by the use of people and resources´«..Terry G.

Nature & Characteristics of Management
‡ Critical element in the economic growth of the country. ‡ Essential in all organized effort, be it a business or any other activity. ‡ Dynamic and life giving element in every organization. ‡ A process, discipline, activity. ‡ Intangible, goal oriented & universal.

Scope of Management
‡ The scope is very wide. ‡ According to Herbison & Myers, it refers to three distinct ideas. i) as an economic resource ii) as a system of authority iii) as a class or elite.


Importance of Management
‡ Optimum use of resources ‡ Effective leadership and motivation ‡ Establishes sound industrial relations ‡ Achievement of goals ‡ Change and growth ‡ Improve standard of living.


Functions of Management
‡ No consensus on the classification ‡ No similar terminology amongst the experts ‡ Newman & Summer:
± Organizing, planning, leading & controlling

‡ Henry Fayol:
± Planning, organizing, commanding, coordinating & controlling

Functions of Management
‡ Luther Gullick: POSDCORB P : planning O : organizing S : staffing D : directing CO: coordinating R : reporting B : budgeting

Functions of Management
± The process of establishing goals and a suitable course of action for achieving those goals.


Functions of Management
± The process of engaging two or more people in working together in a structured way to achieve a specific goal or set of goals.


Functions of Management
Staffing ± Selecting and training the individuals for specific job functions & charging them with the associated responsibilities.


Functions of Management
Directing ± It is the process of influencing and motivating employees to perform essential tasks in a n organization.


Functions of Management
CO: coordinating
± The integration of the activities of the separate parts of an organization to accomplish organizational goals.


Functions of Management
Reporting ± Process superiors of executives keeping the




about what is going on through records, research and inspection.


Functions of Management
± Formal quantitative statement of resources allocated for planned activities over stipulated periods of time.


Functional areas of Management
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Production Marketing Finance Human Resources Research & Development Industrial Engineering MIS Maintenance Quality Engineering Materials

Management :Science or Art ? 
Elements of Science  Elements of Art

‡ Systematic body of knowledge ‡ Scientific inquiry and Observation ‡ Experimentation ‡ Universal truths

‡ Application of Knowledge ‡ Doing things creatively ‡ Personalized skill ‡ Perfection through practice

Management as Science
‡ Distinct discipline ‡ Offers principles & guidelines ‡ Social science ‡ An inexact science ‡ Scientific & systematic.


Management as Art
‡ Uses the practical knowledge acquired in tackling problems. ‡ Combines human & nonhuman resources in a creative way to achieve results. ‡ A personalized activity ‡ Constant practice leads to good management


Management: Science as well as Art
‡ Art of management is as old as civilization. ‡ Science of developing management is young and

‡ Both are complementary & mutually supportive


Management: Science as well as Art
‡ According to Peter Drucker: ³Every organization has the same resources to work with. It is the quality of management that spells the difference between success and failure´. ‡ Ability to solve problems requires knowledge & constant practice sound


Management as a Profession 
Essential features of profession:
± Well defined body of knowledge ± Formal education and training ± Minimum qualification ± Representative body ± Service above self ± Ethical code of conduct

Management as a Profession
‡ Management has well defined body of knowledge, tools and techniques, research & consultancy ‡ Acquiring management formal training is possible education through

‡ No representative body unlike for doctors, lawyers, etc ‡ No universal code of conduct.

Management as a Profession
‡ No regulatory body and code of conduct leads to neglection of service motto. ‡ Not a recognized profession ,but moving in that direction . ‡ Some initiatives are: separation of ownership from management, state regulation of business activities, proliferation of management institutions, etc.

Management & Administration
‡ Controversy over the meaning of the terms Management and Administration. ‡ Three schools of Thought- administration is broader than management, administration is part of management, management and administration are identical. ‡ American School of thought: Administrators think, managers act; administration is a top level activity, management is a lower level function. Proponents-Ordway Tead, Oliver Sheldon, 26 W.Spriegel.

Management & Administration
‡ English School of thought: Management is rule making and rule enforcing body, Administration is just an implementing agency. ProponentsE.F.L.Brech, Henry Fayol, Kimball and Kimball. ‡ Newman, Harold Koontz, McFarland , Ernst Dale maintain that management and administration are identical.

Roles of Management
‡ Management roles refers to specific categories of managerial behavior. ‡ Mintzberg identifies ten management roles grouped under three major heads namely
± interpersonal roles( roles that involve people and other duties that are ceremonial and symbolic in nature), ± informational roles( roles that involve receiving , collecting and disseminating information) ± decisional roles( roles that revolve around making choices).

Roles of Management
‡ Interpersonal roles include: Figure head, Leader, Liaison ‡ Informational roles include: Monitor,

Disseminator, Spokesperson ‡ Decisional Disturbance Negotiator



Entrepreneur, allocator,



Roles of Management
‡ According to Robert Katz, the following skills are required for managers job:
± Technical skills( knowledge and proficiency in a specialized field), ± Human skills( ability to work well with other people individually and in a group), ± Conceptual skills( ability to think and to conceptualize about abstract and complex situations).

Levels of Management
‡ Three levels exist in Management ± ± first line managers( responsible for the overall direction and operations of an organization), ± middle managers( translate the broad strategies into specific goals for implementation) ± top line managers( responsible production of goods and services). for the


Levels of Management
‡ First line managers: foremen, white collar supervisors, Section heads. ‡ Second line managers : Functional heads and immediate subordinates. ‡ Top line managers : CEO, President, Chairman, MD, COO, CIO .

Relative Skills Needed for Effective Performance at different levels of Management

Top Management Middle Management First-line Management





Development of Management thought
Modern management approaches Early management approaches

Industrial Revolution

Adam Smith division of labor Venetian business enterprises and their management practices




1900- 1950

Post 1950

Key Management Theories ± An Overview
³Muckrakers´ begn exposes of business (1902) The Great Depression Begins Deming lectures on quality in Japan

In search of Excellence becomes bestseller (Mid-1980s) Apple Corp. Formed (1977) Baldrige Award initiated (1987)











AT & T divestiture takes effect (Jan 1, 1984)

Labour Shortage

World War I (1914-1918)

World War II (1941-1945)

Protest Movemenets (1960s to early 1970s)

IBM PC Introduced (1981)

Scientific Management School

Classical Organizational Theory School The Behavioral School Management Science The System Approach The Contingency Approach

Source: Management by Stoner

Dynamic Engagement Approach 35

Development of Management thought
‡ Management is as old as human civilization. Ex: Egyptian pyramids, Great Wall of China. ‡ During 1400¶s: Venetian business enterprises and their management practices ‡ During 1776: Adam Smith described the advantages of division of labor and specialization. ‡ Beginning of 18th century: Industrial Revolution resulted in the advent of machine power , mass production and efficient transportation.

Development of Management thought
‡ Evolution of management thought can be studied in two broad categories: ‡ Early management approaches (Scientific management, administrative management theory and human relations movement) ‡ Modern management approaches (behavioral, quantitative, systems and contingency approaches) .

Scientific Management
‡ Fredrick W.Taylor (1856-1915) ± father of scientific management ‡ An approach that emphasizes the scientific study of work in order to improve worker efficiency. ‡ Contributions by Taylor: Scientific task planning, Time and Motion study, Standardization, Differential Payment , functional foremanship.

Scientific Management
‡ Basics of Scientific Management ( 4 principles) 
Each task must be scientifically designed so that it can replace the old, rule of thumb methods.  Workers must be scientifically selected and trained so that they can be more productive .  Bring the scientifically designed jobs and workers together so that there will be a match between them.  Division of labor and cooperation between management & workers.

Scientific Management
Taylor summed up his approach in these words: i. Science, not rule of thumb ii. Harmony, not discord iii. Cooperation , not individualism iv. Maximum output in place of restricted output v. Development of each man to his greatest efficiency vi. Equitable division of work

Scientific Management
Limitations: i. Exploitative device ii.Depersonalized work iii.Unpsychological iv.Undemocratic v.Antisocial vi.Unrealistic

Administrative Management Theory
‡ Henry Fayol(1841-1925) developed this theory. ‡ Focuses on principles that can be used by managers to coordinate the internal activities of organizations. ‡ Explains the process of managing an organization from the top managerial perspective. ‡ Five functions to be performed by managers: planning, organizing, Commanding, Coordination, Controlling.

Administrative Management Theory
‡ Managers should apply 14 principles at the operational level: 
Division of work Authority and Responsibility Discipline Unity of Command Unity of direction Subordination of individual interest to the common good

Administrative Management Theory 
       Remuneration of Personnel Order Centralization Scalar Chain Equity Stability of tenure Initiative Espirit de Corps


Administrative Management Theory
Limitations:  Lack of empirical evidence  Neglect of human factors  False assumptions  Pro-management bias  Historical significance


Human Relations Theory
‡ Elton Mayo(1880-1949) contributed to this theory. ‡ It is a movement in management thinking and practice that emphasized satisfaction of employees¶ basic needs as the key to increased worker productivity. ‡ Compensated the deficiencies in scientific management and administrative management. ‡ Gained popularity after studies of human behavior at work situations during 1924-33.

Human Relations Theory
‡ Hawthorne Studies: A group of studies conducted at the Hawthorne plant of Western Electric company whose results ultimately led to the human relations view of management. ‡ Illumination Experiment: Test group Vs Control group, Illumination Vs Productivity.

Human Relations Theory
‡ Hawthorne Effect: The possibility that individuals singled out for a study may improve their performance simply because of the added attention they receive from the researchers, rather than because of any specific factors being tested. ‡ Bank wiring Experiment: Group norms influencing individual behavior Vs Economic incentives.

Human Relations Theory
‡ Key Concepts:  The individual-not only motivated by economic factors but also by social & psychological factors.  The work group-workers find satisfaction in the member ship of social groups.  Work environment-to be conducive for both organizational and personal growth.  The leader-should provide participative climate.

The Human Relations Movement Pyramid


Human Relations Theory
Criticisms:  Philosophy preaches collaboration competition-cow psychology not 

Concerned only with operative employees  Over concern on happiness ± productivity link  Anti individualistic  Not a scientifically designed experiment.

Behavioral Approach
‡ Developed as a natural evolution to Hawthorne Experiments. ‡ Hawthorne studies stressed on emotional elements to explain human behavior and performance. ‡ Behavioral approach emphasizes on scientific research as the basis for developing theories about human behavior in the organizations that can be used to develop practical guidelines for managers.

Behavioral Approach
‡ Contributors: Abraham Maslow, Chris Argyris,etc ‡ Also called as Human Resources approach. ‡ Contributions: Individual motivation, group behavior Foundation to HRM Job enrichment MBO Positive reinforcement

Behavioral Approach
‡ Limitations: Self actualizing view Compatibility of individual & organization Discounted the non human aspects of organization Best of managing is humanizing organizations

Quantitative Approach
‡ Features Offers quantitative aids to decision making, develops quantitative tools to assist in providing products and services. Managerial Choices depend on criteria such as costs, revenues, ROI, etc Emphasis on computers and their assistance in decision making alternatives. Promotes holistic view of factors influencing decision making

Quantitative Approach 
Eliminates subjective thinking in decision making Minimizes bias in decision making Aids in objective rational decision making. ‡ Limitations: All variables influencing decision can¶t be identified. Less importance to human relationships Decision quality depends on the data inputted to the computer.

Systems Approach
‡ Integrated approach to management problem solving and decision making ‡ Advocates: Chester Barnard, George Homans ‡ Key Concepts of this approach: System is a set of interdependent parts Concept of holism System can be open or closed System has a boundary

Systems Approach
‡ Tries to solve problems by diagnosing them with in a frame work of inputs, transformation processes, outputs and feed back ‡ Good balance between the needs of various functional parts of the enterprise and goals of the firm as a whole. ‡ Conceptual frame work to understand organization is too abstract. ‡ Does not identify situational differences and factors





System Approach


Contingency Approach
‡ Also termed as Situational approach ‡ Based on the premise that situations dictate managerial action ‡ Advocates: Selznic, Woodward, James Thompson ‡ Appropriate managerial action depends on the particular parameters of the situation ‡ Spells out the relationship of the organization to its environment ‡ Concerned with structural adaptations of organizations to its task environment.

Contingency Approach
‡ More pragmatic and action oriented. Integrates theory and practice in a systems framework ‡ Advocates the managers to develop skills for situational analysis ‡ Limitations:
± Paucity of literature & Complex ± Defies empirical testing ± Reactive ± Not holistic in nature

‡ Principles of Management-P C Tripathi, P N Reddy; 3rd Edn.,TMH ‡ Management-Stephen Robbins; 8th Edn.,PHI ‡ Management-VSP Rao, V H Krishna; Excel ‡ Essentials of Management-Koontz,Weihrich;5th Edn.,TMH ‡ Management ± James A F Stoner, R Edward Freeman, Daniel R Gilbert;6th Edn., PHI ‡ Principles of management: a modern approach-Henry Albers, 4th Edn,,John Wiley & sons ‡ Fundamentals of management-Donnelly, Gibson,Ivancevich ,10th Edn,.Irwin Mc Graw

Web References
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