Chapter 1 - Nature and Significance

THEEXTRACL ASS.
COM PAGE 1
NATURE AND SIGNIFIC ANCE OF

MANAGEMENT
Chapter at a glance
Introduction Concept Characteristics of

Management
Objective of Management Importance of Management Nature of Management
Management as Science, Art Levels of Management Functions of Management

and profession
Concept of Coordination Importance of Coordination
Garage-to-Google
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FOUNDER: L ARRY PAGE AND SERGEY BRIN
It all started in year 1995 at Stanford University. Larry Page was considering
Stanford for graduation and Sergey Brin, a student of Stanford, was assigned
to show him around, by the next year both were working from their dorm
rooms, both built a search engine that used links to determine the
importance of individual pages on the World Wide Web. They called the
search engine Backrub.
Backrub was renamed Google. Over the next few years, Google caught
the attention of not only the academic community, but Silicon Valley
investors as well. In August 1998 Andy Bechtol sheim wrote Larry and
Sergey a check of $1,00,000 and Google Inc. was officially born. With
this investment, the newly incorporated team made the upgrade from
the dorms to their first office: A garage in California.
In the years that followed the company expanded rapidly hiring
engineers, building a sales team, Google outgrow the garage and
eventually moved to its current HQ (The Googleplex), California.
Today, with more than 85,000 employees in 50 different countries,
Google makes hundreds of products used by billions of people across
the Globe, from YouTube to Android and of course Google search.
INTRODUCTION
Management is defined as a process of getting things done with the aim of

achieving goals effectively and efficiently.
“Management is the process of working with and through others to effectively achieve
organisational objectives by effectively achieve organisational objectives by effectively
using limited resources in the changing environment” KREITNER
MANAGEMENT CONCEPT
So there are three terms which need to be elaborated:
1. Process
2. Effectiveness
3. Efficiency
Process – It means the primary function that the management performs to get
things done. These functions are planning, organising, staffing, directing and
controlling. We will be studying these functions in the later chapters.
Effectiveness – It means completing the given task. It is concerned with doing

the right task, completing activities and achieving goals. It is concerned with the end
result.
Efﬁciency – It means doing the task correctly with minimum cost. Efficiency is
concerned with using lesser inputs for maximum output. The input resources are
money, materials, equipment and human resources.
Effectiveness and efficiency are two different terms but they both are interrelated.
It is important for management to achieve goals with minimum resources i.e as
efficiently as possible.
Effectiveness and efficiency are two sides of the same coin they must go hand in
hand.
FOR EXAMPLE- Ria is responsible for producing 100 units in a day , she produces 100
units but due to mishandling of machine it broke down. Though Ria produced 100 units
but at a higher cost, in this case Ria was effective but not effecient.
Conclusion:
Management should complete it task with minimum resources i.e. a balance

should be maintained between efficiency and effectiveness
CHARACTERISTICS OF MANAGEMENT/ FEATURES OF

MANAGEMENT
Management is a Goal
Oriented process
Management is Multi-
dimensional
Management is a Group
Features of activity
Management
Management is an
intangible force
Management is a
continuous process
Management is all
pervasive
Management is a dynamic
function
1. Management is Goal Oriented process: An organisation has certain goals which

are the basic reason for its existence. Different organisation may have different goals.
For instance, the goal of XIOMI is to be the market leader in affordable smartphone.
2. Management is Multi-Dimensional - As it involves complex activities and have

following three dimensions:
a. Management at work: All organisation exist for performance of some work. In a

showroom customers’ needs are satisfied, in college students are taught and so on.
It’s the duty of management to translate this work into small achievable goals and
provide resources to achieve them.
b. Management of people: Human resources is the most precious asset in an

organisation. The task of the Management is to make people work towards achieving
the organisational goals.
Management must deal with employees as individual with different needs &
behaviour. On the other hand it should also deal with individuals as a group of
people.
c. Management of operations: In order to survive organisation must have some

product or service to provide to its customers. Therefor the management should
manage the process of transforming inputs into desired outputs.
3. Management is a group activity – An organisation is a group of individuals with

different needs. Every member of the group has a different purpose for joining the
organisation. But as a team they work in one direction i.e. fulfilling the organisation
goal.
Management as a team can contribute more effectively and efficiently than an
individual.
Together Everyone
TEAM
Achieves More
4. Management is an intangible force – Management is an intangible force that

cannot be seen but its presence can be felt.
When targets are achieved, employees are happy and customers are satisfied one can
feel the presence of management.
5. Management is a continuous process – Management is a continuous process as

it involves series of continuous, composite but separate functions – planning,
organising, directing, staffing and controlling. These functions are performed by
managers at all times.
6. Management is pervasive – Management is essential in all organisation and in all

departments, whether big or small. There are certain common activities that are
performed in all type of organisations. A school,
#Pervasive: It means
hospital, shopping mall – all require management.
general or common
7. Management is a dynamic function – There are various factors such as social,

economical, legal, political and technological that effects an organisation. In order to be
successful management should adapt and change its goals accordingly
FOR EXAMPLE-In order to be successful in Indian food industry pizza hut made major
changes in its menu for satisfying Indian customers.
OBJECTIVES OF MANAGEMENT
In an organisation there are different objectives and management t has to achieve all
objectives in an effective and efficient manner. The objectives of management can be
classified as follows:
1. Organisational/ Economic objectives:
Management has to achieve various objectives while considering the interest of all
stakeholders including shareholders, employees, customers and the government. The
main objective of any organisation must be to utilise human and material resources to
the maximum possible advantage.
The Economic objective of a business are:
Economic
Objective
Survival Profit Growth
A) Survival: The primary /basic objective of any organisation is survival. Management

of an organisation must ensure the survival of the organisation by earning enough
revue to cover cost.
B) Proﬁt: Mere survival is not the motive of any organisation. The main motivating
factor in any business is profit therefore the management must ensure that the
organisation makes enough profit to cover cost and risk of the business. For
Example Ria has established a bakery, the cost that she incurs per cake is $10, so she
must sell her cake above$10 to make the sale profitable.
FOR EXAMPLE-Ria has established a bakery, the cost that she incurs per cake is ₹150, so
she must sell her cake above ₹150. I.e ₹200 to make her sale profitable. So, she earns a
profit of ₹50 .
Profit = Income – Cost
C)Growth: Every organisation wants to grow in the big run. Management must use
the profits to expand and grow the business. Growth of the business can be
measured in terms of increased sales, number of employees, number of products,
market share etc.
2. Social objectives:
Social objective involves the creation of benefit for the society. Since business operates
in a society by utilizing its scarce resources, the society expects something in return.
As a part of society every organisation whether it is business or non- business has a

social obligation to fulfil.
This include:
• Using environmental friendly methods of production.
• Giving job opportunities to disadvantage sections of society.
• To supply good quality goods and services at reasonable price.
3. Personal objective:
Personal objectives refers to the objectives which are related to the employees of an
organisation. Different people with different experiences and objectives become part of
the organisation to satisfy their different needs.
• Financial needs like salaries, incentives and other perks.
THEEXTRACL ASS.COM P A G E 11
• Social needs like recognition in the organisation.
• Higher level needs which include growth and development.
In order to bring harmony in the organisation, management has to integrate personal

goals with the organisational goal.
IMPORTANCE OF MANAGEMENT
Management is an integral part of an organisation without management everything will

be at chaos.
A business rises because of its management and if fails it will be because of

management.
Therefore we can conclude that anything minus management is nothing.
Anything- Management = zero
1. Management helps in achieving goals : An organisation have certain goals that it

expect to be achieved, management helps to achieve these goals through the
employees of the organisation.
2. Management increases efficiency: Management helps to increase the efficiency of

the organisation by reducing cost and improving the productivity, it does so through
better planning, organising, directing, staffing and controlling the activities.
THEEXTRACL ASS.COM PA G E 12
3. Management creates a dynamic organisation: A business runs in an environment
that is ever changing. People resist change and it’s the duty of the management to
help people by introducing them to the benefits of these changes, so that the
organisation is able to maintain its competitive edge
4. Management helps in achieving personal objectives: A manager motivates and leads

his team in such a manner that individuals are able to achieve personal goals while
contributing to the organisational objectives.
5. Management helps in development of society : An organisation have various goals

which it needs to fulfil. In the process of fulfilling all its goal organisation helps in
development of society
(i) Provides good quality products at reasonable price.
(ii) Creates employment opportunities.
(iii) Introduce new technology for greater good of the society.
NATURE OF MANAGEMENT
Today the term ‘management’ has several different connotations that highlights various
aspects of its nature.
Over a period of time, management has grown into a dynamic subject with its own
characteristics. The study of management has evolved. However, one question that needs to
be addressed in regard to the nature of management, whether it is science or an art or both?
THEEXTRACL ASS.COM PAG E 13
MANAGEMENT AS AN ART
Art is the skilful and personal application of existing knowledge to achieve desired results. It
can be learned through books, experience and observation. As art is concerned with
application of human creative skills and imagination its. Application will change/differ
person to person.
Following are its basic features:
1. Existence of theoretical knowledge: Art presupposes the existence of certain theoretical

knowledge. Experts in their fields have extracted certain basic principles which are
applicable to a particular form of art for example: literature, art, and dance.
2. Personalised application: The use of basic knowledge differ from person to person. Art,
therefore is a very personalised concept. For ex. Two speakers, two actors, two dancers
will always differ.
3. Based on practise and creativity: Art involves the creative practise of existing
theoretical knowledge. For ex. All music is based on seven basic notes but a musician
use these notes differently in a certain manner.
Management can be said an art as it satisfies the following criteria:
I. Existence of theoretical knowledge:There is a lot of literature available in various

areas of management like marketing, finance and human resource which the
manager has to specialise in.
II. Personalised application: There are various theories and principles of management
propounded by management thinkers, manager applies these principles and
knowledge in a given situation. A good manager works through a combination of
practice, creativity, imagination and innovation.
III. Based on practise and creativity: A manger applies this acquired knowledge in a
personalised and skilful manner in the light of the realities of a given situation.
CONCLUSION-The best managers are highly trained and educated with qualities such as
ambition , self motivation, creativity, and imagination. What distinguishes a successful
manager from a less successful manager is the ability to put these principles into practice.
MANAGEMENT AS A SCIENCE
Systematic body of knowledge that explains certain general truths is scienc
The basic features of science are as follows:
1) Systematised body of knowledge: Scientific principles are based on a cause and effect
relationship.
2) Principles based on experimentation: Scientific principles are first developed through

observation and then tested through repeated experimentation under controlled
conditions.
3) Universal validity: Scientific principles have universal validity and application. For Ex. If
anything is dropped from a height it will only come downward due to gravity.
Based on the above features we can say that management also share some of the features of
science:
I. Systematic body of knowledge: Management has its own theory and

principles that have been developed over a period of time but it also draws on
another disciplines such as Eco, sociology etc.
II. Principle based on experimentation: Management principles are evolved over

a period of time by repeated experimentation and observation in different
types of organisations. Since management deals with humans and whenever
human factor is involved the outcome cannot be accurately predicted.
Therefore management is an inexact science.
III. Universal validity:
• As the principles of management are not exact as that of principles of

science therefore their application and use is not universal.
• The principles of management are to be modified according to the

situation.
• Though some of the management principles can be used in different

situations say for training and developed of managers.
CONCLUSION-Management principles are not universally accepted, it also involves

human factors, therefore management is an inexact science.
MANAGEMENT AS A PROFESSION
According to Cambridge dictionary profession means “any type of work that needs
special training or a particular skill, often one that is respected because it involves a
high level of education.”
1. Well defined body of knowledge: All professions whether legal, accounting, medical
etc. are based on a well-defined body of knowledge
2. Restricted entry: Entry to any profession is restricted through an examination or

educational degree.
FOR EXAMPLE-To be a chartered Accountant (CA) a student is required to clear all the
examination which are conducted by ICAI.
3. Professional association: All professions are affiliated to a professional association. The
association regulates entry and exit, grants certificate for practise and formulates code
of conduct. For Example a chartered accountant needs to get a registration number
from institute of chartered accounts of India (ICAI) to practice and audit books of
accounts.
4. Ethical code of conduct: All profession are bound by a code of conduct which guides
the behaviour of its members. For example all CA’s take the oath of ethical practise at
the time they enter the profession.
5. Service motive: The main motive of any profession is to give/provide dedicated and
committed service to its clients. For ex. The task of a lawyer is to ensure that it’s client
get justice.
I. Well defined body of knowledge: Management is based on a systematic body of

knowledge comprising well defined principles based on a variety of business situation.
This knowledge can be acquired through books, colleges and professional institutes.
Management as a subject is thought at different institutions such as IIM (Indian

institute of management), Harvard etc.
II. Restricted entry: Anyone can be called a manager irrespective of one’s education
qualification. There is no such restrictions on being assigned as a manager. But
professional knowledge and training is considered to be a desirable qualification.
III. Professional association: There is no such compulsion for management to be

members of any association. Though there are several association of practising
management in India, like the All Indian Management association.
IV. Ethical code of conduct: Though AIMA has laid down a code of conduct to regulate
activities of its members. But its membership is not compulsory for all managers.
V. Service motive: The basic motive of any organisation is profit maximisation. Though
organisation serves the society in many ways but the primary motive of any business
is to earn profits.
CONCLUSION- Management is not exactly a profession because it does not meet the exact
criteria of a profession.
THEEXTRACL ASS.COM PA G E 17
LEVELS OF MANAGEMENT
Management is a universal term which is used for certain functions performed by

individuals in an organisation. Every individual in the hierarchy is responsible for
completion of a particular task. To be able to fulfil that responsibility he is assigned a
certain amount of authority or the right to take a decision. This authority
responsibility relationship binds individuals as superiors and subordinates and gives
rise to different levels in an organisation. There are three levels in the organisation.
They are as follows:
TOP MANAGEMENT
It consists of the senior- most executive of the organisation they are called by
different names usually referred as chairman, the CEO (chief executive officer), chief
operating officer, president and vice president.
Functions performed:
i. integrate diverse elements
ii. Coordinate the activities of different departments according to the

overall objective of the organisation.
iii. Formulate overall organisational goals and strategies
iv. Analyse business environment and its implications.
v. They are responsible for all the activities of the business and for its
impact on society.
MIDDLE MANAGEMENT
Middle level management acts as a link between top and lower level of management.
They are subordinate of top level management and superior of lower level of
management.
They are also known as division heads. (Example: HR manager, production

manager, marketing manager, finance manager, plant supereindent, regional
manager, divisional manager)
Functions of middle management:
i. Responsible for implementing and controlling plans developed by top

management.
ii. They are responsible for all the activities of first line managers.
iii. Their main task is to carry out the plans formulated by the top managers.
OPERATIONAL MANAGEMENT
They perform the activities or carry on the tsk according to the plans of top and
middle level management.
It refers to the lower level in the hierarchy of the organisation, Forman and
supervisors comprise the operation management.
Functions:
i. Superiors directly oversee the efforts of the workforce but their authority and
responsibility is limited.
ii. Through their efforts quality of output is maintained, wastage of materials is

minimised and safety standards are maintained.
iii. They represent the workers grievance before the management and maintain
discipline among the workers.
COORDINATION
The process by which management synchronised the activities of different departments is

known as coordination.
Coordination is sometimes considered a separate function of management, however it is the

essence of management,
Coordination is implicit and inherit in all function of an organisation.
• The process of coordinating the activities of an organisation begins at the planning

stage. Top management plans for the entire organisation.
• According to the plans organisational structure is developed.
• As per the need of the organisational plan, staffing function is performed.
• Directing is required for execution of these plans, staffing function is performed.
• Directing is required for execution of these plan
• Controlling helps to scrap out any discrepancies between actual and planned activities.
CONCLUSION- We can say that coordination is one of the important process in the
organisation without which everything will be a chaos. It ensures that the organisational
objectives are achieved with minimum conflict.
Characteristics of coordination:
Following are some of the features of coordination that we can find from the definition:
I. Coordination integrates group efforts: It’s the main task of coordination it unifies
diverse interests into purposeful activity. It gives a common focus to group effort
to ensure that performance is as it was planned and scheduled.
II. Coordination ensures unity of efforts:
• The purpose of coordination is to secure unity of action in the realisation of a

common purpose.
• It acts as a binding force between departments coordination ensures that all
actions is taken in achieving the goal of the organisation.
III. Coordination is a continuous process:
• Coordination begins at the planning stage and it continues till controlling.

Top management plans for the entire organisation .according to these plans,
the organisational is developed and staffed.
• Directing is required for execution of plans and controlling corrects any

deviation between planned standards and actual performance
IV. Coordination is an all – pervasive function: It is required at all level of the

management. it helps to integrate the efforts of various departments of the
organisation. In the absence of coordination there is overlapping and chaos
instead of harmony and integration of activities.
V. Coordination is the responsibility of all managers: Coordination is the function of

every manager in the organisation. Top level managers are required to coordinate
with subordinates to ensure that the overall policies and plans are duly carried
out.
Middle level management coordinates with both the top level and first line
managers. Operational managers coordinates the activities of its workers to
ensure that work is conducted according to plans.
Importance of coordination:
Coordination is important as it integrates the efforrts of individuals, departments

and specialists. The primary reason for coordination is that departments and
indicduals in the organisation are interdependent, i.e. they depend on each other
for information and resources to perform their respective activities.
Managers need to reconcile differences in timings, effort or interest. At the same

time, there is a need to harmonise individual goals and organisational goals. The
need for coordination arises because of the following reasons:
1. Growth in size: As an organisation grows in size, the number of people
employed also increase. At times, it may become difficult to integrate their
efforts and activities. For management, it is necessary to ensure that all
individuals work towards the common goals of the organisation. But employees
may have their individual goals also. Thus, harmonise individual goals and
organisation gals through coordination.
2. Functional differentiation: In an organisation there may be separate

departments of production, finance, marketing and human resource. All these
departments have their own objectives, policies and strategies. Therefore
coordination is required as to avoid any confusion and conflict as it acts as a
binding force between various departments.
3. Specialisation: Due to increasing complexities of modern technology and

diversity of tasks, organisation need to employ a number of specialists. Specialists
usually think that they only are qualified to evaluate, judge and decide. They do
not take advice or suggestions from other members of the organisation. This often
leads to conflict between them. Therefore, coordination is required to avoid any
type of conflict between the specialist and the other members of the organisation.

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THEEXTRACL ASS.

NATURE AND SIGNIFIC ANCE OF

Introduction Concept Characteristics of

Objective of Management Importance of Management Nature of Management

Management as Science, Art Levels of Management Functions of Management

Concept of Coordination Importance of Coordination

PARENT C OMPANY: ALPHABET INC. REVENUE: $ 11 0 B I L L I O N

Management is defined as a process of getting things done with the aim of

So there are three terms which need to be elaborated:

Effectiveness – It means completing the given task. It is concerned with doing

Management should complete it task with minimum resources i.e. a balance

CHARACTERISTICS OF MANAGEMENT/ FEATURES OF

1. Management is Goal Oriented process: An organisation has certain goals which

2. Management is Multi-Dimensional - As it involves complex activities and have

a. Management at work: All organisation exist for performance of some work. In a

b. Management of people: Human resources is the most precious asset in an

c. Management of operations: In order to survive organisation must have some

3. Management is a group activity – An organisation is a group of individuals with

4. Management is an intangible force – Management is an intangible force that

5. Management is a continuous process – Management is a continuous process as

6. Management is pervasive – Management is essential in all organisation and in all

7. Management is a dynamic function – There are various factors such as social,

1. Organisational/ Economic objectives:

The Economic objective of a business are:

Survival Profit Growth

A) Survival: The primary /basic objective of any organisation is survival. Management

Profit = Income – Cost

As a part of society every organisation whether it is business or non- business has a

• Using environmental friendly methods of production.

• Giving job opportunities to disadvantage sections of society.

• To supply good quality goods and services at reasonable price.

• Financial needs like salaries, incentives and other perks.

• Higher level needs which include growth and development.

In order to bring harmony in the organisation, management has to integrate personal

Management is an integral part of an organisation without management everything will

A business rises because of its management and if fails it will be because of

Therefore we can conclude that anything minus management is nothing.

Anything- Management = zero

1. Management helps in achieving goals : An organisation have certain goals that it

2. Management increases efficiency: Management helps to increase the efficiency of

4. Management helps in achieving personal objectives: A manager motivates and leads

5. Management helps in development of society : An organisation have various goals

(i) Provides good quality products at reasonable price.

(ii) Creates employment opportunities.

(iii) Introduce new technology for greater good of the society.

Following are its basic features:

1. Existence of theoretical knowledge: Art presupposes the existence of certain theoretical

Management can be said an art as it satisfies the following criteria:

I. Existence of theoretical knowledge:There is a lot of literature available in various

Systematic body of knowledge that explains certain general truths is scienc

The basic features of science are as follows:

2) Principles based on experimentation: Scientific principles are first developed through

I. Systematic body of knowledge: Management has its own theory and

II. Principle based on experimentation: Management principles are evolved over

III. Universal validity:

• As the principles of management are not exact as that of principles of

• The principles of management are to be modified according to the

• Though some of the management principles can be used in different

CONCLUSION-Management principles are not universally accepted, it also involves

2. Restricted entry: Entry to any profession is restricted through an examination or

I. Well defined body of knowledge: Management is based on a systematic body of

Management as a subject is thought at different institutions such as IIM (Indian

III. Professional association: There is no such compulsion for management to be