Unit 1:

INTRODUCTION to BUSINESS MANAGEMENT & PRINCIPLES

What is an Organization ?
ORGANIZATION is systematic arrangement of PEOPLE brought together to accomplish some specific purposes
ORGANIZATIONs use management to accomplish the work that is required to achieve the goals.

The major characteristics of an Organization

People
Structure
Goals

Levels of Management. Skills needed at different Managerial Levels

Definitions of Management
Frederick W. Taylor
Management is the art of knowing what you want to do and then seeing that it is
done in the best and the cheapest way.

Mary Parker Follett.

Management, is the "art of getting things done through people”

George R. Terry
Management is a distinct process consisting of planning, organising, actuating and controlling; utilising in each both science and
art, and followed in order to accomplish pre- determined objectives.

Harold Koontz
Management is the process of designing and maintaining an environment in which individuals working together in groups
efficiently accomplish selected aims.

Peter F. Drucker
Management is a multi-purpose organ that manages a business and manages Managers and manages Workers and work.

Stephen Robbins
Management is the process of getting things done, effectively and efficiently with and through other people

Efficiency & Effectiveness

Efficiency:
“Doing things right" or getting the most output from the least amount of inputs
Effectiveness:
“Doing the right things” of attainment of organizational goals
CLASSICAL (1880-1930)
Frederick Taylor
1.The art of Knowing what you want to do: Clarity of operation (almost like a Goal)
2. In the best (scientific) & the cheapest way : quality of product & cheap or cost effective price

NEO CLASSICAL (1930 -1950)

Mary Follett.
Art of getting things done through people : Importance to people

MODERN (1950 onwards)

George Terry
Planning, organising, actuating and controlling, determined objectives: Talks about functions & Goals

Harold Koontz
Maintaining an environment in which individuals working together in groups efficiently accomplish selected aims. Internal
environment, people working together & Goals

Peter Drucker
Multipurpose organ, manages business, Managers, Workers & work: Multipurpose is like broad list of goals. It also talks about
managing business, mangers, workers & work

Stephen Robbins
Management is the process of getting things done, effectively & efficiently with and through other people:
 Process,
 Efficiency & effectiveness

MAJOR SCHOOLS OF MANAGEMENT THOUGHT

Past to Present
(HISTORY/EVOLUTION of Management concepts/thoughts)

Why study history/evolution of management?

History is important in that it reveals all of the past. It is there for you to study and learn from so that the future can be improved
upon.
“People who do not know their history are fated to repeat it."
It is important because history helps you understand the past to predict the future and help in creating it.
It helps us see the origins of today’s management practices and recognize what has worked and what has not

Major Management Eras

Early Management Era (Prior to 1880)
Classical Management Era (1880-1930)
Neo-Classical Management Era (1930*-1950) * Since neo classical thought process started a decade earlier some authors show the NCM Era from 1920
Modern Management Era (1950 onwards)

I. Early Management Era (Prior to 1880)

Construction of the Egyptian pyramids
2.Constriction of the arsenal of Venice.
3. Adam Smith’s monumental work ‘Wealth of Nations’ in 1776 (argued the benefits of division of labour or job specialization).
Known as “Father of Economics” and “Father of Capitalism”
4. Industrial Revolution (Established that that it is more economical to manufacture in factories than at home).
 Managers were needed to manage these factories
 Those managers needed formal management theories to guide them.
II. Classical Era (1880-1930)
Schools/Approaches/Theories under Classical Era
- Scientific Management
- Bureaucratic Management
- Administrative Management

CLASSICAL ERA (1880-1930)

A. Scientific Management School
F W Taylor is known as the “Father of Scientific Management”
-Studied manual work using scientific principles to replace the old rule-of thumb for improving efficiency/production.
-Scientifically select the worker putting the right person on the job then train & develop methodically the worker. Provide him
with the right tools /equipment, having the worker follow his instructions exactly,
-Heartily cooperate with the workers and pay them fairly . Further motivate them with additional incentive based on his output.
Pay for Performance.
Load clear work and responsibility to management too.

Using similar approaches for other jobs, Taylor was able to define the “one best way” for doing each job using scientific
selection
Overall, Taylor achieved consistent productivity improvements in the range of average of 200 % and in some cases much more.

B. Bureaucracy Mgt School

Max weber -1905
“The theory of Social and Economic Organisation”
The bureaucratic School of Management

A major contribution is his “bureaucracy” theory, a formalised and idealised view of organisation, comprising 6 major principles
 A formal hierarchical structure
 Management by rules
 Organisation by task competency.
 Impersonal Relationships
 A focused mission
 Employment based on technical qualification
C. Administrative Theory
Henri Fayol
Identified five major functions of Management POCCC
 Planning
 Organizing
 Commanding
 Co-ordinating
 Controlling 
1. Fayol pioneered in distinguishing management functions from other functions/activities of a business.
2. He developed 14 principles of management (as universal) from which many current management concepts have evolved.

14 Principles of Management by Henri Fayol

Division of labour : Division of work leads to specialisation resulting in higher output. This principle recommends grouping of
people as per their area of specialization. If people are specialized at their work, they can perform their task better.

Authority : Managers must have the authority to issue orders and instructions to the subordinates. Yet , formal authority alone
may not help to compel obedience from subordinates; managers must have the expertise to exert personal authority.

Discipline : Discipline means respect for rules and agreements. People working in an organization need to comply with rules and
agreements that govern the organization. Without discipline results cannot be achieved.
Discipline can be brought by a) effective leadership, guidance and motivation. B) good supervision at all levels, and c) clear and
fair agreement with employees.

Unity of command : There should be one boss for one subordinate. Conflict will arise when one receives order and instructions
from multiple managers.

Unity of direction : All operations in an organization need to be directed towards one objective. Without this achievement of
goal cannot be ensured.

Subordination of individual interest to general interest : If there is a conflict between the individual goals and organizational
goals, preference should be given to organizational goals, i.e., individual goals should not supersede the goals of the
organization.

Scalar Chain (Hierarchy) : This the line of authority running from top level to lower level of management. It is also known as
hierarchy of authority. It illustrated in the form of an organizational chart clearly showing the structure of authority from the top
management to employees down the line.

Remuneration : There should be a fair system of remuneration that ensures equal pay for equal work. It should be fair to both
employees and employers.

Centralisation : It refers to declining role of subordinates in the decision making. Though major decisions are taken by the
managers at the top level, but at the same time enough authority should be given to the subordinates to do the jobs properly.

Initiative : Subordinates should have the freedom to conceive new ideas and do their task, even though they commit mistakes.

Stability of staff : Employee turnover should be less to ensure efficiency of an organization.

Esprit de corps : ‘ Unity is strength’. People should work as a team to enjoy the benefits of synergy.

Order : People and material should be in the right place at the right time. Fayol followed the concept of ‘ A place for everything
and everything in its place ‘. When human beings are kept at the right place( right man at the right place) it is social order, and
when non-human or material resources are kept at the right place, it is material order.

Equity : Managers should be fair to their subordinates.

The Positive Aspects of Henri Fayol’s Theory

Fayol pioneered in distinguishing management functions from other functions/activities of a business. It provide systematic
understanding to the process of management.
Managers need specific roles in order to manage work and workers.
Clearly identified 14 principles of management and claimed its universality.
His theory provided foundation to the continuously progressing thoughts on management.

Comparison of Taylor & Fayol

F. W Taylor Henri Fayol
  He is known as the father of scientific
management.
 He worked from bottom to top level.
 He gave more emphasis to shop & factory
management.
 His main concern was to increase the
efficiency of workers and managers.
 He is known as the father of functional
management.
 He worked from top to bottom level.
 He gave more emphasis to the office & the
management process as a whole.
 His main concern was to evolve principles
of general management and the functions of
managers

Summary: The classical school of management

Scientific Bureaucratic Administrative
 Concerns for precise  Impersonal view of  Development of
work methods. organisations. managerial principle.
 Best way for the jobs to  Formal structure,  Best way to organise all
be done legitimate authority and jobs in a business
competence of
management

Features of classical school of thought :

It involves some of the early works on management.
It attempts to find ways to increase output of workers.
Employees have strong economic needs which can be satisfied through financial incentives.
It stresses on formal structure of jobs and work schedules to satisfy organizational and individual needs.
It views organizations as closed system which do not interact with the external environment.
It develops a set of management principles which are universally applicable to all
Which provides foundation to the modern management theories.

Core Ideas
1. Application of science to the practice of management.
2. Development of basic management functions.
3. Articulation and application of specific principles of management. Evolved in response to the shift from handicraft to
industrial production. Emphasis is on economic rationality of people and organizations; motivated by economic incentives, they
make choices that yield the greatest monetary benefits.

III. Neo-Classical Management Era

Emphasized human relations & behaviour: giving the importance to individuals as well as groups and their relationship,
behavioural & social aspects. It was further lead to the application of behavioural sciences in management

Note: The classical theorist viewed people as means of production and suggested ways to increase production. But,
unfortunately, managers could not achieve the targets of production as people at work place did not always behave rationally.

III. Neo-Classical Management Era (1930*-1950)

Behavioural Theories
The behavioural school of management emphasizes the human element in an organization. By recognizing the importance of the
individuals, her emphasis was more on a group behaviours and group processes.

Mary Parker Follett : A pioneer of the behavioural approach to management, was a social worker and studied issues related to
working conditions of employees.
“Management is the art od getting things done through other people.”

Behavioural Theories
The fulfillment of emotional needs of workers is important in achieving economic goals. Employee satisfaction and working
conditions are important in achieving worker productivity. Workers are intrinsically motivated to work when they feel a sense of
belonging and participate in decision making. Workers desire diverse and challenging work. 

CONTRIBUTIONS OF MARY PARKER FOLLETT

TO MANAGEMENT THOUGHTS
Follett was one of the earliest thinkers to recognize that organizations could be viewed from the micro level of individual
(human element) & more so from group behaviour in the workplace.
Furthermore, she believed that organizations should be based on a group ethics rather than on individualism.
She believed in the need for mutuality of interests between employer and employees.
Individual potential, she argued, remained as potential until released through group association. The manager’s job was to
harmonize and coordinate group efforts – the came up with the notion of “power with” rather than “power over” employees.
Managers and workers should view themselves as partners – as part of a common group.
Follett’s humanistic ideas influenced the way the managers looked at motivation, leadership, power and authority. As a social
philosopher Follett’s ideas had clear implications for management practices. From her period a steady growth and recognition
for a new area of study called Organisational Behaviour (OB) started happening.

The Hawthorne Effect Productivity increases when workers believe that they are being observed closely. Employees perform
better when managers and co-workers make them feel valued. Financial rewards are not necessarily conducive to increasing
worker productivity. Workers care about self-fulfilment, autonomy, empowerment, social status and personal relationships with
co-workers.

Mayo and his associates conducted their study at Western Electric’s Hawthorne Plant between 1924-1932, to evaluate the
attitude and psychological reaction of workers in on-the-job situation. Their experiments were carried out in four phases.
1) Illumination experiment
2)Relay assembly test room experiments
3) Interview phase
4)Bank wiring observation room experiment.

Other OB Proponents of later period in 20th Century

HAWTHORNE STUDIES by Elton Mayo
Scholars generally agree that the Hawthorne studies, under the leadership of Elton Mayo, had a dramatic impact on the direction
of management thought. Mayo concluded that behaviour and sentiments are closely related, that group influences significantly
affects individual behaviour, that group standards establish individual worker output, and that money is less a factor in
determining output than are group standards, group sentiments and security

1. Illumination experiments : This experiment involved manipulation of illumination for one group of workers, called test
group and comparing their productivity and performance with another group for whom illumination was not manipulated, called
controlled group. In the first spell of experiment, for the test group, productivity and performance improved. However it did not
last long. In fact the control group’s performance also rose in between with the alteration in lighting conditions for the test group,
even though for the control group there was no change in the lighting conditions. With such contradictory results, researchers
concluded that intensity of illumination was not related to productivity of workers. There had to be something besides
illumination which influenced the performance of the workers in Western Electric Company.

2. Relay assembly test room experiment : This set of experiments was conducted under the guidance of Elton Mayo. The
researchers selected six women employees of the relay assembly test room, and were put in a separate room. In the test room, a
number of variables were altered, like increased wages and rest period, shortened workday and workweek etc.
In addition the sample workers were given the freedom to leave their workstation without permission and were also given special
attention. Productivity increased during the study period. Such results led the researcher to believe that better treatment of
subordinates made them more productive. They highlighted the significance of social relations. Workers would perform better if
management looked after their welfare and supervisors paid special attention to them. This condition was later lebelled as the
Hawthorne effect.

3. INTERVIEW PHASE : In this phase of the experiments, about 21000 people were interviewed. The purpose of the
interviews was to explore the attitude of workers in depth. The conclusions that emerged were.
A complaint is not necessarily an objective of recital of facts; it may also reflect personal disturbance of cause of which may be
deep rooted.
 All objects, persons, and events carry some social meaning. They relate to employee’s satisfaction or dissatisfaction.
Workers’ personal situations are the results of configurations of relationships, involving sentiments, desires, and interest. Such
relational variables, when related to the worker’s own past and present interpersonal relations, result in their personal situation.
Workers assign meaning to their status in the organization and give value to events, objects, and specific features of their
environment
d) Workers derive satisfaction or dissatisfaction from the social status of an organization. This means that they also look for
social rewards, associating them with an organization.
e) Workers’ social demands are influenced by social experiences in groups, both inside and outside the workplace.

4. BANK WIRING OBSERVATION ROOM EXPERIMENT: In this experiment there were fourteen participants including
wiremen, solder men and inspectors.
There was no change in the physical working conditions.
Sample workers were paid based on an incentive pay plan, relating their pay to output. They had the opportunity to earn more by
increasing the output.
However, it was observed that the output was constant at a certain level.
Analysis of the results showed that the group encourages neither too much nor too little work.
They enforce ‘a fair day’s work’ on their own. Group norms, therefore more important to the worker than money.
This study, thus provided, some insight into informal social relations within groups.

ABRAHAM A. MASLOW(1908-1970)
Maslow focused on human needs. In 1943, he suggested that number of different human needs exists and he felt that people are
motivated by a sequence of needs. So organizations which solely rely on money as a motivator may be ignoring important needs.
He introduced a new concept, viz., hierarchy of needs. He felt that people are motivated by five distinct types of needs which are
arranged in a hierarchy in order of their power to motivate human behaviour:
- Physical or physiological needs
- Safety or security needs
- Social needs
- Ego or status needs
- Self-actualisation, self-realisation, self-fulfilment needs.

DOUGLAS McGREGOR9(1906-1964)
McGregor’s major contribution in the emerging areas of human relations lies in developing two alternative
management/manager views of subordinates, popularly known as theory X and theory Y.
Theory X managers believe that their subordinates basically try to avoid responsibility and work assignments. So they cannot be
inspired or motivated. Thus theory X takes a relatively pessimistic and negative view of workers. On the contrary, Theory Y
managers hold progressive outlook and are dynamic in nature. They view work as rewarding if given the chance by superiors. In
McGregor’s view theory Y was a more appropriate philosophy for managers to adhere to.

Chris Argyris : A contemporary advocate of the behavioural school of management thought, Argyris has argued in his book
“Personality and Organization” that people normally progress from a stage of immaturity and dependence to maturity and
independence and that many modern organization keep their employees in a dependent state, thus preventing the individual from
achieving his or her fullest potential . Furthermore he felt that various concepts and principles of modern management such as
specialisation inhibit the natural development of a healthy personality.-

Major Contributor to the Behavioural School

Contributors Contributions

Mary Parker (1868-1933) Group influences in the workplace

Elton Mayo (1880– 1949) Effect of human motivation on productivity and output

Abraham Maslow (1908-1970) Relates human motivation to a hierarchy of needs

Notable Contributors
Douglas McGregor (1906–1964) Emphasizes human characteristics- theory X and theory Y and to the Behavioural
the corresponding style of leadership School of
Management
(1) Chris Argyris
1957 “Personality and Organization” Fundamental conflicts between Individual and Organizational needs. Frederick Herzberg
1959 “The Motivation to Work”. Two-factor Theory. Kurt Lewin 1944 – 1951 Model of planned change: unfreeze, change,
refreeze
(2) Rensis Likert 1967 “The Human Organization” Linking-pin model to bridge human relations and organizational structure
George Homans 1950 “The Human Group” Extrapolates from a small group to understanding the social system. Warren Bennis
1961 “The Planning of Change” Foundation for planned organizational change and development.
Summary: Neo-Classical School of Management Behavioural School is a logical extension of the Human Resource School. They
are largely concerned with motivation of workers. Workers are diverse in their needs and want challenging work, participative
decision-making, self-direction and control. Managers must help workers deal with situational constraints and social aspects of
organizational and environmental changes.

Organizational Behaviour (OB)

1960s-Today
The field of study that researches the actions (behaviours) of people at work is called organizational behaviour

IV. Modern Management Era (1950 onwards)

Major Theories/Approaches
1. Quantitative Approach
2. System Approach
3. Contingency Approach

Quantitative Approach
more prominent from1950s (though’ the thoughts started from 1940s )
- Evolved from mathematical and statistical methods developed to solve WWI military logistics and quality control
problems.
- Focuses on improving managerial decision making by applying: statistical, optimization models, information models,
and computer simulations.

QUANTITATIVE THEORY : This theory became an acceptable theory during world war II , when Britain wanted to solve the
problem of war. The problem was that the radar system did not perform well at field sites as it performed at the testing stations.
During the war managers ,govt officials, and scientists are brought together to help the army to utilize the resources effectively.
The experts solved many logistic problems in the war. After the war, such techniques were used by the organizations to solve
their business problems. This school of thoughts uses statistics, optimization models, information models, and computer
simulation to solve business problems. It has various branches , such as
Management science b) Operations Management c) Management information system
Management Science approach: Also known as the operation research approach, which is applied in the areas like capital
budgeting, production scheduling, product strategy management, human resource planning and inventory management.

Systems Approach
1960s
System: A set of interrelated and interdependent parts arranged in a manner that produces a unified whole.

Organization as an Open System - Dynamically interact to their environments by taking in inputs and transforming them into
outputs that are distributed into their environments.

Contingency Approach
1960s

Also called the situational approach.

Organizations are individually different, face different situations (contingency variables), and require different ways of
managing.
One of the earliest contingency studies was done by Fred Fiedler and looked at what style of leadership was most effective in
what situation.

A good way to describe contingency is “if, then.” If this is the way my

situation is, then this is the best way for me to manage in this situation. It’s
intuitively logical because organizations and even units within the same
organization differ—in size, goals, work activities, and the like. It would be
surprising to find universally applicable management rules that would work in all
situations

Popular Contingency Variables:

FUNCTIONS OF MANAGEMENT

Scope of management in an Organization

NATURE & CHARACTERISTICS OF MANAGEMENT

 1. Goal oriented – aims at achieving pre-determined objectives
2. Comprised of following major functions :
Planning, Organizing, Leading, Controlling
3. Applicable to any type of organization
4. Applies to all organizational levels
5. Involves group effort to achieve goals
6. Is a continuous process
7. Integrates men, machines and materials to accomplish goals
8. Is a Science, Art and a Profession 

1. Management is an activity
2. Management is a purposeful activity.
3. Management is concerned with the efforts of a group
4. Management applies economic principles.
5. Management involves decision making.
6. Management is getting things done through others.
7. Management is an integrating process.
8. Management co-ordinates all activities and resources.

1. Management is a universal activity.

2. Management is dynamic not rigid

Characteristics of Management
Management is a distinct process.
Management is an organized activity
Management aims at the accomplishment of predetermined objectives.
Management is both a science and an art.
Management is a group activity
Management principles are universal in nature
Management integrates human and other resources.

Scope of Management includes the following aspects:-

Subject-matter of Management
Management is considered as a continuing activity made up of major management functions like planning, organizing, leading
and controlling which itself is process (called Management Process).

Functional Areas of Management

- Financial Management: includes forecasting, cost control, management accounting, budgetary control, statistical control,
financial planning etc.
- Human Resource Management: covers the various aspects relating to the employees of the organisation such as recruitment,
training, transfers, promotions, retirement, terminations, remuneration, labour welfare and social security, industrial relations etc.

Management covers the following functional areas:-

- Financial Management: Financial management includes forecasting, cost control, management accounting, budgetary
control, statistical control, financial planning etc.
- Human Resource Management: Personnel / Human Resource Management covers the various aspects relating to the
employees of the organisation such as recruitment, training, transfers, promotions, retirement, terminations,
remuneration, labour welfare and social security, industrial relations etc.
- Marketing Management: Marketing management deals with marketing of goods, sales promotion, advertisement and
publicity, channels of distribution, market research etc.
- Production Management: Production Management includes production planning, quality control and inspection,
production techniques etc.
- Material Management: Material management includes purchase of materials, issue of materials, storage of materials,
maintenance of records, materials control etc.
- Purchasing Management: Purchasing management includes inviting tenders for raw materials, placing orders, entering
into contracts etc.
- Maintenance Management: Maintenance Management relates to the proper care and maintenance of the buildings, plant
and machinery etc.
- Office Management: Office management is concerned with office layout, office staffing and equipment of the office.

Management is an Inter-Disciplinary Approach

Though management is regarded as a separate discipline, for the correct application of the management principles, study of
commerce, economics, sociology, psychology, and mathematics is very essential. The science of management draws ideas and
concepts from a number of disciplines making it a multi-disciplinary subject.

Principles of Management
The principles of management are of universal application. These principles are applicable to any group activity undertaken for
the achievement of some common goals.

Management is an Agent of Change

The techniques of management can be improved by proper research and development.

The Essentials of Management

The essentials of management include scientific method, human relations and quantitative techniques.

MANAGEMENT AS SCIENCE, ART & PROFESSION

SCIENCE
- COLLECTION OF SYSTEMATIC KNOWLEDGE
 - CONTINUOUS STUDY, OBSERVATION AND EXPERIMENT
- CRITICALLY TESTED FROM TIME TO TIME
- GENERAL PRINCIPES
- UNIVERSAL APPLICABILITY
- CAUSE AND EFFECT RELATIONSHIP

Universally acceptance principles scientific principles can be applied in all situations, at all times and all places similarly
management principle can be applicable to all type of organisation
Experimentation and observation scientific principles are based on research, experimentation and logic management principles
have been developed through experiments and practical experiences eg remuneration
Cause and effect relationship principles of science relates cause and effect between different variables management establishes
relation between managers and employees employs paid well => more efficient work
Test of validity and predictability they stand the test of time –means it can be tested at any time or any no. of time management
principle can be tested for their validity with regards to clarity of thought and direction

MANAGEMENT AS SCIENCE, ART, & PROFESSION

ART
- PRACTICAL KNOW-HOW
- SKILLS
- CREATIVITY
- PERSONALISED NATURE
- MANAGING AS PRACTICE (TACKLING SITUATIONS).

Is management an art ? -practical knowledge -personal skill -creativity -perfection through practise

Practical knowledge -every arts require practical knowledge, -it is important to know practical applications of theoritical
principles simply obtaining a degree is not enough, manager should also know how to apply various principles in real situations
in his capacity as a manager

Personal skill all the theoritical base may be same for every artist each one has his own style and mode of interpratation every
manager has his own way of managing things based on his knowledge experience and personality

Creativity every artist has an element of creativity that lets him produce something that has never existed before management is
also creative in nature because it combines the concept of intelligence and imagination

 perfection through practice every artist becomes more and more proficient through constant practice learning is throug art of
trial and error initially but the application of management principles over the year makes him perfect

1conclusion  old saying that “manager are born” has been rejected in the favour of “managers are made”  science and art not
mutually exclusive but they are complementary to each other  management is the oldest of art and youngest of science 
management as science is the “root” and management as art is the “fruit”

PROFESSION
- SPECIALIZED KNOWLEDGE -FORMAL EDUCATION AND TRAINING
- SOCIAL OBLIGATIONS
- CODE OF CONDUCT
- REPRESENTATIVE ASSOCIATION

 Is management a profession ? -specialized knowledge -formal education and training -social obligations -code of conduct
-representative association

Specialized knowledge a profession must have systematic body of knowledge that can be used for development of professionals
a manager must have devotion and involvement to acquire expertise

Formal education and training an individual can enter a profession only after acquiring specific knowledge and skill (degree is
mandatory) in management also an individual has to acquire appropriate knowledge and training (degree is not mandatory)

 social obligations professionals are motivated in desire to serve society, social norms and value a manager is responsible not
only for his superior’s but also to society

Code of conduct members of a profession has to abide by the code of conduct which contain certain rules and regulations the
AIMA (All India management Association) has prescribed a code of conduct for managers but it has no take legal action

Aims code of conduct for managers formal education to degree level existence and strengthening of professional organisations
foundation and development of professional literature increased research activity supplying the discipline with new theoretical
frameworks new knowledge to deal with issues of technological development
Representative association for the regulation of profession the existence of representative body is a must ex:-institute of
chartered accountants of India but AIMA does not have any statutory powers to regulate the work of managers

Conclusion management is not a full pledged profession * no minimum qualifications are have been prescribed for managers * it
does not restrict the entry in managerial jobs *no management association has the authority to grant a certificate of practice
*managers are responsible to many groups such as shareholders employees and society *managers are known by their
performance and not mere degrees *the ultimate goal of business is to maximize the product and not social welfare

THE SLOGAN OF MANAGEMENT “HE WHO SERVES BEST ,ALSO PROFITS MOST”

MANAGEMENT AND ADMINISTRATION

Various views of management experts in this regard are:
1. BOTH ARE DIFFERENT
ADMINISTRATION MANAGEMENT

OLIVER Function of industry concerned with Function of industry

SHELDON determination of corporate policy, concerned
co-ordination of finance, production and distribution in the execution of policy
under the ultimate control of the executive. within the limits set up
by administration.

FLORENCE & A process of thinking A process of actual

TEAD operation

2. MANAGEMENT INCLUDES ADMINISTRATION - BRECH

Management as a generic term includes administration
 As per modern approach
- Top management - responsible for making decisions about the direction of the organization and establishing policies
- Middle management -responsible for translating the goals set by top management into specific details and see get them
done
-  First-line management -responsible for supervision and control of day to day activities
Thus at the top level more time is spent on administrative activities and as one moves down the organization, more time is spent
on managerial activities

Levels of Management
Is there a way to classify managers in organizations? In traditionally structured organizations (which are often pictured as a pyramid because more employees are
at lower organizational levels than at upper organizational levels), managers can be classified as first-line, middle, or top. (See Exhibit 1-1.) At the lowest level
of management, first-line managers manage the work of nonmanagerial employees who typically are involved with producing the organization’s products or
servicing the organization’s customers. First-line managers may be called supervisors or even shift managers, district managers, department managers, or office
managers. Middle managers manage the work of first-line managers and can be found between the lowest and top levels of the organization. They may have
titles such as regional manager, project leader, store manager, or division manager. In our chapter-opening dilemma, Lisa is a middle manager. As the general
manager, she’s responsible for how her restaurant performs, but also is one of about 60 general managers company-wide who report to someone at corporate
headquarters. At the upper levels of the organization are the top managers, who are responsible for making organization-wide decisions and establishing the
plans and goals that affect the entire organization. These individuals typically
have titles such as executive vice president, president, managing director, chief operating officer, or chief executive officer. Not all organizations get work done
with a traditional pyramidal form, however. Some organizations, for example, are more loosely configured with work being done by ever-changing teams of
employees who move from one project to another as work demands arise. Although it’s not as easy to tell who the managers are in these organizations, we do
know that someone must fulfil that role—that is, there must be someone who coordinates and oversees the work of others, even if that “someone” changes as
work tasks or projects change.

Mintzberg’s Managerial Roles

Interpersonal Roles
- The Figurehead: performs ceremonial duties. Examples: greeting visiting dignitaries, attending an employee’s wedding,
taking an important customer to lunch.
- The Leader: responsibility for the work of subordinates, motivating and encouraging employees, exercising their formal
authority.
- The Liaison: making contacts outside the vertical chain of command including peers in other companies or departments,
and government and trade organization representatives.

Informational Roles
- The Monitor: scans the environment for new information to collect.
- The Disseminator: Passing on privileged information directly to subordinates.
- The Spokesperson: Sharing information with people outside their units.

Decisional Roles
- The Entrepreneur: Seeks to improve the unit by initiating projects.
 - The Disturbance Handler: Responds involuntarily to pressures . Examples: a looming strike, a major customer gone
bankrupt, or a supplier reneging on a contract.
- The Resource Allocator: Decides who gets what.
- The Negotiator: Committing organizational resources in “real-time” with the broad information available from their
informational roles.
 

How Organizations Go Global

Strategic Alliances
Partnerships between and organization and a foreign company in which both share resources and knowledge in developing
new products or building new production facilities.

• Joint Venture
A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business
purpose.

• Foreign Subsidiary
Directly investing in a foreign country by setting up a separate and independent production facility or office.

IV. 1980s - Present

- Focusses on integrating people and technologies.

- Managers now may manage employees who are working from home or from anywhere; halfway around the world.
- Now, practically everyone in an organization is connected—wired or wireless—with devices no larger than the palm of
the hand. Just like the impact of the Industrial Revolution in the 1700s on the emergence of management, the
information age has brought dramatic changes that continue to influence the way organizations are managed.

Challenges of Modern Management & Modern Organizations

Highly Competent managers are always under the lookout by organizations for managing them
CII Institute of Logistics

Need for great mangers Universal Need for Management

Universality of Management
The reality that management is needed in all types and sizes of organizations at all organizational levels in all organizational
areas in all organizations, regardless of location

Customers, Innovation & Sustainability

Three key critical elements of modern time business
 1. The Importance of Customers
Customers: the reason that organizations exist
- Managing customer relationships is the responsibility of all managers and employees.
- Consistent high quality customer service is essential for survival.
- Customer Satisfaction Vs Customer Delight

2. The Importance of Innovation

Innovation
- Doing things differently, exploring new territory, and taking risks.
- Managers should encourage employees make use of any opportunities for innovation.

3. The Importance of Sustainability

Sustainability -
a company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic,
environmental, and social opportunities into its business strategies.

Changes Impacting the Manager’s Job

The Management Environment

External environment refers to factors, forces, situations and events outside the organization that affect its performance.

Components of the external environment

The term external environment refers to factors and forces outside the organization
that affect its performance. it includes several different components.

The economic component encompasses factors such as interest rates, inflation,

changes in disposable income, stock market fluctuations, and business cycle stages.

The demographic component is concerned with trends in population characteristics such as

age, race, gender, education level, geographic location, income, and family composition.

The political/legal component looks at federal, state, and local laws, as well as global laws
and laws of other countries. It also includes a country’s political conditions and stability.

The sociocultural component is concerned with societal and cultural factors such as
values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behaviour.

The technological component is concerned with scientific or industrial innovations.

And the global component encompasses those issues associated with globalization and a world
economy. Although all these components pose potential constraints on managers’ decisions
and actions, we’re going to take a closer look at two of them—the economic and
demographic aspects. Then, we’ll look at how changes taking place in those components
constrain managers and organizations. We’ll wrap up this section by examining environmental
uncertainty and stakeholder relationships.

Organizational Stakeholders

Stakeholders - any constituencies in the organization’s environment that are affected by an organization’s decisions & actions.

What Is Organizational Culture?

- Organizational Culture - The shared values, principles, traditions, and ways of doing things that influence the way
organizational members act.
- In most organizations, these shared values and practices have evolved over time and determine to a large extent, how
“things are done around here.”
- Implications:
Culture is a perception.
Culture is shared.
Culture is descriptive.
- Strong Cultures : Are cultures in which key values are deeply held and widely shared

Managerial Decisions Affected by Culture

Planning
• The degree of risk that plans should contain
• Whether plans should be developed by individuals or teams
• The degree of environmental scanning in which management will engage

Organizing
• How much autonomy should be designed into employees’ jobs
• Whether tasks should be done by individuals or in teams
• The degree to which department managers interact with each other

Leading
• The degree to which managers are concerned with increasing employee job satisfaction
• What leadership styles are appropriate
• Whether all disagreements—even constructive ones—should
be eliminated
Controlling
• Whether to impose external controls or to allow employees to control their own actions
• What criteria should be emphasized in employee performance evaluations
• What repercussions will occur from exceeding one’s budget

Dimensions of Organizational Culture

Current Trends and Issues

Globalization
Management in multi-international organizations
Political and cultural challenges of operating in a global market
 Working with people from backlash
 Movement of jobs to countries with different cultures
 Coping with anti-capitalist low-cost labour
Ethics
Increased emphasis on ethics education in college curriculums
Increased creation and use of codes of ethics by businesses

How Managers Can Improve Ethical Behaviour in An Organization

1. Hire individuals with high ethical standards.
2. Establish codes of ethics and decision rules.
3. Lead by example.
4. Set realistic job goals and include ethics in performance appraisals.
5. Provide ethics training.
6. Conduct independent social audits.
7. Provide support for individuals facing ethical dilemmas.

Workforce Diversity
Increasing heterogeneity in the workforce
More gender, age, minority, ethnic, and other forms of diversity in employees

Social Responsibility/CSR
A business’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good
for society.

Different Types of Global Organizations

- Multidomestic Corporation- Is an MNC that decentralizes management and other decisions to the local country.
- Global Company- Is an MNC that centralizes its management and other decisions in the home country.
- Transnational Corporation (Borderless Organization)- Is an MNC that has eliminated structural divisions that impose
artificial geographic barriers and is organized along business lines that reflect a geocentric attitude.

MANAGEMENT AND ADMINISTRATION

3. NO DISTINCTION - FAYOL
- Cannot distinguish the activities
- Administration: higher executive functions in government and other social institutions
- Management :used for the same functions in the business sector
 MANAGEMENT AND ADMINISTRATION
There is lack of concurrence among management writers over the meaning and use of the words management and
administration.

One group of management writers feels that administration involves “thinking”. It is a top level function that centres around the
preparation of plans, rules, policies and objectives of an organization. Whereas management involves “doing” and is a lower
level function, concerning with execution and direction of policies and operations. Hence, administration is more important at
lower levels.
Another group of management writers feels management as comprehensive generic term that includes administration.
Management is regarded as comprehensive generic function covering entire process of planning, organizing, directing and
controlling. Administration is regarded as a branch of management that comprises of two functions – planning and controlling.
According to them, the function of management is divided into two categories – the upper level management usually called as
administrative management and the lower level management which is termed as operative management.

According to Peter Drucker, the basic difference between management and administration lies in use of these terms in different
fields. According to him, managing of business enterprises is called management and managing nonbusiness organizations is
called administration. Hence financial performance plays key role in management. But in managing non business organizations
like educational institutions, government offices, military etc., administration is more priority than financial decisions.

Administration is the function in industry concerned with determination of the corporate policy, the coordination of finance,
production and distribution, the settlement of compass of the organization under the ultimate control of the executives”.
“Management is the function in industry concerned with the execution of polity within the limits setup by the administration and
the employment of the organization for the particular objects set before it”. (Oliver Sheldon)
group.

“Administration is primarily the process and the agency used to establish the object or purpose which an undertaking and its staff
are to achieve, secondarily, administration has to plan and stabilize the broad lines of principles which will govern action. These
broad lines are in turn called policies. Management is the process and the agency through which the execution of policy is
planned and supervised”. (G.E. Milward)

“Administration is that phase of business enterprise that concerns with overall determination of institutional objectives and the
policies necessary to be followed in achieving those objectives. Administration predetermines the specific goals and lays down
the broad areas within which those goals are to be attained. ministration is a determinative function, management on the other
hand is an executive function – which is primarily concerned with the carrying out of the broad policies laid down by the
administration. (William R. Spriegal)

Thus administration is a “thinking” function and management is a “doing” function. According this concept, managers get
salary and administration staff get dividends.
Administration determines the policies upon which the enterprise is to be conducted while the function of management is to
carry out the policies that are laid down by the administrative
The differences between administration and management are listed below:

Environmental Uncertainty Matrix