BUSINESS STUDIES Nature and Significance of Management

Nature and Significance of Management

Topics Covered
Concept of Management
Characteristics of Management
Objectives of Management
Importance of Management
Nature of Management
Levels and Functions of Management
Coordination

Concept of Management

Management is a process wherein various activities and functions are performed to achieve the various
goals and objectives of an organisation in an effective and efficient manner.

According to Robert L. Trewelly and M. Gene Newport, ‘Management is the process of planning,
organising, actuating and controlling an organisation’s operations to achieve coordination of the human
and material resources essential in the effective and efficient attainment of objectives.’

The definition of the term management comprises three important concepts:

 Process refers to the performance of various functions of the management, namely planning,
organising, staffing, directing and controlling.
 Effectiveness implies successfully completing the given task in the stipulated time. It focuses on
the end result. On the other hand, efficiency implies completing the task with minimum possible
resources or more benefits can be derived with the use of the given resources. For an organisation,
both effectiveness and efficiency are equally important.
 While effectiveness implies actual achievement of goals, efficiency implies reduction in cost.
However, in the achievement of one, the organisation has to often compromise on the other. In
other words, if it aims at effectiveness, it may have to compromise on efficiency to some extent and
vice versa.

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BUSINESS STUDIES Nature and Significance of Management

Characteristics of Management

1) Goal-oriented process: Management always aims at achieving the goal of the organisation. For
example, if the plan of a company is to sell 100 flats in a month, then the company will chalk out a
plan, motivate its employees and organise its resources keeping in mind its goals.
2) Pervasive: Management is pervasive in the sense that various functions of management are
performed by every organisation irrespective of its nature, size, characteristics and
geographical location. In other words, every organisation needs management. For example, a
corporate firm must be managed as much as a non-profit organisation. Similarly, an organisation in
India must be managed as much as an organisation in Japan. The only difference lies in the way the
management is practised by different organisations.
3) Continuous process: Management is said to be a continuous process in the sense that managers
perform several functions simultaneously. However, it may happen that at a particular point of
time, one function is accorded greater priority than the other. For instance, on a certain day,
greater time is devoted towards planning, while on another day, the controlling function is given
priority.
4) Dimensions of Management
Management is regarded as multi-faceted as it involves numerous dimensions which render
complexity to the process of management. Three main dimensions of management:
 Managing work: An organisation exists with the objective of performing a defined function.
Management helps in translating this work in terms of the objectives and goals which are to
be achieved. It also defines how they are to be achieved.
 Managing people: It is the people in the organisation who work towards the goals and
objectives defined by the organisation. Accordingly, managing people forms another important
dimension of management.

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BUSINESS STUDIES Nature and Significance of Management
 Managing operations: In every organisation, there is a production process wherein the inputs
are converted to the desired product or service. Management is required to ensure that
production operations are carried out smoothly.

 Every organisation exists for  Management deals with  Combination of management

doing some work
 Management converts this
work to goals to be
accomplished
 It provides ways to achieve
goals in terms of
 Solving problems
 Making decisions
 Preparing budgets
 Assigning responsibilities
employees as individuals as
well as a group of people
 Management needs to take
care of employees
 It also has a task to unite the
efforts of individuals towards
the accomplishment of
organisational goals
of work and management of
people
 It involves decision making in
terms of
 Work to be done
 Way/method of doing
work
 Allocating work

5) Group activity: Management is a group activity as it unifies individual effort towards the
achievement of a common organisational goal.
6) Dynamic: Management is dynamic in the sense that it must continuously adapt to the changing
business environment. As the economic, social or political environment changes, the goals and
objectives of the organisation must also change accordingly.
7) Intangible: Management cannot be seen but its presence can be felt. Indicators of good management
can be felt by seeing proper coordination in the working environment, happy and satisfied
employees and achievement of targets/goals.

Objectives of Management

Objectives Meaning
 Organisational objective of management refers to the
objective of using various resources of the
organisation optimally and efficiently such that they
yield maximum advantage. In other words, it must
be able to fulfil the economic objective. .
 3 important organisational objectives:
o Survival: The need of every organisation is to
survive and exist in the competitive market for a
longer duration of time.
o Profit: Every organisation is able to earn sufficient
amount of profit.
o Growth: Every organisation must grow and
expand their business activities.
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BUSINESS STUDIES Nature and Significance of Management

 Social objective is the creation of benefits for society

or doing something for society. Organisation being
a part of society must give back to it in the sense that
it creates economic value for it.
 Social objectives include
Include creation of benefits o Providing quality products at reasonable prices
for society o Using eco-friendly methods of production
o Giving employment opportunities to the weaker
section of society
o Providing basic facilities to employees
o Avoiding unfair trade practices such as charging
higher price and selling adulterated goods
o Creating various social amenities such as
schools, hospitals etc.
 Management must fulfil the personal objectives of
individuals so that employees feel satisfied and
motivated and work wholeheartedly for the
organisation.
 Individual objectives are
o Competitive salary
o Personal growth & development
o Peer & social recognition
o Good & healthy working conditions

Importance of Management

1) Achievement of goals: An organisation requires management for the achievement of its various
goals and objectives. The management unifies the activities and efforts in an organisation
towards the achievement of common goals and objectives.
2) Efficiency in work: Through management in the form of planning, organising, directing, staffing and
controlling, efficiency and productivity can be increased in the organisation.
3) Creating dynamism: Every organisation must adapt itself to the continuously changing business
environment. Management helps employees to comfortably adapt to these changes.
4) Achievement of personal objectives: In addition to achieving organisational goals, management
helps in achieving personal goals of individuals in the organisation. This is done with motivation
and leadership by managers.
5) Serving society: In the process of achieving various organisational goals, the management helps in
the development of society as well. For instance, producing high-quality goods and services,
creating employment opportunities, adopting efficient and environment-friendly techniques of
production, and helping society to grow and develop.

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BUSINESS STUDIES Nature and Significance of Management

Nature of Management

1) Management as a Science
As a science, management fulfils the following criteria:
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BUSINESS STUDIES Nature and Significance of Management
 Systematic body of knowledge: Various disciplines of science are based on a specified and
defined body of knowledge which is based on the cause and effect relationship. Similarly,
management has a host of theories and principles which were developed over the years. In
addition, similar to other disciplines, management has its own unique vocabulary.
 Theories based on experimentation: The principles and theories of science are developed with
continuous observation and experimentation over the years. Similarly, the principles of
management have also been developed by continuous observations and experiments over
the years in varied situations. However, unlike science, no exact cause and effect relationship can
be established in management. This is because management primarily deals with human
behaviour which is dynamic and cannot be predicted. So, the outcome of the theories and
principles cannot be predicted accurately.
 Universal validity: The principles of science are universally valid. Similarly, the theories and
principles of management are also valid to some extent (if not universally valid). The theories
and principles act as guidelines for managerial actions in different situations.

2) Management as an Art
Criteria for management to be called an art:
 Existing literature: Similar to various other art forms such as music and dance, management also
has an existing body of knowledge in the form of various theories and principles. For example,
Henry Fayol’s Principles of Management and Taylor's Scientific Management Theory.
 Dynamic application: Art is the application of the knowledge in a personalised and creative
manner. For example, the basic steps in a dance form are performed by each dancer in a unique
creative manner. Similarly, managers apply the basic principles and theories of management
in a creative manner according to the need of the situation.
 Practice and creativity: Under art, there is continuous practice and innovation on the part of the
artists. This gives rise to unique interpretations of similar situations. Similarly, in management, with
continuous practice, the manager uses his own creativity and imagination to formulate new
and unique ways to deal with a situation.

3) Management as a profession
Basic features based on which management can be regarded as a profession:
 Systemised knowledge: Professionals require a systematic body of knowledge in order to acquire
the specialised skills of a profession. Similarly, management can be called a discipline in the sense
that it has a systemised and well-defined body of knowledge. One can gain this knowledge
through colleges, institutes and books. Nowadays, various institutions are set up primarily with the
objective of providing education in management. So it can be asserted that this feature of
profession is present in management.
 Professional association: Similar to other professions (For example, chartered accountants are
affiliated to the Institute of Chartered Accountants of India), management is also affiliated to a
professional association which regulates the functions of its members. They define the
ethical code of conduct for managers and regulate their activities. For example, in India, AIMA (All
India Management Association) regulates the functioning of its member managers. However, it
is not mandatory for a manager to be a member of the association.
 Restriction to entry: Unlike other professions, no specific qualifications or degrees are
mandatorily required to be a manager; however, preference is always given to those who
possess professional knowledge in terms of degrees and diplomas. In a way, this helps in
restricting the entry of people in management as a profession.

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BUSINESS STUDIES Nature and Significance of Management
 Code of conduct: All professionals are bound by a code of conduct of its profession. For example,
company secretaries are guided by the code of conduct laid down by the Institute of Company
Secretaries of India. Similarly, in management as a profession, there is an ethical code of conduct
which guides the behaviour of its members. Many management associations like AIMA (All India
Management Association) lay down an ethical code of conduct. However, it is not mandatory for a
manager to be a member of such organisations.
 Motive to serve society: Nowadays, profit maximisation is not the only goal of management,
rather they also strive to serve society. This is done by producing good quality goods and
charging reasonable prices.

Levels of Management

Levels Meaning and its functions Example

Top Level Management
Middle Level Management
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Includes managers from different o Chairman
functional areas and they have o Board of Directors
maximum authority o Managing Director
Functions o General Manager
 Formulates the objectives of the o President
organisation o Vice-President
 Frames plans and policies to o Chief Executive Officer
achieve the set objectives (CEO)
 Organises activities to be o Chief Operating Officer
performed by persons at the (COO)
middle level o Chief Financial Officer (CFO)
 Is responsible for survival &
growth of the organisation
 Arranges finance and other
resources to carry out day-to-day
activities
 Maintains contact with the outside
world
Acts as a link between the top and o Purchase Department Head
lower levels of management o Sales Department Head
Performs the functions of the top o HR Manager
level for their respective departments o Marketing Manager
Functions o Operations Manager
 Interprets the policies framed by o Regional Manager
top level management to lower level o Production Manager
management o Finance Manager
 Organises activities for their o Plant Superintendent
respective departments o Divisional Manager
 Recruits/selects employees for o Executive Officer
their respective departments
 Motivates employees by providing
them with incentives
 Controls employees
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BUSINESS STUDIES Nature and Significance of Management
 Cooperates with other departments
for achieving organisational
objectives
 Implements plans framed by top
management
Lower Level Management Performs the work as per the o Supervisors
directions received by top and o Superintendent
middle levels of management. They o Foreman
have limited authority. o Clerk
Functions o Section Officer
 Passes the problems and o Sub-department Executive
grievances of workers to middle
level management
 Maintains proper
working/environmental conditions
 Ensures safe and secure work
environment for workers
 Helps middle level managers in
recruitment, selection,
appointment and promotions of
workers
 Communicates with workers,
welcoming suggestions and
feedback
 Maintains quality standards of
output
 Develops team spirit in employees
and boosts their morale

Functions of Management

The terms planning, organising, directing, staffing and controlling are the primary functions of
management which every manager performs. It must be remembered that these functions are
performed simultaneously, the only difference being the priority given to each function at a particular point
of time. Moreover, these functions are interrelated in the sense that one cannot be completed without the
other. For example, for organising to be appropriate, it is necessary that the required planning is done.
Similarly, for direction to be successful, correct staffing is necessary.
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BUSINESS STUDIES Nature and Significance of Management
1) Planning: Planning means taking decisions regarding what is to be done, by whom and how. In
other words, it involves the setting of goals and objectives and devising suitable means of achieving
them in an effective and efficient manner. Planning forms the stepping stone for effective
management.
2) Organising: After planning, the next step in management is organising. It involves identifying the
various tasks and resources which would be required for the implementation of the plans
framed. Under the organising function, the manager assigns the duties and tasks to various groups
and departments. Authority relationships are also defined.
3) Staffing: Staffing refers to hiring appropriate personnel according to the requirements of the
work. Staffing includes functions such as hiring, training and development of people.
4) Directing: Directing involves guiding the people in various tasks and activities in the
organisation. It comprises two important aspects—motivation and leadership. Motivation involves
providing the right encouraging environment for the personnel to work towards the goals and
objectives of the organisation. Leadership, on the other hand, implies effectively getting the work
done by appropriately praising and providing criticism.
5) Controlling: It is very important to ensure that the work is carried out in the right direction towards the
set goals and objectives. Controlling involves setting standards for tasks and measuring the actual
performance against the set standards. It ensures that there is minimum diversion from the set
targets. In addition, it involves taking appropriate corrective measures in case of any deviation from
the standards.

Coordination

Coordination refers to the process through which the various functions of management are
synchronised towards the common goals and objectives of the organisation. It is said to be the
essence of management. It acts as a binding force in the organisation in the sense that it unifies the
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BUSINESS STUDIES Nature and Significance of Management
efforts of various individuals in the organisation towards the achievement of common goals and
objectives of the organisation.
According to E.F.L. Brech, ‘Coordination is balancing and keeping together the team by ensuring
suitable allocation of tasks to the various members and seeing that the tasks are performed with harmony
among the members themselves’.

Features of Coordination
1) Integrates group efforts: Unification of individual effort from different backgrounds and with different
styles of working in one common direction.
2) Ensures unity of action: All the departments in an organisation coordinate with each other so that
the goal of the organisation can be achieved.
3) Continuous process: Coordination is an ongoing process, starts at planning and continues till
controlling.
4) All-pervasive function: Coordination is required at all levels and in all departments so that all the
functions can be performed as activities of various departments are interdependent on each other.
5) Responsibility of all managers: Top level managers coordinate plans and policies of the
organisation, middle level managers coordinate departmental activities.
6) Deliberate function: Coordination is deliberately performed by all managers as managers always try
to coordinate the activities of the organisation.

Importance of Coordination in Management

1) Size of the organisation: When the size of the organisation increases, the need for coordination
also increases. This is because many people are working in a large organisation and individuals have
their own requirements and objectives. So, it is necessary to bring all their efforts jointly to achieve the
common goal of the organisation. In this situation, organisational efficiency is important to harmonise
the objectives of employees and employers through proper coordination.
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BUSINESS STUDIES Nature and Significance of Management
2) Functional differentiation: In an organisation, there are different inter-linked and inter-related
departments. Coordination is required to bring together the activities of different departments
towards one common organisational goal. Also, it helps to minimise the differences among
departments.
3) Specialisation: As there are number of specialists working in the organisation, employees work in
their own way. This results in chaos and misunderstanding in the work place. So, coordination helps in
coordinating the activities of all the specialists in the right direction and enables the
achievement of the organisational goal.

Management in the 21st Century

The management in the 21st century is a global management. The entire world is a global village where
exchange of technologies, goods, services and labour among countries takes place.

Role as a Global Manager

 In the capacity of country manager: Capacity to meet international bodies, clients and government
offices for international operations
 In the capacity of functional manager: Skills to select the right techniques, resources and
manpower across the globe
 In the capacity of business leader: Able-bodied to make changes in the business as per
developments and trends in the global environment

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