Course Title- Principles of Management

Course Code- SLLCH THM 01 01 04 C 4004

UNIT-1

Meaning of Management

In order to satisfy his/her wants, a person has to perform numerous activities. An individual
alone cannot perform all the necessary activities. Therefore, human beings join together in
the form of groups and organizations. Every organization (e.g., a family, a college, a business
enterprise, an army, school etc.) is basically a group of people seeking to achieve some
common objectives. A central organ or agency is required to coordinate the activities and
efforts of various individuals working together in an organization so that they can work
collectively as a team. Such an organ is called management.

Definition of Management

According to Harold Koontz – Management is the art of getting things done through others
and with formally organized groups.

According to F.W Taylor- Management is the art of knowing what you what to do and then
seeing that they do it in the best and cheapest way.

According to Koontz and O’Donnell- Management is the creation and maintenance of an

internal environment in an organization where individuals, working in groups, can perform
efficiently and effectively towards the achievement of group goals.

According to Peterson and Plowman- Management may be defined as the process by means
of which the purpose and objectives of a particular human group are determined, clarified and
effectuated.

Nature/Features/Characteristics of Management

1. Management is Universal- Management is required in every form of group activity

whether it is a family, a club, a government, an army or a business enterprise. The
fundamental principles of management are applicable in all areas of organized effort.
2. Management is purposeful- Management exists for the achievement of specific
objectives. It is a means towards the accomplishment of predetermined goals. All
activities of management are goal-oriented.
3. Management is a social process- Management is done by people, through people
and for people. It is a social process because it is concerned with interpersonal
relations. Human factor is the most important element in management.
 4. Management is multidisciplinary- Management has to deal with human behavior
under dynamic conditions. Therefore, it depends upon wide knowledge derived from
several disciplines like engineering, sociology, economics, mathematics etc.
5. Management is a continuous process- Management is a dynamic and an on going
process. The cycle of management continues to operate so long as there is organized
action for the achievement of group goals.
6. Management is Intangible- Management is an unseen or invisible force. It cannot be
seen but its presence can be felt everywhere in the form of results. However the
managers who perform the functions of management are very much tangible and
visible.
7. Management is situational- Efficient management is always situational or
contingency management because there is not one best way of doing things. A
successful manager must take into account situational differences.
8. Management is essentially an executive function- It deals with the active direction
and control of the activities of people to attain predetermined objectives. Management
is a technique by means of which the objectives of a human group are determined,
clarified and accomplishes.
9. Management is an Art as well as Science- Management contains a systematic body
of theoretical knowledge as ell as the practical application of such knowledge.
10. Group Effort – Management is a force to direct the activities of human group
engaged in the realization of a collective aim. The relationship of management with
the collective effort is because of the fact that in order to achieve the predetermined
objectives of any enterprise it is absolutely essential to depend on the collective effort
of a group rather than the efforts of any particular individual.

Importance/Purpose of Management

1) Optimum use of resources: management facilities optimum utilization of available

human and physical resources, which leads to progress and prosperity of a business
enterprise. Even wastage of all types are eliminated or minimized.
2) Achievement of group goals- Management enables an enterprise to achieve its
desired objectives through proper planning and control. It decides what should be
done and how. It lays down the long term and short term goals keeping in mind the
resources of the enterprise.
3) Competitive strength: Management develops competitive strength in an enterprise.
This enables an enterprise to develop and expand its assets and profits.
4) Motivates employees: It motivates employees to take more interest and initiative in
the work assigned and contributes for raising productivity and profitability of the
enterprise.
5) New techniques: Management facilities the introduction of new machines and new
methods in the conduct of business activities. It also brings useful technologies
developments and innovation in the management of business activities.

6) Effective management: Society gets the benefits of efficient management in terms of

industrial development, justice to different social groups, consumer’s satisfaction and
welfare and proper discharge of social responsibilities.

7) Expansion of business: Expansion growth and diversification of a business unit are

possible through efficient management. It creates good corporate image to a business
enterprise.

8) Stability and prosperity: Efficient management brings success stability and

prosperity to a business enterprise through cooperation and team spirit among employees.

9) Human Development-Management is not simply the direction of things but the

development of men. It improves the personality and calibre of people to raise their
efficiency and productivity.

10) Effective use of managers: Management ensures effective use of managers so

that the benefits of their experience, skills and maturity are available to enterprise.

Scope of Management

1) Production Management
2) Marketing Management
3) Financial Management
4) Human Resource Management

1) Production Management-Production function so as to produce the right goods in the

right quantity at the right time and at the right cost. It consists of the following
activities: -
a) Designing the product
b) Location and layout of plant and building
c) Operations of purchase and storage of raw materials
d) Planning and control of factory operations
e) Repairs and maintenance
f) Inventory control and quality control
g) Research and development

2) Marketing Management- It refers to the identification of consumers’ needs and

supplying them the goods and services, which can satisfy those wants. The activities
are as follows: -
a) Marketing research to determine the needs and expectations of consumers
b) Planning and developing suitable products
c) Setting appropriate prices
d) Selecting the right channels of distribution
e) Promotional activities like advertising and salesmanship to communicate with
customers.

3) Financial Management: - Financial management seeks to ensure the right amount

and types of funds to business at the right time and at a reasonable cost. The activities
are as follows: -
 a) Estimate the volume of funds required for long term and short term needs of
the business
b) Selecting the appropriate sources of funds
c) Raising the required funds at the right time
d) Ensuring proper utilization and allocation of raised funds
e) Administration of earning

4) Human Resource Management- It involves planning, organizing, directing and

controlling the procurement, development, compensation, maintenance etc. of the
human resources in an enterprise. It consists of the following activities: -
a) Human resource planning
b) Recruitment
c) Selection
d) Training and Development
e) Performance appraisal
f) Compensation and promotion
g) Employee services and benefits
h) Maintaining Personnel records.

Levels of Management

1. Managerial or the Top Level Management: This level consists of the board of directors
and managing director. It is the supreme source of power since it manages the policies and
procedures of an entity. Their main responsibility lies in planning and coordinating. The roles
and responsibilities of this ‘creamy’ level can be summed up as follows:

(a). It is at this level that all the objectives and major policies are laid down.
(b). Instructions are given for preparing the necessary budgets for various departments,
schedules and policies.
(c). Preparation of premeditated plans and policies are done at this level.
(d). Appointment of executives at central level or departmental heads.
(e). Since it consists of Board of Director the top administration is accountable towards the
shareholders for performance of the organization.
(f). Harmonization and control are the two major roles played by the top management.
(g). It guides the organization in the right direction towards achieving the goals and
objectives.

2. Executive or Middle Level Management: The line and departmental managers form this
level of management. These people are directly accountable to the top management for
functioning of their respective departments. Their main role comes under the directional and
managerial functions of an organization. The roles of managers at this level are as follows:

(a). The main role lies in the implementation of policies and plans as per the directives of the
top management.
(b) Preparing plans for the sub units of their respective departments.
(c) Actively contribute in guidance and employment of supervisory level of management.
(d) Their duty is to understand and elucidate the policies of the top management to the lower
management.
(e) Bringing together the activities within the department is another role at this level of
management.
(f) Assessment of performance of junior managers.
(g) Timely and important reports or data to be sent to the top management.
(h). Motivation of supervisory managers is a vital role in this level of management.

3. Supervisory or Operative Level Management: This level constitutes mostly of

supervisors, foremen and first-line managers. The main role of these people is:

(a) Handing over jobs or responsibilities to a variety of workers.

(b) Guidance towards day-to-day activities of the organization.
(c) These managers are directly responsible for the quality and amount of production.
(d) They act as mediators in communicating the problems of workers and also undertake
recommending solutions to a higher level of organization.
(e) They take stock of the machines and material required for the work to be done.
(f) They are the role models for the workers as they are directly and constantly in touch with
them.
(g) It is their duty to uphold discipline and decorum in the organization.

Functions of Management

1. Planning

2. Organizing
 3. Staffing

4. Directing

5. Controlling

1. Planning- Planning is the most basic or primary function of management. It proceeds

with other functions because the manager plans before he acts. Planning involves
determining the objectives and selecting a course of action to achieve them. It implies
looking ahead and deciding in advance what is to be done, when and where it is to be
done, how and by whom it is to be done.
2. Organizing- Once plans are formulated, the next step is that of organizing.
Organizing is the process of establishing a harmonious authority-responsibility
relationship among the members of the enterprise. The network of authority
relationships is known as organizational structure. Such a structure serves as the
framework within which people can work together effectively for the accomplishment
of common objectives.
3. Staffing- Staffing is the process of filling all positions in the organization with
adequate and qualified personnel. Staffing consists of manpower planning,
recruitment, selection, training, compensation, integration and maintenance of
employees. Staffing function has become important with the growing size of an
organization.
4. Directing- Directing is the managerial function of guiding, supervising, motivating
and leading people towards the attainment of planned targets of performance. Even
after staffing the work will not start so long as they do not know for what work they
have been recruited in the organization and the manager through the medium of
communication tells them as to what is expected from them or what functions they are
expected to perform. Once the employees start their work it is the duty of the manager
to give them good leadership. When under the leadership of the manager the
employees move ahead, he is supposed to supervise them and solve their problems at
work. After this, it becomes the responsibility of the manager to motivate the
employees so that they work with zeal and dedication. In this way, four activities are
included in the function of directing.
I. Supervision- Supervision is an essential element of directing function of
management. It means observing the subordinates at work to see that they are working
in accordance with plans and to help them in solving their problems.
II. Communication- This is a process of passing information and making it understand
from one person to another. A manager has constantly to tell his subordinates as to
what they are to do, how they are to do it and when they are to do it.
III. Leadership- Leadership has an important role in directing. A manager guides his
subordinates through leadership and impresses their conduct also. The important
function of leadership includes directing the work of subordinates, unifying their
 efforts and motivating every person in the attainment of the objectives of the
organization.
IV. Motivation- Motivation means inspiring the employees of the organization in the
work of achieving its objectives. Among the various resources of production, man is
the only active resource that provides movement to the material resources. If a man
becomes lethargic or inactive all other resources automatically become inoperative. It
is, therefore, necessary that human resources should be motivated to achieve
organizational objectives.
5. Controlling- Controlling is the last but very important function of management.
Under controlling managers ensure whether the work is being done according to plans
or not and whether the quality and amount of work are as per pre-determined
standards. By comparing the actual results with the pre-determined standards efforts
are made to find out variations. Then corrective action is taken in respect of negative
variations so that the difference between the results obtained and the results desired is
reduced to the minimum possible extent.

Process of Management

Traits/Attributes/Qualities of a Successful Manager

1. Communication Skills- This includes both written and spoken communication,
including public speaking. A good manager understands the importance of clear
communication, meaning that his or her instructions are always specific and
unambiguous, presentations are always well prepared and delivered and feedback
 is constructive, frequent and effective.

2. Self-Motivation- As the manager, the onus is on you to motivate your team – this
is simply not going to happen if you are unable to motivate yourself.
Maintaining a positive outlook is vital, especially on bleaker days.

3. Flexibility- “The only constant changes.” This saying, make of it what you will, is
particularly relevant to management. One thing you can be certain of as a manager
is that you will be required to adapt to change regularly and without warning –
how well you adapt to this change is what is important.

4. Delegation- Managers with an “I’m the only one who can do this task
properly” attitude soon learn that that’s the quickest way to go crazy with stress.
Part of being a good manager is learning to trust your team enough to delegate
work to them, as well as knowing when and what to delegate.

5. Industry Knowledge- It is essential for a good manager to keep on top of

industry-related news and developments, both so s/he can work more effectively
in his or her industry and also facilitate better networking and relationship
building,

6. Confidence- Managers are decision-makers. This means a manager needs to be

able to make decisions with confidence, lead with confidence and stand by his or
her convictions. Any team would find difficulty working with a manager who
seems unpredictable and unsure of himself, just as conversely teams as a whole
become more confident with a strong leader.

7. Reliability- Are you dependable? Can your team, including juniors and

superiors, rely on you? This is a vital trait that any good manager should have.

8. Mediation -As a manager, you will be required to resolve disputes in the

workplace. Are you capable of remaining objective? Can you smooth over issues
before they turn into disputes?

9. Implementing Training- A good manager improves his workforce (both as a

whole and individually) by implementing training to increase skill sets, improve
cohesion among workers and tackle relevant problems within the workplace. Not
only does training create a more skilled workforce but it also boosts morale.

10. Organization-Being organized, in terms of projects, your staff, goals etc. is

important for any manager. Without organization, you will be unable to plan
effectively, execute goals or measure your success/failure.
 Managerial Roles

Mintzberg has identified ten roles of managers which are grouped into three categories.

Interpersonal, Informational and Decisional

1. Interpersonal Roles
a) Figurehead- In this role, a manager performs symbolic duties required by the
status of his office. Making speeches, bestowing honors, welcoming official
visitors, distributing gifts to retiring employees
b) Leader- This role defines the manager’s relationship with his own subordinates.
The manager sets an example, legitimizes the power of subordinates and brings
their needs in accord with those of his organization.
c) Liaison- It describes a manager’s relationship with the outsiders. A manager
maintains mutually beneficial relations with other organizations, governments,
industry groups.

2. Informational Roles
a) Monitor- It implies seeking and receiving information about his organization and
external events. An example is picking up a rumor about his organization.
b) Disseminator- It involves transmitting information and judgements to the members of
the organization. The information relates to internal operations and the external
environment. A MANAGER CALLING A STAFF MEETING AFTER A BUSINESS
TRIP IS AN EXAMPLE
c) Spokesman- In this role, a manager speaks for his organization. He lobbies and
defends his enterprise. A manager addressing the trade union is an example.

3. Decisional Roles
a) Entrepreneur- It involves initiating change or acting as a change agent. For example,
a manager decides to launch a feasibility study for setting up a new plant.
b) Disturbance Handler- This refers to taking charge when the organization faces a
problem or crisis. E.g., a strike, feud between subordinates’ loss of an important
customer. A manager handles conflicts, complaints and competitive actions.
c) Resource Allocator- In this role a manager approves budgets and schedules, sets
priorities and distributes resources.
d) Negotiator- As a negotiator, a manager bargains with suppliers, dealers, trade unions,
agents etc.
Managerial skills

According to professor Robert kartz, all managers require three managerial skills. However,
the degree of these skills required varies from the level of management and from organization
to organization.

1. Technical Skills

Technical skills refer to the ability and knowledge in using the equipment, techniques and
procedures involved in performing specific tasks. These skills require specialized knowledge
and proficiency in the mechanics of a particular job. Ability in programming and operating
computers is, for instance, a technical skill.

There are two things a manager should understand about technical skills

In the first place, he must know which skills should be employed in his particular enterprise
and be familiar enough with their potential to ask discerning questions of his technical
advisers.

Secondly, a manager must understand both the role of each skill employed and the
interrelationships between the skills.

2. Human Skills

Human skills consist of the ability to work effectively with other people both as
individuals and as members of a group. These are required to win the co-operation of
others and to build effective work teams. An awareness of the importance of human skills
should be part of a manager’s orientation and such skills should be developed throughout
the career.
 3. Conceptual Skills

Conceptual skills comprise the ability to see the whole organization and the
interrelationships between its parts. Such skills help the manager to conceptualize the
environment, analyze the forces working in a situation and take a broad and foresighted
view of the organization.

A manager also needs these extra skills.

4. Diagnostic Skills

Diagnostic skills include the ability to determine, by analysis and examination, the nature
and circumstances of a particular condition. It is the ability to cut through unimportant
aspects and quickly get to the heart of the problem e.g., logical thinking, analytical
reasoning and creativity.

5. Communication skills- Communication skills are required equally at all three levels
of management. A manager must be able to communicate the plans and policies to the
workers. Similarly, he must listen and solves the problems of workers. He must
encourage free flow communication in the organization.
6. Leadership skills- Leadership skill is the ability to influence human behaviour. A
manager requires leadership skills to motivate the workers. These skills help the
manager to get the work done through workers.
7. Problem-solving skills- A manager should know how to identify a problem. He
should also possess the ability to find the best solution for solving any specific
problem. This requires intelligence, experience, and up-to-date knowledge of the
latest developments.
8. Decision-making skills- Decision-making skills are required at levels of
management. However, it is required more at the top level of management. A
manager must be able to take quick and correct decisions. The success or failure of a
manager depends upon the correctness of his decisions.

Social Responsibility of Business

Definition of Social Responsibility

According to Keith Davis – Social responsibility is the obligation of the decision-makers to

make decisions that protect and improve the welfare of the society as a whole along with their
own interests.

Why should businesses be socially responsible?

Social responsibility is a voluntary effort on the part of business to take various steps to
satisfy the expectation of the different interest groups. As you have already learnt, the interest
groups may be owners, investors, employees, consumers, government and society or
community. But the question arises, why should the business come forward and be
responsible
towards these interest groups. Let us consider the following points:

1. Public Image - The activities of business towards the welfare of the society earn
goodwill and reputation for the business. The earnings of business also depend upon the
public
image of its activities. People prefer to buy products of a company that engages itself
in various social welfare programmers. Again, good public image also attracts honest
and competent employees to work with such employers.

2. Government Regulation - To avoid government regulations businessmen should

discharge their duties voluntarily. For example, if any business firm pollutes the
environment it will naturally come under strict government regulation, which may
ultimately force the firm to close down its business. Instead, the business firm should
engage itself in maintaining a pollution-free environment.

3. Survival and Growth -Every business is a part of society. So, for its survival and
growth, support from society is very much essential. The business utilizes the available
resources like power, water, land, roads, etc. of the society. So, it should be the
responsibility of every business to spend a part of its profit for the welfare of
society.

4. Employee satisfaction - Besides getting a good salary and working in a healthy

atmosphere,
employees also expect other facilities like proper accommodation, transportation,
education and training. Employers should try to fulfil all the expectations of the
employees because employee satisfaction is directly related to productivity and it is
also required for the long-term prosperity of the organization. For example, if a business
spends money on training of the employees, it will have more efficient people to work
and thus, earn more profit.

5. Consumer Awareness - nowadays consumers have become very conscious about

their rights. They protest against the supply of inferior and harmful products by forming
different groups. This has made it obligatory for the business to protect the interest of
the consumers by providing quality products at the most competitive price.

Responsibility towards Different Interest Groups

1. Responsibility towards owners

Owners are the persons who own the business. They contribute capital and bear the business
Risks. The primary responsibilities of a business towards its owners are to:

a. Run the business efficiently.

b. Proper utilization of capital and other resources.
c. Growth and appreciation of capital.
d. Regular and fair return on capital invested.

2. Responsibility towards investors

Investors are those who provide finance by way of investment in debentures, bonds, deposits
etc. Banks, financial institutions, and investing public are all included in this category. The
Responsibilities of business towards its investors are:

a. Ensuring safety of their investment,

b. Regular payment of interest,
c. Timely repayment of principal amount.

3. Responsibility towards employees

Business needs employees or workers to work for it. These employees put their best effort
for the benefit of the business. So, it is the prime responsibility of every business to take care
of the interest of their employees. If the employees are satisfied and efficient, then the only
business can be successful. The responsibilities of business towards its employees include:

a. Timely and regular payment of wages and salaries.

b. Proper working conditions and welfare amenities.
d. Opportunity for better career prospects.
e. Job security as well as social security like facilities of provident fund, group insurance,
pension, retirement benefits, etc.
f. Better living conditions like housing, transport, canteen, crèches etc.
g. Timely training and development.

4. Responsibility towards suppliers

Suppliers are businessmen who supply raw materials and other items required by
Manufacturers and traders. Certain suppliers, called distributors, supply finished products
to the consumers. The responsibilities of business towards these suppliers are:

a. Giving regular orders for the purchase of goods.

b. Dealing on fair terms and conditions.
c. Availing reasonable credit period.
d. Timely payment of dues

5. Responsibility towards customers

No business can survive without the support of customers. As a part of the responsibility of
Business towards them the business should provide the following facilities:

a. Products and services must be able to take care of the needs of the customers.
b. Products and services must be qualitative
c. There must be regularity in supply of goods and services
d. Price of the goods and services should be reasonable and affordable.
e. All the advantages and disadvantages of the product as well as procedure to use
the products must be informed do the customers.
f. There must be proper after-sales service.
g. Grievances of the consumers, if any, must be settled quickly.
h. Unfair means like under weighing the product, adulteration, etc. must be avoided.

6. Responsibility towards competitors

Competitors are the other businessmen or organizations involved in a similar type of
business.
The existence of competition helps the business in becoming more dynamic and innovative
so as
to make itself better than its competitors. It also sometimes encourages the business to
indulge in negative activities like resorting to unfair trade practices. The responsibilities of
business towards its competitors is:

i. not to offer exceptionally high sales commission to distributers, agents etc.

ii. not to offer to customers heavy discounts and /or free products in every sale.
iii. not to defame competitors through false or ambiguous advertisements.

7. Responsibility towards government

Business activities are governed by the rules and regulations framed by the government. The
various responsibilities of business towards government are:

a. Setting up units as per guidelines of government

b. Payment of fees, duties and taxes regularly as well as honestly.
c. Not to indulge in monopolistic and restrictive trade practices.
d. Conforming to pollution control norms set up by the government.
h. Not to indulge in corruption through bribing and other unlawful activities.
8. Responsibility towards society
A society consists of individuals, groups, organizations, families etc. They all are the
members
of the society. They interact with each other and are also dependent on each other in almost
all activities. There exists a relationship between them, which may be direct or indirect.
Business,
being a part of the society also maintains its relationship with all other members of the
society. Thus, it has certain responsibilities towards society, which may be as follows:

a. to help the weaker and backward sections of the society

b. to preserve and promote social and cultural values
c. to generate employment
d. to protect the environment
e. to conserve natural resources and wildlife
f. to promote sports and culture
g. to provide assistance in the field of developmental research on education, medical
science, technology etc.

Business Ethics towards Society

Ethics means norms for the conduct of people in social groupings. Ethics is derived from the
Greek word "Ethos" which means culture - the prevalent behaviour in the society. Thus, it is
a code of conduct that has social acceptance.
It deals with moral principles and social values. It helps to classify, what is good and what is
bad? It tells us to do good things and avoid bad things.
Business Ethics can be defined as the critical, structured examination of how people &
institutions should behave in the world of commerce. In particular, it involves examining
appropriate constraints on the pursuit of self-interest, or (for firms) profits, when the actions
of individuals or firms affect others.
According to Andrew crane- Business ethics is the study of business situations, activities, and
decisions where issues of right and wrong are addressed

Features of business ethics

1. Code of conduct: Business ethics is the code of conduct that businessmen should

follow while conducting their normal business activities.
2. Based on moral and social values: Business ethics is based on well-accepted
moral/principal values. It suggests the moral of conduct for businessmen. They include
self-control, service to society fair treatment to social groups and not
harming/exploiting others.
3. Provides basic framework: Business ethics provides the framework within which
business is to be conducted. It suggests legal, social, moral, economic and cultural
limits within which business has to be operated. It suggests what is good and what is
bad in business.
4. Needs willing acceptance for enforcement: Business ethics cannot be enforced by law
or by force. It must be accepted as self-discipline by businessmen. It should come from
within the businessmen.
5. Education and guidance required for introduction: Businessmen should be given
proper education, guidance and training in order to motivate them to follow ethical
business practices.
6. Not against profit-making: Business Ethics is not against fair profit making. However,
it is against profiteering by cheating and exploiting consumers, employees or investors.
It supports the expansion of business activities but by fair means and not through illegal
activities or corrupt practices.
7. Voluntary: Business ethics must be voluntary. The businessmen must accept business
ethics on their own. Business ethics must be like self-discipline. It must not be enforced
by law.

Role or Importance of Business Ethics

 1. Stop business malpractices- Some businessmen do business malpractices by
indulging in unfair trade practices like black-marketing, artificial high pricing,
adulteration, cheating in weights and measures, selling of duplicate and harmful
products etc. Business ethics helps to stop these business malpractices.
2. Improve customer’s confidence- Business ethics are needed to improve the
customer’s confidence about the quality, quantity, price, etc. of the products, The
customer have more trust and confidence in the businessmen who follow ethical rules.
3. Survival of business- Business ethics are mandatory for the survival of the business.
The businessmen who do not follow it will have short term success, but they will fail
in the long run. This is because they can cheat a customer once
4. Safeguarding consumer’s rights- The consumer has many rights such as the right to
health and safety, right to be informed right to choose, right to be heard, right to
choose etc. But many businessmen do not respect and protect these rights. Business
ethics are a must to safeguard the rights of consumers.
5. Protecting employees and shareholders- Business ethics are required to protect the
interests of employees, shareholders, competitors, dealers, suppliers etc. It protects
them from exploitation through unfair trade practices.
6. Develop good relations- Business ethics are important to develop good and friendly
relations between business and society. This will result in a regular supply of good
quality goods and services at low prices to society.
7. Creates a good image- Business ethics create a good image for the business and
businessmen. If the businessmen follow all ethical rules, then they will be fully
accepted and not criticized by society. Society will always support those businessmen
who follow this necessary code of conduct.
8. Smooth functioning- If the business follows all business ethics, then the employees,
shareholders, consumers, dealers, competitors and suppliers all will be happy. So,
they will give full cooperation to the business. This will result in the smooth
functioning of the business.
9. Consumer satisfaction- Today, the consumer is the king of the market, any business
simply cannot survive without the consumers. Therefore, the main aim or objective of
business is consumer satisfaction.
10. Healthy competition- The business must use business ethics while dealing with
competitors. They must have healthy competition with the competitors.

Factors governing Business Ethics

1. Value Forming Institutions- The value system of an individual is shaped by various

institutions e.g. family, religion, school and the government. These institutions
prescribe what is good or bad for an individual. Right behaviour is rewarded while
wrong behaviour is punished. This continues throughout the life of an individual as
acquires certain values through his daily experience in the long run.
2. Organizational goals- The objectives of an organization influence the values of its
members. A business is an economic institution and it must be profitable. The
classical economic theory stressed the profit maximization goal. Many times,
managers may be forced to compromise their personal ethical values in order to
achieve organizational goals.
3. Work and career- Work refers to the job and the tasks or responsibilities associated
with it. Career, on the other hand, represents a series of jobs or positions. Each work
 has its own values and persons performing the work follow these values. For example,
Salespeople may have different values than engineers.
4. Superiors- Most people succumb to pressure from superiors in doing things that they
may consider unethical otherwise. For example, a secretary may tell a visitor that the
boss is out when he is actually in because her boss has told her to do so.
5. Peers and Colleagues- An individual in a workgroup tends to conform to the norms
of the group. He does so either to get approval or the friendship of his colleagues. He
adopts the attitudes, beliefs and values of the group to which he is associated. Thus,
the behavioral standards of peers and colleagues exercise a significant influence on
the value system of an individual. For example- a person may justify some
indiscretions on the basis that everybody is doing’
6. Professional codes- Code of ethics is a written document that outlines the principles
of conduct to be used in making decisions within an organization. These days 3 types
of code are available.
a) Big companies formulate their philosophy or creed to guide the behaviour of their
employees. The main objective of these documents is to build the company’s image
by showing the company’s concern for ethical behaviour in society.
b) Company policies contain a code to guide actions that have ethical conduct i.e. no
discrimination in recruitment on any basis to govern the conduct of their members.
c) In India, the institute of chartered accounts, the institute of company secretary of
India, have formulated professional codes. These codes are enforced through fines
and even expulsion of erring members.

Emerging Challenges of Management

1. Globalization: - Globalization phenomenon is getting popular these days. Globalization of

business refers to the free flow of goods service, technology, labor, capital information,
across the national boundary; it is closer economic integration among different countries in
terms of flow of good service, capital labor and technology. Globalization is the tendency of
expanding business in different countries. Managers have to work in boundary less world.
There is no territory or barrier in export and import business. Globalization invites global
competition. Organizations which were competing locally with local competitors now they
have to compete with global competitors. It is very difficult to organization to survive and
develop in such situation. Organizations should increase quality of product and reduce cost
which is a challenge for manager. Many organizations are becoming global these days. They
are running their business in different countries with different culture, climate, and
geography, political and economic system. It is a challenging work for managers to prepare
executives officers who can run business in such countries.

2.       Workforce diversity: - Modern organizations are characterized by workforce diversity.

Diversified workforce is the reality of business these days. Organizations are becoming
heterogeneous in terms of ethnicity, gender, nationality, age group, etc. People having
different religions, different nationality works together under one roof. Different people have
different nature and they show different behavior because they come from different
background. How to manage such diversified workforce is a great challenge for managers. If
such diversified workforce is managed properly, organization will be highly benefited
because they also bring diversified skill and knowledge. But, if they are not managed
properly, they create serious problem.
3.       Quality assurance and productivity: - Quality is the ability of the product to satisfy
customers need. How to improve quality of the product or how to assure customers about the
quality of the product has become a great challenge for management. Quality ensures
organizations survival and growth. Organizations use quality to compete with competitors.
Only improving quality of product organizations can face the global competition. Therefore,
there must be continuous improvement in quality. Quality improvement has no boundary. It
is the race without final line. It is said that people buy quality not product. And, to improve
quality is a really a challenge for management. Along, with increasing quality to increase
productivity again is another challenge for management. Organization must try to achieve
higher productivity. Higher productivity only helps to reduce cost. Productivity is the ratio
between input and output. Improved technology, employees, regular skill development and
better utilization of resources helps to increase productivity. Total quality management is the
latest approach or needs to improve quality.

4.       Technological advancement: - How to utilize advanced and sophisticated technology has

become another challenge for management. Technology has developed beyond the
expectation of anybody in the world over the last 100 years. Tremendous advancement has
been made in production, distribution and information technology. Managers must manage
all this technology with the development of computers, the face of information technology
has absolutely changed. The introduction of the internet, email and other electronic media,
have benefitted organizations in the field of production, distribution and other areas of
business. Decision making has been facilitated by information technology. Technological
advancement has changed the nature of jobs. Most of the jobs which were performed by
unskilled and semi-skilled labours previously, now they are performed by skilled labourers.
The number of white-collar jobs is increasing and blue-collar jobs are decreasing. The
organization must train their employees about new technology. Only with new technology,
Organization can compete with other competitors.

5.       Ethics and social responsibility: - Ethics is the study of how our decisions affect other
people. It is the study of people’s rights and duties. The moral rules the people to make
decisions and the nature of relationships among people. Ethics is to follow a social code of
conduct, social norms, values and attitude. The decisions made by managers have a broad
reach both inside and outside the organization. So, managers must follow ethical norms and
consider social responsibilities. Managerial decisions must be based on ethical grounds. But,
these days ethics id\s decreasing in the business world. So, many business organizations have
unethical practices. Because of the unethical practice of some business houses, all business
world is blamed.
How to fulfil social responsibility is also a challenge for management. The concept of
corporate social responsibility has developed. Social responsibility means the obligation of
business organizations towards society community, people, shareholders, etc. To provide a
quality product at an affordable price, to develop more and more employment opportunities,
to carry out different development activities in society, to control pollution are some social
responsibilities of business organizations.

6.       Innovation and change: - Management must pay attention to innovation and change.
Otherwise, they would go out of business. Rapid innovations are taking place in technology,
product and service. Product lifecycle is getting shorter and shorter. The product needs
continuous improvement if the life span is to be made long. New ideas, new techniques, new
methods are being innovated; there must be new inventions of ideas, a new invention of
product. Old and outdated products cannot satisfy customers.
There is change in external environment, political and legal, socio-cultural, economic and
technological environment change rapidly. How to adjust to such change, how to keep pace
with such change, how to keep pace with such change has become challenge for
management.

7. Empowerment: - This is the age of empowerment. The role difference between

management and workers has narrowed down. The status between worker and
manager is very narrow. Most of the decisions are taken at the operating level.
Workers are free to plan and schedule their work. They are given more and more
autonomy and freedom. They participate in major decision-making activities. Joint
goal setting and joint performance evaluation have become common. A self-managed
work team had been established, more and more information is given to employees,
and how to manage such an empowered team has become a challenge for managers.