BUSINESS MANAGEMENT CHAPTER – 1

Henry Fayol was a French mining engineer and a successful manager. He started his
career as a French mining engineer and rose to the position of Chief Managing
Director. After conducting many experiments and observations in the organization,
Fayol proposed 14 management principles. Due to his contribution to the
development of managerial thoughts he is called the “Father of Modern
Management”.
The 14 principles are as follows: (S^3CORE^2 AU^2D^2I)
1. Principle of Subordination of Individual Interest to Organizational Interest
2. Principle of Scalar Chain
3. Principle of Centralization
4. Principle of Order
5. Principle of Remuneration
6. Principle of Equity
7. Principle of Esprit De Corpse
8. Principle of Authority and Responsibility
9. Principle of Unity of Command
10.Principle of Unity of Direction
11.Principle of Division
12.Principle of Division of Work
13.Principle of Initiative

Principles of Scientific Management by Fredrick Winslow Taylor:

This guy introduced his observations and experiments based on scientific data.
Taylor’s approach towards management is termed as scientific management. For his
contribution in development of managerial thoughts, he’s known as “Father of
Scientific Management”. His theory is based on scientific experiments.
Principles of Scientific Management are as follows: (HSC D^2M)
1. Harmony, Not Discord
 2. Science, Not Rule of Thumb
3. Cooperation, Not Individualism
4. Division of Responsibility
5. Development of employer and employees for greater efficiency and maximum
prosperity
6. Mental Revolution

Bureaucratic Approach: Max Weber proposed this approach and he proposed that
this approach is the best. This approach is basically like an ideal, intentionally
rational, and very efficient form of organization founded on principles of logic, order,
and legitimate authority. This approach includes:
a. Clear Division of Labor.
b. Well-defined hierarchy of authority.
c. Formal rules and procedures.
d. Impersonality
e. Careers based on merit- [Follow technical process / Technical Competence]

There are 3 types of Legitimate Authorities. They are:

A. Traditional Authority: A person here acquires his position he belongs to a
particular class or he obtains his position by traditional process authority.
For eg: Member of a royal family.
B. Rational Legal Authority: It’s vested in a legally established position or rank
within organization’s hierarchy. It’s like a proper merit is taken rather than
acquiring position traditionally.
For eg: CEO of a company
C. Charismatic Authority: People obey a person due to their beliefs that the
person has some special power or appeal.

Classical Approach
Scientific Principles Administrative Principles Bureaucratic Principles
Where, Scientific Principles are given by Friedrick Winslow Taylor, Administrative by
Henry Fayol, and Bureaucratic by Max Weber.

Advantages of Bureaucracy: (CR^2 PIE)

1. Competence: This theory is based on the element that a bureaucrat is hired
based on his performance in a competitive environment and his discipline and
it includes selection based on merit. If this guy has performed his duties
diligently then he gets selected. There’s no personal touch in this theory.
2. Rules & Regulations: The bureaucrat has to follow the rules and regulations
laid down by the organization. Ignorance of these would lead to doubt on his
position. Even if the rules are leading to slight errors in the performance of
workers they should be carried out diligently.
3. Rationality: There’s no way that the bureaucrat can endure emotional feelings
or decisions taken emotionally. All decisions are to be taken rationally. The
decisions taken need to be practical taking into consideration their effects on
the management.
4. Predictability: Bureaucrats are very predictable. It’s because once they’re
given a task it becomes their duty to become a perfectionist in that task. They
won’t goof up with their tasks and hence they become predictable.
5. Efficiency: Bureaucrats will carry out their tasks efficiently. They’ll make the
most productive use of the available resources. They won’t let any of them go
unproductive.
6. Impartiality: In this theory, there’s a lack of personal influence or opinions.
There’s a predetermined system designed and that needs to be followed
always.

Disadvantages of Bureaucracy: