PRINCIPLES OF MANAGEMENT

(3151103)

DR. URJA MANKAD

ASSISTANT PROFESSOR
V.V.P. ENGINEERING COLLEGE, RAJKOT
UNIT 1

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 Management definition, characteristics,

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objectives, levels of management,
difference between management and
administration

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UNIT 2

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 Management history: schools of

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management, scientific management, the
behavioral approach, the systems
approach, contingency approach

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UNIT 3

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 Motivation-definition, types, Maslow’s

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hierarchy needs theory, leadership-
definition and its importance for a
manager

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UNIT 4

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 Functionsof management, planning,
organizing, staffing, controlling, and

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leading

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UNIT 5

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 Organizational structure: meaning,
principles, types, span of control,

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departmentalization, chain of command,
centralization and decentralization

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UNIT 6

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 Organizational culture of environment,
concept of culture, its importance,

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attributes and its effect on manager

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UNIT 7

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Corporate social responsibility,
meaning, importance, business ethics,

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meaning and importance

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INTRODUCTION TO
MANAGEMENT
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 Q:1: DEFINE "MANAGEMENT”
 Without management, a country's resources of production

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remain resources and never become production. It is a critical
element in the economic growth of a country. It is essential in
all organized efforts, be it a business activity or any other

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activity. Principles of Management have become universal for
managing educational, social structures, and military and
government. It may vary in size and complexity. Management
is the dynamic and life-giving element in every organization.
Although, in competitive age, there is no monopoly in any
business, a good management can have its monopoly.

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 DEFINITIONS OF MANAGEMENT
 Although there is no universal definition of management, the
following few can be useful to understand it.

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 George R Terry: Management is a process consisting of
planning, organizing, actuating and controlling, performed to
determine and accomplish the objectives by the use of people and

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resources.
 Claude S. George: Management is the central core of our
national as well as personal activities, and the way we manage
ourselves and our institutions reflects with alarming clarity what
we and our society will become.
 Harold Koontz: Management is the art of getting things done
through and with the people in formally organized groups. It is
an art of creating an environment in which people can perform
and individuals can co-operate towards attainment of group goals11
QUESTION: WHAT ARE THE CHARACTERISTICS,
PURPOSE, IMPORTANCE OR SIGNIFICANCE OF
MANAGEMENT?

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 Characteristics/ Nature of management
1. Management is intangible

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2. Management is goal-oriented

3. Management is universal

4. Management is a social process

5. Management is a group activity

6. Management is a system of authority

7. Management is an activity

8. Management is dynamic

9. Management is an art as well as science

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10. Management is multidisciplinary
PURPOSE OF MANAGEMENT:
 Management is concerned with acquiring maximum
prosperity with minimum efforts. It is essential where the

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group efforts are required to be directed towards
achievement of common goals. It is said that anything

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minus management amounts to nothing. Koontz and
O'Donnel have rightly observed,

 "There is no more important area of human activity than

management since its task is that of getting things done
through others"
 The inputs of labour, capital and raw material never become
productive without the catalyst of management.
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THE FOLLOWING POINTS FURTHER HIGHLIGHT THE
IMPORTANCE OF MANAGEMENT FOR ANY COUNTRY.

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 1. Achievement of group goals: Management makes
group efforts more effective. The group as a whole
cannot realize its objectives unless there is mutual co-

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operation and co-ordination among the members of the
group. Management creates team work and team spirit in
an organization by developing a sound organizational
structure. It brings human and material resources
together and motivates the people for the goals of the
organization.

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 2. Optimum utilization of resources: The available
resources are put to use in such a way that all sort of
wastage and inefficiencies are reduced to minimum.

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Workers are motivated to put in their best performance
by the inspiring leadership. Managers create an
environment conducive to highest efficiency and
performance. Through the optimum use of available
resources, management accelerates the process of
economic growth.

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 3. Minimization of cost: In the modern era of intense
competition, every business enterprise must minimise
the cost of production and distribution. Only those firms

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and companies survive in the market which can produce
goods of better quality at comparatively less or minimum
cost. A study of principles of management helps in
knowing certain techniques used of reducing costs. The
techniques of production are budgetary control,
production control, cost control, financial control,
material control.

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 4. Change and Growth: A business enterprise operates
in a constantly changing environment. Changes in

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business environment create uncertainties and risk and
also produce opportunities for growth. An enterprise has
to change and adjust itself in the ever-changing

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environment. Sound management moulds not only the
enterprise but also alters the environment itself to ensure
the success of the business. Many of the giant business
corporations of today had an humble beginning and grew
constantly through effective management.

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 5. Efficient and smooth running of business:
Management ensures efficient and smooth running of

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business though better planning, sound organization and
effective control of the various factors of production.
 6. Higher profits: Profits can be enhanced in any

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enterprise either by increasing the sales revenue or
reducing costs. To increase the sales revenue is beyond
the control of an enterprise. Management by decreasing
costs increases its profits and thus provides opportunities
for future growth and development.

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 7. Provide innovation: Management gives new ideas,
imagination and visions to an enterprise.

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 8. Social benefits: Management is useful not only to the
business firms but to the society as a whole. It improves the
standard of living of the people through higher production

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and more efficient use of scarce resources. By establishing
cordial relations between different social groups,
management promotes peace and prosperity in society.
 9. Useful for developing countries: Management has to
play a more important role in developing countries like
India. In such countries, the productivity is low and
resources are limited. It has rightly been observed , " There
are no under-developed country, they are only under-
managed countries. 19
MANAGEMENT FUNCTIONS/ PROCESS
OF MANAGEMENT

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 There is enough disagreement among management writers
on the classification of the management function.

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 Newman and Summer recognize only four functions,
organizing, planning, leading and controlling.
 Henry Fayol identifies five functions of management,
planning, organizing, commanding, coordinating and
controlling.
 Luther Gulick states seven functions under the catch word
"POSDCORB", which stands for planning, organizing,
staffing, directing, coordinating, reporting and budgeting.
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 But the most widely accepted are the functions of
management given by Koontz and O'Donnel, .i.e.
planning, organizing, staffing, directing and controlling.

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Theoretically, it may be convenient to separate the
function of management but practically, they overlap,
they are highly inseparable. Each function blends into
another and affects the performance of others.

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PLANNING
 It is a basic function of management. It deals with chalking
out a future course of action and deciding the most

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appropriate course of action to complete the pre-determined
goals. According to Koontz, "Planning is deciding in advance-

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what to do, when to do and how to do. It bridges the gap from
where we are and where we want to be" It is an exercise in
problem solving and decision making. Thus, Planning is a
systematic thinking about ways and means for
accomplishment of pre-determined goals. Planning is
necessary to ensure proper utilization of human and non-
human resources. It is all pervasive. It is an intellectual
activity and it also helps in avoiding confusion, uncertainties,
risks, wastages etc.
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ORGANISING:
 Itis the process of bringing together physical,
financial and human resources and developing

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productive relationship amongst them for
achievement of organizational goals. According to

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Henry Fayol, "to organize a business is to provide it
with everything useful or its functioning i.e. raw
material, tools, capital and personnel". TO organize
a business involves determining and providing
human and non-human resources to the
organizational structure.

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ORGANIZING:

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 It
involves
identification of activities

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classification or grouping of activities
assignment of duties
delegation of authority and creation of
responsibility
coordinating authority and responsibility
relationships

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STAFFING:
 Itis a function of manning the organization and

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keeping it manned. Staffing has assumed greater
importance in the recent years due to advancement of

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technology, increase in size of business, complexity
of human behavior. The main purpose of staffing is
to put right man on right job. According to Koontz
and O'Donnel, "Managerial function of staffing
involves manning the organization structure through
proper and effective selection, appraisal and
development of personnel to fill the roles designed
on the structure."
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STAFFING:
 It
involves"

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Manpower planning (searching, choosing and
giving right place)

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Recruitment, selection and placement
Training and development
Remuneration
performance appraisal
promotion and transfer

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DIRECTING:
 Itis that part of management which actuates the

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organizational methods to work efficiently for
achievement of organizational purposes. It is
considered life-spark of the enterprise which sets it in

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motion, the action of people, because planning,
orgnising and staffing are only preparation of doing
the work. It directly deals with influencing, guiding,
supervising, motivating subordinates for the
achievement of organizational goals.

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DIRECTING:
 It is made up of:

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 Supervision: It implies overseeing the work of
subordinates by their superiors. It is the act of watching
and directing the work and workers.

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 Motivation: means inspiring, stimulating or encouraging
the sub-ordinates with zeal to work. Positive, negative,
monetary, non-monetary incentives may be useful for this
purpose.
 Leadership: It may be defined as a process by which
manager guides and influences the work of subordinates in
desired direction.
 Communication: It is the process of passing information,
experience, opinions etc. It is a bridge of understanding. 28
 CONTROLLING:
 Itimplies measurement of accomplishment against the

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standards and correction of deviation if any to ensure
achievement of organizational goals. The purpose of

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controlling is to ensure that everything occurs in
conformity with the standards. An efficient system of
control helps to predict deviations before they actually
occur. According to Theo Haimann," Controlling is the
process of checking whether or not proper progress is
being made towards the objectives and goals and
acting if necessary, to correct any deviation".

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CONTROLLING:
 According to Koontz and O'Donnel, "Controlling is
the measurement and correction of performance

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activities of subordinates in order to make sure that
the enterprise objectives and plans desired objects to

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obtain them as being accomplished." Therefore,
controlling has following steps:
Establishment of standard performance
measurement of actual performance
Comparison of actual performance with the
standards and finding out deviation if any.
Corrective action.
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SOME MORE FUNCTIONS:
 According to Ernest Dale, innovation and representation are
two additional functions of management.

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 Innovation: These days, it is not necessary for an organization
to grow bigger, but constantly necessary to grow better. E.g.

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HUL's shampoo sachets, Eureka Forbes' direct-to-home sales
and ITC's e-choupals.
 Representation: A manager is also required to spend a part of
his time in representing his organization before various outside
groups. These stake-holders can be government official, labour
unions, financial institutions, suppliers, customers etc. A
manager must be in support by effectively managing the social
impact of his organization.
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ABRAHAM MASLOW'S
"NEED HIERARCHY THEORY"

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 One of the most widely mentioned theories of motivation
is the hierarchy of needs theory put forth by
psychologist Abraham Maslow. He saw human needs in

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the form of a hierarchy, ascending from the lowest to the
highest, and he concluded that when one set of needs is
satisfied, this kind of need ceases to be a motivator.
 As per his theory, these needs are as follow:

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 Sel
f

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act
ual
iza

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tio
Esteem
n

Social

Safety

Physiological 33
1. PHYSIOLOGICAL NEEDS:

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 These are important needs for sustaining the human life;
water, food, warmth, shelter, sleep, medicines and
education are the basic physiological needs which fall in

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the primary list of need satisfaction. Maslow was of an
opinion that until these needs were satisfied to a degree
to maintain life, no other motivating factors can work.

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2. SECURITY OR SAFETY NEEDS:

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 These are the needs to be free of physical danger and of
the fear of losing a job, property, food or shelter. It also
includes the protection against the emotional harm.

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3. SOCIAL NEEDS:

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 Since people are social beings, they need to belong and
be accepted by others. People try to satisfy their need for
affection, acceptance and friendship.

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4. ESTEEM NEEDS

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 According to Maslow, once people begin to satisfy their
need to belong, they tend to want to be held in esteem
both by themselves and by others. This kind of need

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produces such satisfaction as power, prestige, status and
self-confidence. It includes both internal esteem factors
like self-respect, autonomy and achievements; external
esteem factors such as status, recognition and attention.

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5. NEED FOR SELF-ACTUALIZATION

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 Maslow regards this as the highest need in the hierarchy.
It is the drive to become what one is capable of
becoming; it includes growth, achieving one's potential

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and self-fulfilment. It is to maximize one's potential and
accomplish a huge task.

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 All of the needs are structured into a hierarchy and only
once a lower level of need has been fully met with,
would a worker be motivated by the opportunity of

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having the next need up in the hierarchy satisfied. For
example, a person who is dying of hunger will be
motivated to achieve basic wages in order to buy food
before worrying about having a secure job contract or the
respect of others.

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 A business should, therefore, offer different incentives to
workers in order to help them fulfil each need in turn and
progress up the hierarchy. Managers should also

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recognize that all workers are not motivated in the same
way and do not all move up the hierarchy at the same
pace. They may therefore, have to offer a slightly
different set of incentives from worker to worker.

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Scientific Management

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 Frederick Winslow Taylor (1856-1915) is considered
to be the Father of Scientific Management. He
exerted a great influence on the development of

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management though through his experiments and
writings.

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1. TIME AND MOTION:

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 While serving as the Chief Engineering of Midvale Steel
Company, Taylor made several important contributions
which are classified under scientific management. He,

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therefore, started time and motion study, under which
each motion of a job was to be timed with the help of a
stop watch and shorter and fewer motions were to be
developed. Thus the best way of doing a job was found.
This replaced the old rule-of-thumb-knowledge of the
workman.

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2. DIFFERENTIAL PAYMENT

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 Taylor introduced a new payment plan called the
differential piece work, in which he linked incentives
with production. Under this plan a worker received low

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piece rate if he produced the standard number of pieces
and high rate if he surpassed the standard. Taylor thought
that the attraction of high piece rate would motivate
workers to increase production.

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3 . DRASTIC RE-ORGANISATION OF
SUPERVISION

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 Taylor suggested that the work should be planned by a
foreman and not by the worker. Further, he said that
there should be as many foremen as there are special

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functions involved in doing a job and each of these
foremen should give order to the worker on his
speciality.

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4. SCIENTIFIC RECRUITMENT AND TRAINING

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 Taylor emphasised the need for scientific selection and
development of the worker. He said that the management
should develop and train every worker to bring out his

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best faculties and to enable him to do a higher, more
interesting and more profitable class of work than he has
done in the past.

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5. INTIMATE FRIENDLY COOPERATION
BETWEEN THE MANAGEMENT AND WORKERS

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 Taylor said that for the above suggestions to succeed, "a
complete mental revolution" on the part of management
and labour was required. Rather than quarrel over

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whatever profits there were, they should both try to
increase production. By doing so, profits would be
increased to such an extent that labour and management
would no longer have to compete for them. In short,
Taylor believed that management and labour had a
common interest in increasing productivity.

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 Taylor's concept of scientific management developed into a
movement and dominated the industrial management scene
for several decades after him. His principles and concepts

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were refined and enlarged by several of his followers, notable
among them being Henry L. Gantt and the Gilbreths.
 Taylor's scientific management approach has evolved into
what is now generally called job engineering. This is
concerned with product, process and tool design; plant layout;
standard operating procedures; work measurement and
standards; and work methods and human-machine
interactions.
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Limitations of the
scientific

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administration :

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LIMITATIONS

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 (1) Taylor's scientific management emphasises the
management of only muscular tasks at the floor level and
neglects the areas of problem-solving and decision-

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making, which are of key importance at the other
managerial levels. This has made March and Simon
describe scientific management as "physiological
organisation theory".

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LIMITATIONS

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 (2) Taylor's belief that economic incentives are strong
enough to motivate workers for increased production is
wrong. No man is entirely and "economic man", that is, a

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man's behavior is not always dictated by his financial
needs. He has many other needs also, such as security
needs, social needs or egoistic needs which motivate him
far more potently than his desire for money, at least after
he has risen above the starvation level.

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LIMITATIONS

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 (3) Taylor's time and motion study is not entirely
scientific. This is because two time studies done by two
separate individuals may time the same job entirely

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differently. There is no such thing as "one best way" so
far as the component motions are concerned, because no
two individuals can be expected to work in the same way
at the same rhythm, with the same attention and the same
learning speed.

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LIMITATIONS

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 4) Separation of planning and doing and the greater
specialization inherent in the system tend to reduce the
need for skill and produce greater monotony of work.

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Having a man take orders from 7 to 8 different bosses
results in confusion, besides increasing the overhead
cost.

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LIMITATIONS
 (5) Taylor's scientific management could not develop rapidly

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because of the following factors:
 (a) Advances in methods and better tools and machines

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eliminated some workers, who found it difficult to get other
jobs. This caused resentment among them.
 (b) Taylor had difficulty in persuading his followers to
understand his ideas or carry them on. In the 1920's and
1930's, "efficiency experts" trained in the methods of Taylor,
Gilbreth and others, were often held in contempt because of
their alleged treatment of human beings as automations
without attention to their needs or attitudes.

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ADMINISTRATIVE
MANAGEMENT
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 Fayol was a French mining engineer turned a leading
industrialist and successful manager. He wrote a monograph
in French in 1916, entitled "General and Industrial

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Administration".
 In his treatise, Fayol provided a broad analytical

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framework of the process of administration. (He used the
word "administration" for what we call management.) His
perspective, unlike that of Taylor extended beyond the shop
level and the physical production processes and was of a
macro nature, covering the general administrative and
managerial functions and process at the organizational level.

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 Fayol wrote that all activities of business enterprises could
be divided into six groups: technical commercial, financial,

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accounting, security and administrative or managerial.
Fayol's primary focus of course, was on this last managerial

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activity because he felt managerial skills had been the most
neglected aspect of business operations.
 Fayol also presented 14 principles of management as
general guides to the management process and management
practice.

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1. DIVISION OF WORK

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 Division of work in the management process produces
more and better work with the same effort. Various
functions of management like planning, organizing,

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directing and controlling cannot be performed efficiently
by single proprietor or by a group of directors. They
must be entrusted to specialists in related fields.

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2. AUTHORITY AND RESPONSIBILITY
As the management consists of getting the work done

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through others, it, implies that the manager should have
the right to give orders and power to exact obedience. A

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manager may exercise formal authority and also personal
power. Formal authority is derived from this official
position, while personal power is the result of
intelligence, experience, moral worth, ability to lead, past
service, etc. Responsibility is closely related to authority
and it arises wherever authority is exercised.
 An individual who is willing to exercise authority, must
also be prepared to bear responsibility to perform the work
in the manner desired. However, responsibility is feared as 59
much as authority is sought after.
3. DISCIPLINE

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 Discipline is absolutely essential for the smooth running
of business. By discipline, we mean the obedience to
authority, observance of the rules of service and norms

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of performance, respect for agreements, sincere efforts
for completing the given job, respect for superiors, etc.
The best means of maintaining discipline are (a) good
supervisors at all levels, (b) clear and fair agreements
between the employees and the employer, and (c)
judicious application of penalties. In fact, discipline is
what leaders make it.

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4. UNITY OF COMMAND

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 This principle requires that each employee should
receive instruction about a particular work from one
superior only. Fayol believed that if an employee was to

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report to more than one superior, he would be confused
due to conflict in instructions and also it would be
difficult to pinpoint responsibility to him.

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5. UNITY OF DIRECTION

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 It means that there should be complete identity between
individual and organizational goals on the one hand and
between departmental goals between or among

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themselves on the other. They should not pull in different
directions.

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6. SUBORDINATION OF INDIVIDUAL
INTEREST TO GENERAL INTEREST

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 In a business concern, an individual is always interested
in maximizing his own satisfaction through more money,
recognition, status, etc.. This is very often against the

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general interest which lies in maximizing production.
Hence the need to subordinate the individual interest to
general interest.

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7. REMUNERATION

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 The remuneration paid to the personnel of the firm
should be fair. It should be based on general business
conditions, cost of living, productivity of the concerned

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employees and the capacity of the firm to pay. Fair
remuneration increases workers efficiency and morale
and fosters good relations between them and the
management.

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8. CENTRALIZATION

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 If subordinates are given more role and importance in the
management and organization of the firm, it is
decentralization. The management must decide the degree

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of centralization or decentralization of authority on the basis
of the nature of the circumstances, size of the undertaking,
the type of activities and the nature of organizational
structure. The objective to pursue should be the optimum
utilization of all faculties of the personnel.

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9. SCALAR CHAIN
 Scalar chain means the hierarchy of authority from the
highest executive to the lowest one for the purpose of

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communication. It states superior-subordinate relationship
and the authority of superiors in relation to subordinates at

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various levels. As per this principle, the order or
communications should pass through the proper channels of
authority along the scalar chain. But in case there is a need
for swift action, the proper channels of authority may be
short-circuited by making direct contact (called gang-plank)
with the concerned authority.

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10. ORDER

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 To put things in an order effort. Disorder does not need
any effort. It evolves by itself. Management should
obtain orderliness in work through suitable organization

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of men and materials. The principle of "right place for
everything and for every man" should be observed by the
management. To observe this principle, there is need for
scientific selection of competent personnel, correct
assignment of duties to personnel and good organization.

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11. EQUITY

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 Equity means equality of fair treatment. Equity results
from a combination of kindness and justice. Employees
expect management to be equally just to everybody. It

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requires managers to be free from all prejudices,
personal likes or dislikes. Equity ensures healthy
industrial relations between management and labour
which is essential for the successful working of the
enterprise.

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12. STABILITY OF TENURE OF
PERSONNEL

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 In order to motivate workers to do more and better work
it is necessary that they should be assured security of job
by the management. If they have fear of insecurity of

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job, their morale will be low and they cannot give more
and better work. Further, they will not have any sense of
attachment to the firm and they will always be on the
lookout for a job elsewhere.

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13. INITIATIVE
 Initiative means freedom to think out and execute a plan.

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The zeal and energy of employees are augmented by
initiative. Innovation which is the hallmark of technological
progress, is possible only where the employees are

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encouraged to take initiative. According to Fayol, initiative
is one of the keenest satisfactions for an intelligent man to
experience, and hence, he advises managers to give their
employees sufficient scope to show their initiative.
Employees should be encouraged to make all kinds of
suggestions to conceive and carry out their plans, even when
some mistakes result.

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14. ESPRIT DE CORPS

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 This means team spirit. Only when all the personnel pull
together as a team, there is scope for realizing the objectives
of the concern. Harmony and unity among the staff are a

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great source of strength to the undertaking. Te achieve this,
Fayol suggested two things. One, the motto of divide and
rule should be avoided, and two, verbal communication
should be used for removing misunderstandings.
"Differences grow more bitter when cleared through written
communication.

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 09/05/2021
DR. UM
ELABORATELY DISCUSS THE
DIFFERENCE BETWEEN
ADMINISTRATION AND
MANAGEMENT.
72
VIEW 1.

 There is difference of opinions regarding the meaning and

use of the words "management" and "administration".

09/05/2021
According to Sheldon, Spriegal and Milward,
1. administration involves "thinking" while management

DR. UM
involves "doing".
2. Administration is a top level function which centres around
the determination of plans, policies and objectives of a
business enterprise. Management is a lower level function
concerned with the execution and direction of policies and
operations.

73
VIEW 2.
. According to the second view of E.F.L. Brech and others,

09/05/2021
management is a comprehensive generic term which
includes administration. He regards management as a
comprehensive generic function including the entire process

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of planning, organizing, directing and controlling.
He believes that administration is only a branch of
management which has two functions: planning and
controlling. The functions of management can be divided
into two categories: administrative management and
operative management. The upper level of management is
called administrative management and lower level is known
as operative management.
74
VIEW 3

 According to the 3rd view of Peter Drucker, the basic

difference between management and administration lies in

09/05/2021
the use of these words in different field.
 The governance of non-business institutions like
government, army, and church is generally called

DR. UM
administration while the governance of business enterprise
is called management.
 Economic performance is the chief dimension in
management. A manager of a business enterprise must
always in every decision and action put the economic
consequences first. While the non-business institution gives
secondary importance to economic consequences because
here is an administrator.
75
 09/05/2021
Q- : Which are the levels of the

DR. UM
management
and what are their functions?
What are the roles of a manager?

76
TOP MANAGEMENT:

09/05/2021
 Itconsists of directors, chief executive and
managing director. It is the ultimate source of

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authority and it manages goals and policies for
an enterprise. It devotes more time to planning
and coordinating functions. The role of the top
managers can be described as follow:

77
TOP MANAGEMENT:
 It lays down the objectives and broad policies of the
enterprise.

09/05/2021
 It issues necessary instructions for the preparation of
department budget, procedures, schedules etc.

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 It prepares strategic plans and policies for the enterprise.
 It appoints the executive for middle level, i.e. department
managers.
 It controls and coordinates the activities of all the
departments.
 It is also responsible for maintaining a contact with outside
world.
 It provides guidance and direction.
 The top management is also responsible towards the
78
shareholders for the performance of the enterprise.
MIDDLE LEVEL MANAGEMENT:

09/05/2021
 Thebranch managers and departmental managers
constitute middle level. They are responsible to the

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top management for the functioning of their
department. They devote more time to
organizational and directional functions. In small
organizations, there is only one layer of middle
management but in the large enterprises, there may
be senior and junior level of middle level
management.
79
 MIDDLE LEVEL MANAGEMENT:
 Their role can be emphasized as:
 They execute the plans of the organization in accordance with the

09/05/2021
policies and directives in accordance with the policies and directives
of the top management.

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 They make plans for the sub-units of the organization.
 They participate in employment and training of lower management.
 They interpret and explain policies from top level management to
lower level.
 They are responsible for coordinating the activities within the
division or department.
 It also sends important reports and data to the top level management.
 They evaluate the performance of the junior managers.
 They are also responsible for inspiring lower level managers towards
better performance. 80
LOWER LEVEL MANAGEMENT:

09/05/2021
 Lower level management is also known as supervisory
or operative level of management. It consists of
supervisors, foremen, section officers, superintendent

DR. UM
etc. According to R. C. Davis, "Supervisory management
refers to those executives whose work has to be largely
with personal oversight and direction of operative
management". In other words, they are concerned with
direction and controlling function of management.

81
LOWER LEVEL MANAGEMENT:
 Their activities include:
 Assigning of jobs and tasks to the various workers.

09/05/2021
 They guide and instruct the workers for day to day
activities.

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 They are responsible for the quality as well as quantity of
production.
 They are also entrusted with the responsibility of
maintaining good relation in the organization.
 They communicate workers' problems, suggestions and
recommendatory appeals to the higher level and higher
level goals and objectives to the workers.
 They help to solve the grievances of the workers.
82
LOWER LEVEL MANAGEMENT:

09/05/2021
 They supervise and guide the subordinates.
 They are responsible for providing training to the workers.

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 They arrange necessary materials, machines, tools etc for
getting the things done.
 They prepare periodical reports about the performance of
the workers.
 They ensure discipline in the enterprise.
 They are image builders of the enterprise because they are
in direct contact with the workers.

83
THE ROLE OF A SENIOR MANAGER

09/05/2021
 According to Mintzberg, a senior manager should be
regarded as playing the following 10 different roles:

DR. UM
 These 10 different roles can be divided as:

INTERPERSONAL INFORMATIONAL DECISIONAL

• FIGUREHEAD • MONITOR • ENTREPRENEUR
• LEADER • DISSEMINATOR • NEGOTIATOR
• LIASION • SPOKESPERSON • RESOURCE
ALLOCATOR
• DISTURBANCE
HANDLER

84
INTERPERSONAL

09/05/2021
 Figurehead: In t his role, every manager has to perform
some duties of a ceremonial nature such as greeting the
dignitaries, taking important customer to a lunch etc

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 Leader: As a leader, every manager must motivate his
employee and try to reconcile their individual needs with
the goals of the organization.
 Liaison: in this role of liaison, every manager must
cultivate contacts outside the vertical chain of command
to collect information useful for his organization.

85
INFORMATIONAL

09/05/2021
 Monitor: A manger has to perpetually scan his
environment for information, interrogate his liaison
contacts and his subordinates, and receive unsolicited

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information as a result of the contacts he has developed.
 Disseminator: In the role of a disseminator, the manager
passes some of his privileged information to his key
subordinates who have otherwise no access of it.
 Spokesman: A manager is also required to spend a part of
his time in representing his organization before various
outside groups. These stake-holders can be government
official, labour unions, financial institutions, suppliers,
customers etc. A manager must be in support by effectively 86
managing the social impact of his organization.
DECISIONAL

09/05/2021
 Entrepreneur: In this role, the manager does not merely adapt
to his surrounding situation but proactively looks for innovation
to make things happen.

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 Disturbance handler: In this role, the manager has to work
reactively like a fire-fighter. He must seek solutions of various
unanticipated problems, like strike, customer being bankrupt,
waiving of contract etc.
 Resource allocator: In this role, the manager must divide work
and delegate authority among the subordinates. He decides who
will do what and get what.
 Negotiator: The manager at all levels has to spend
considerable time in negotiation to resolve a problem or grab a 87
contract or a grievance problem
 09/05/2021
Question 3: Which are the
essential managerial skills?

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88
MANAGERIAL SKILLS

09/05/2021
 :A skill is an individual's ability to perform
physical and mental tasks with a specified

DR. UM
outcome. Skills can be developed through
practice and transferring knowledge and
experience into action. To perform his duty
successfully, the manager should have three
major skills: Conceptual skills, Human relation
skills, and technical skills.

89
THE CONCEPTUAL SKILLS

09/05/2021
 It refers to the ability of a manager to take a broad
and far-sighted view of the organization and its

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future, his ability to think in abstract, his ability to
analyze the forces working in a situation, his
creative and innovative ability and his ability to
assess the environment and changes taking place in
it, in short, his ability to conceptualize the
environment, the organization and his own job.

90
THE TECHNICAL SKILLS:

09/05/2021
 Itis the manager's ability to understand
the nature of the job that people under him

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have to perform. It refers to a person's
knowledge and proficiency in any type of
process or technique. This type of skill
and competence is more important at the
lower levels of management.

91
HUMAN RELATION SKILLS:
 Itis the ability to interact effectively with the

09/05/2021
people of all levels. This skill develops in the
manager sufficient ability

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to recognize the feelings and sentiments of
others
to judge the possible reactions and outcomes
of the various course of action he may
undertake
to examine his own concepts and values
which may enable him to develop more useful
attitudes about himself. 92
 09/05/2021
Question : Is management a
science or an art?

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93
 Answer: The hallmarks of a science are not the test tubes or
the lab coats. Instead, they are implicit in the methods of

09/05/2021
inquiry used by a discipline for gathering the data. We can
call a discipline a science it its

DR. UM
 methods of inquiry are systematic and empirical
 information can be ordered and analysed

 results are cumulative and communicable

 Being systematic means being orderly and unbiased. The

attempt to gain knowledge must be without taint of personal
or other prejudgments. The inquiry must be empirical and
not merely an armchair speculation or a priori approach.

94
 All scientific information collected first as raw data is
finally ordered and analysed with the help of statistical

09/05/2021
tools. When the study is replicated and the second try
provides results similar to the original, one derives much
more confidence in those results.

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 Science is also cumulative in that what is discovered is
added to what has been found there. We learn from the
past mistakes and get guidance for future. We build upon
the base that has been left by others.

95
 Science denotes two types of systematic knowledge:
natural or exact and behavioural or inexact. We must

09/05/2021
remember that management is not natural or exact science.
For example, it is not possible to study the effect of only
monetary incentives on a worker's productivity. At the best,

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we can get a rough idea of the relationship between an
employee and employer. Further, our findings may not be
accurate and dependable as those of the physical sciences.
They can tell us about tendencies and probabilities only.
Therefore, we can place management in the category of the
behavioural science.

96
 Some people argue that the principles of management do
not have universal application and their application

09/05/2021
varies according to the culture. It is believed so due to
lack of understanding of the critics about management

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theory and management practice. A classic study by
Harbison and Myers made in 23 countries concluded that
management in various countries does not differ
fundamentally. They viewed management in 3 concepts:
economic aspect, a system of authority, a class or elite.

97
 "Science" talks about "why" of a phenomenon, whereas
"Art" talks of "how" of it. Art is concerned with

09/05/2021
understanding of how a particular work can be
accomplished. In this sense, Management is the art of

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getting things done through others in dynamic and
mostly non-repetitive situation. The manager has to
constantly analyse the existing situation, determine the
objectives, seek alternatives, implement, coordinate,
control and evaluate information and make decisions

98
 A theoretical body of lessons and principles which a
manager has learnt in a classroom will not give him his

09/05/2021
aim, if he has not acquired the art or skills of applying
these theories and principles in prevalent situations in a

DR. UM
tactful manner. This knowledge has to be applied as a
medical or legal practitioner does. He does not copy the
skills of other but uses his knowledge and skills as per
the case and the problem.
 We may thus conclude that management involves both
the elements: that of a science and an art. while some of
the aspects of management are formed like science but
they involve application like that of an art.

99
 09/05/2021
 Question: Elaborately discuss the difference
between administration and management.

DR. UM
100
 There is difference of opinions regarding the meaning and
use of the words "management" and "administration".

09/05/2021
According to Sheldon, Spriegal and Milward,
administration involves "thinking" while management
involves "doing". Administration is a top level function

DR. UM
which centres around the determination of plans, policies
and objectives of a business enterprise. Management is a
lower level function concerned with the execution and
direction of policies and operations. However, no two sets
of personnel are required to discharge administrative and
managerial functions

101
 According to the second view of E.F.L. Brech and others,
management is a comprehensive generic term which

09/05/2021
includes administration. He regards management as a
comprehensive generic function including the entire process
of planning, organizing, directing and controlling. He

DR. UM
believes that administration is only a branch of management
which has two functions: planning and controlling. The
functions of management can be divided into two
categories: administrative management and operative
management. The upper level of management is called
administrative management and lower level is known as
operative management.

102
 According to the 3rd view of Peter Drucker, the basic
difference between management and administration lies in the

09/05/2021
use of these words in different field.
 The governance of non-business institutions like government,

DR. UM
army, and church is generally called administration while the
governance of business enterprise is called management.
Economic performance is the chief dimension in
management. A manager of a business enterprise must always
in every decision and action put the economic consequences
first. While the non-business institution gives secondary
importance to economic consequences because here is an
administrator.

103
 09/05/2021
Question : What are the qualities of
an international manager?

DR. UM
104
 International business refers to the business
activities that involve the transfer of resources,

09/05/2021
goods, services, knowledge, skills or information
across national boundaries. Although the

DR. UM
international business is often an extension of
domestic business, the major differences lie in
political, legal, and cultural environments of
different countries, which make the international
business more difficult, expensive and challenging.
Following are the characteristics required in an
international manager.
105
CONCEPTUAL, HUMAN RESOURCE AND
TECHNICAL SKILLS:
 Conceptual skills of an international manager refer to the

09/05/2021
strategic capabilities to think of unique and difficult-to-imitate
resources, which can generate economic returns and
competitive advantage. This includes patents, trade secrets,

DR. UM
proprietary designs, product development and process
innovation.
 Human Resource skill of a manager is manifested more than in
global HRM. It includes recruiting, evaluating, motivating and
training the employees.
 Technical skills of a manager enable him to demonstrate that his
products meet international technical standards, to align the
technological and business strategies of his firm, to make the
most efficient use of his firm's existing technology and if his
product is not satisfying the local market, then to find a 106

solution.
ABILITY TO EVALUATE HOST COUNTRY RISK
 Host country risk involves economic and political risks. The
economic risk incorporates measures such as the openness of the
economic system, the inflation rate, and exchange rate

09/05/2021
fluctuation and the possibility of repatriating profits, with a
general assumption of -the more the change, the more the risk.

DR. UM
 Political risk encompasses political instability, conflict intensity
between nations, likelihood of changes in labour and
environmental laws and regulations affecting business and trade,
likelihood of disruption to firm's operations due to nationalist
sentiments and the prospect of an arbitrary decision by the host
government. It is useful to remember that while strong
encouragement of foreign is now the norm, government policy
remains diverse in many cases.

107
ABILITY TO MANAGE COUNTRY RISK
 An international manager should have the ability to proactively
manage the two kinds of risks: Economic risks and political risk.
Economic risk can be managed in the following ways.

09/05/2021
 minimizing outright commitment of resources
 Signing bilateral or multilateral treatise that protect mutual

DR. UM
investment.
 Identifying or creating reciprocal settings where investment
from the host country can be seized in case of expropriation.
 Avoiding high visibility acquisitions or assets viewed as
national icons.
 accelerating profit repatriation
 developing a staggered technology transfer policy
 opting for strategic partnership with a local partner
108
 09/05/2021
 Management of political risk may include coalition
building, advocacy advertising, channelizing investment
in local industries and contributing to the development at

DR. UM
regional level. Coalition building often involves bringing
on board the local constituencies.

109
 09/05/2021
4. Ability to exert pressure on home government: it is
the ability to assist a multinational enterprise in a foreign
market via dumping, pricing, ties aid, tied scholarship.

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5. Ability to obtain legitimacy:: Legitimacy is the
acceptance of an MNE as a natural organ in a local
environment. The international manager should be able
to convince different political constituencies that his firm
operates as a domestic company, contributes to the local
economy and takes responsibility seriously.

110
KNOWLEDGE OF LEGAL
ENVIRONMENT

09/05/2021
 If the knowledge of the host country's political
environment helps the international manager to identify
key constituency, the knowledge of legal environment

DR. UM
helps him to know the "rules of the game" and to set the
range within which he can conduct legitimate business
activity. These laws are competition laws, marketing and
distribution laws, patent laws and treaties including the
protection of intellectual rights.

111
FAMILIARITY WITH INTERNATIONAL MONETARY
SYSTEM AND INTERNATIONAL ACCOUNTING

09/05/2021
 Accounting is fundamental because ultimate success is
reflected in accounting report. For this, he needs to know
different national, political, legal, and cultural and

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taxation systems and their harmony. He should take care
that the diversity should not affect the profit of the firm.

112
FAMILIARITY WITH THE HOST
COUNTRY'S CULTURE

09/05/2021
 All functions of an international manager such as his
choice of organization design, strategy formulation,
management style, human resource management,

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international alliances and mergers are affected by the
cultural difference and language difficulties.

113
KNOWLEDGE OF HUMAN CAPITAL

09/05/2021
 Human resource is arguably more important than
manufacturing sector. Researchers have identified five
dimensions of the value of human capital: availability,

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experience, quality, compensation level, and cultural
distance.

114
 09/05/2021
Q.Contributions and

DR. UM
Limitations of
Administrative
Management.

115
 09/05/2021
 Both Taylor and Fayol had essentially the same goal of
increasing production but they tried to reach this goal
from different directions. Taylor worked from the bottom

DR. UM
of the hierarchy upward, whereas Fayol worked from the
apex downwards.
 Fayol's principles met with widespread acceptance
among writers on management and among managers
themselves. In the United States, the most important
acceptance of his principles came from two General
Motors executives – James D. Mooney and Alan C.
Railey. These executives wrote a book, "Onward
Industry", in 1931, later revised and renamed "Principles 116
of Organization."
 09/05/2021
 The real explosion in the number of principles of
management came with Colonel L. Urwick, a
distinguished executive and management consultant in

DR. UM
U.K. He wrote a book, "The Elements of
Administration", in which he tried to assemble the
concepts and principles of Taylor, Fayol, Mooney, Railey
and other early management theorists. Some of the
several dozen principles he advocated are as follows:

117
 09/05/2021
1. There should be clear line of authority, as in the
military, from the top management down to the lowest
employee.

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2. The authority and responsibility of each employee
should be communicated to him in writing.
3. Each individual should perform one function only.
4. The span of control of a manager should never exceed
six.
5. Authority can be delegated, but not responsibility

118
 09/05/2021
 Drawing inspiration from Fayol, a new school of thought
known as Management Process School came into
existence. Harold Koontz and Cyril O'Donnell are the

DR. UM
champions of this school. Management theory, as a body
of knowledge, is not culture-bound but is transferable
from one environment to another. This approach is also
referred to as the "universalist" approach.

119
1. FAYOL'S PRINCIPLE OF DIVISION OF WORK OR
SPECIALIZATION PRODUCES THE FOLLOWING
DYSFUNCTIONAL CONSEQUENCES:

09/05/2021
 It leads to the formation of small work groups with
norms and goals, often at odds with those of
management. Each individual carries out his assigned

DR. UM
part as something apart from the overall purpose of the
organization as a whole.
 It results in the dissatisfaction of workers because it does
not provide them the opportunity to use all their abilities.
 It results in an increase in the overhead cost because the
more the specialization develops at one level; the greater
becomes the need for coordination at a high level.

120
2. FOR MANY OF FAYOL'S PRINCIPLES ONE CAN FIND
AN EQUALLY PLAUSIBLE AND ACCEPTABLE
CONTRADICTORY PRINCIPLE

09/05/2021
 For many of Fayol's principles one can find an equally
plausible and acceptable contradictory principle and
there is nothing in Fayol's writings to indicate which the

DR. UM
proper one to apply is. Simon substantiated this criticism
by referring to the principle of unity of command and the
principle of specialization or division of labour. Both the
principles, he said, cannot be followed simultaneously.

121
 These principles are based on few case studies only and have not been tested
empirically. Indeed, whenever these principles have been tested empirically,
they have fallen like autumn leaves.

09/05/2021
 These principles are often stated as unconditional statements of what ought
to be done in all circumstances when what is needed are conditional
principles of management.

DR. UM
 These principles (viz., the principle of specialization, chain of command,
unity of direction and span of control) result into the formation of
mechanistic organization structures which are insensitive to employees
social and psychological needs. Chris Argyrols contends that such structures
inhibit the employees' self-actualization and accentuate their dependence on
superiors.
 These principles are based on the assumption that organizations are closed
systems. But this is not so. Organizations are open systems. Hence the rigid
structures which these principles tend to create, do not work well under
unstable conditions.
122
Q. BUREAUCRACY
 Max Waber, a German sociologist, is known as the Father of
Bureaucracy. About 1910 he made a study of different types of

09/05/2021
business and government organizations and distinguished 3
basis types of administration in them: leader-oriented, tradition-

DR. UM
oriented and bureaucratic. Leader-oriented administration is
one in which there is no delegation of management functions.
All employees serve as loyal subjects of a leader. In tradition-
oriented administration managerial positions are handed down
from generation to generation. "Who you are" rather than "what
you can do", becomes the primary criterion of work
assignment. In bureaucratic administration, delegation of
management responsibilities is based on the person's
demonstrated ability to hold the position has been traditionally
held by members of his family. People earn positions. 123
IMPORTANT FEATURES OF
BUREAUCRATIC ADMINISTRATION

09/05/2021
 1.There is Insistence on following Standard Rules:
Weber believed that the authority in an organization should
not be governed by the personal preferences of the employer

DR. UM
but it should be governed by standard rules. This would
provide equality in the treatment of subordinates and
continuity and predictability of action. This would also
obviate the need for searching ad hoc solution to problems.
 02. There is a Systematic Division of work: This
increases production by improving efficiency and saving
time in changing over from one job to another.
 03. Principle of Hierarchy is Followed: Each lower officer
is under the control and supervision of a higher one.
124
IMPORTANT FEATURES OF
BUREAUCRATIC ADMINISTRATION

09/05/2021
 4. It is Necessary for the Individual to have Knowledge of
and Training in the Application of Rules: because these
form the basis on which legitimacy is granted to his authority.

DR. UM
 05. Administrative Acts, Decisions and Rules are Recorded
in Writing: This makes the organization independent of
people besides making people's understanding more accurate.
 06. There is Rational Personnel Administration: People are
selected on the basis of their credentials and merit and are
paid according to their position in the hierarchy. Promotions
are made systematically. There is emphasis on winning
people's loyalty and commitment.
125
QUESTION: CONTRIBUTIONS AND
LIMITATIONS OF BUREAUCRACY

09/05/2021
 Contributions: Bureaucracy can be viewed as the logical
extension of management when it becomes impossible for
one person to fulfill all management functions. The concept

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has enabled most modem large scale organisations which
required functionally specialized staff to train and control
the people with heterogeneous backgrounds and to delegate
specific responsibilities and functions to them.

126
QUESTION: CONTRIBUTIONS AND
LIMITATIONS OF BUREAUCRACY

09/05/2021
 Limitations: During the past years, however,
bureaucracy has come in for a lot of criticism. Research
by Merton, Selznick and Gouldner have revealed several

DR. UM
dysfunctional consequences of bureaucracy. Bennis and
Thompson are among the severest critics of bureaucratic
organizations. In fact, Weber himself in his own life time
became so much disenchanted with these organizations
that he later on began to attack the concept which at one
time he had helped to immortalize.

127
 Over conformity to rules: In bureaucratic organization,
employees observe "stick to the rule" policy because they

09/05/2021
fear being penalized for the violation of these rules. They
therefore follow only the letter of the law without going into
its spirit.

DR. UM
 Buck-passing: In a bureaucratic organization, the
employees' initiative is stifled. In situations when there are
no rules, employees are afraid of taking decisions
independently lest they may be punished for the wrong
decisions.
 Trained incapacity In bureaucratic organization the training
and experience, repeated many times over, develop in an
individual skills and abilities in a specialized area only. The
individual finds himself incapable to respond appropriately 128
to new situations in other areas.
 Displacement of goals Goal displacement takes place when an oranisation
substitutes for its legitimate goal some other goal for which it was not created,
for which resources were not allocated to it, and which it is not known to
serve.
 After some time the leaders of an organization may begin to devote more and

09/05/2021
more of their attention and resources to preserve and maintain the organization
itself rather than its initial purpose.
 After some time the employees of an oranisation may so intensively internalize

DR. UM
the rules that the goals which these rules were originally framed to achieve are
totally forgotten.
 Employees develop ''professional automation" when the management insists
on following a certain way of doing things and praises or punishes employees
on the basis of their adherence to that prescribed work (and not on the basis of
their achievement of goals). If a librarian is praised for the neat and orderly
look of the library and not for the increase in the number of book borrowers, if
a factory worker is praised for his regular attendance and not for the quality of
his performance and if a teacher is praised for the pass percentage of his
students and not for the quality of his instruction, it is not surprising if they
begin to feel after some time that the orderly look of the library, regular factory
attendance and high pass percentage are all what are demanded of them. 129
 09/05/2021
 The secondary goals of an organisation may completely
subordinate its primary goals, so that the latter are no
longer served effectively.

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 Sectional interests may develop among the sub-units of
an organisation and the heads of these units may become
so much enamoured with their sectional goals that they
may forget organisation goals.

130
 No real right of appeal The clients of a bureaucratic organization
generally feel dissatisfied because they have no real right of appeal.
 Neglect of Informal groups Bureaucratic organizations often
ignore the existence of informal groups which usually carry out a

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big chunk of organizational work.
 Rigid structure Precise description of roles over conformity to

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rules make bureaucratic structures rigid. Such structures, though
they work well is stable environments, do cope well with today
changing environment.
 Inability to satisfy the needs of mature individuals The
maturity-immaturity theory, propounded by Chris Argyris, explain
in great detail how bureaucratic organizations are unable to meet
the needs of mature individuals who work in them. According to
this theory, a mature individual wants independence, initiative,
self-control, opportunity to use all his skills and information to
plain his future. But the hierarchy and control features of a
bureaucratic organisation work against these needs. 131
QUESTION: NATURE OF PLANNING
 Planning is the beginning of the process of the process of

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management. A manager must plan before he can possibly
organize, staff, direct or control. Because planning sets all
other functions into action, it can be seen as the most basic

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function of management. Without planning other functions
become mere activity, producing nothing but chaos. This has
been called the principle of primary of planning.
 Planning is an intellectual process which requires a manager
to think before acting. It is thinking in advance. It is by
planning that managers of organisations decide what is to be
done, when it is to done, how it is to be done, and who is do
it. Decision-making is thus an integral part of planning. It is
defined as the process of choosing among alternatives 132
QUESTION: NATURE OF PLANNING

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 In fact, deciding which goal to pursue is probably the
most important part of the planning process. Managers
must also decide which assumptions about the future and

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about the environment they will use in making their
plans. In addition, managers must decide how they will
allocate their resources to attain their goals.
 Planning is a continuous process Koontz and O’Donnell
rightly observe that like a navigator constantly checking
where his ship is going in the vast ocean, a manager
should constantly watch the progress of his plans.

133
QUESTION: NATURE OF PLANNING

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 It is wiser for him to be right than merely being
consistent. They call it the principle of navigational
change. A plan must be flexible. By flexibility of a plan

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meant its ability to change direction to adapt to changing
situations without undue cost. Because circumstances
change, it is simple common sense that a plan must
provide for a s many contingencies as possible. It needs
to possess a built in flexibility in a at least five major
areas viz., technology, market, finance, personnel and
organization.

134
QUESTION: NATURE OF PLANNING

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 Flexibility is possible only within limits. It is almost
invariably true that it involves extra cost. Sometimes it
may be so expensive that its benefits may not be worth

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the cost.
 Planning is an all-pervasive function. In other words,
planning is important to all managers regardless of their
level in the organization. There are, however, some
differences in involvement by managers at different
levels.

135
QUESTION: IMPORTANCE OF PLANNING
WITHOUT PLANNING, BUSINESS DECISIONS WOULD BECOME
RANDOM, AD HOC CHOICE. FOUR CONCRETE REASONS FOR THE
PARAMOUNT IMPORTANCE OF THE PLANNING FUNCTION ARE AS
FOLLOWS.

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 01. Minimizes Risk and Uncertainty
 In today’s increasingly complex organisations, intuition

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alone can no longer be relied upon as a means for
making decisions.
 By providing a more rational, fact-based procedure for
making decisions, planning allows managers and
organisations to minimize risk and uncertainty. Planning
does not deal with future decisions, but with the futurity
of present decisions.
 It is through planning that the manager relates the
uncertainties and possibilities of tomorrow to the facts of
136
today and yesterday.
IMPORTANCE OF PLANNING

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 02. Leads to Success
 Planning does not guarantee success, but studies have shown

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that, often things being equal, “chance favours the prepared
mind”. Companies that plan, not only outperform the non-
planners but also out perform their own past results. This may
be because when a businessman’s actions are not random or
ad hoc, arising as mere reaction to the market place.
 Planning leads to success by doing beyond mere adaptation to
market fluctuations. With the help of a sound plan,
management can act proactively, and not simply react. It
involves an attempt to shape the environment on the belief
that business is not just the creation of environment but its
creator as well. 137
IMPORTANCE OF PLANNING
 03. Focuses Attention on the Organisation’s Goals

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 Planning helps the manager to focus attention on the
organisation’s goals and activities. This makes it easier to
apply and coordinate the resources of the organization more

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economically. It also enables the managers to chalk-out in
advance an orderly sequence of steps for the realization of an
organisation’s goals and to avoid a needless overlapping of
activities.
 04. Facilitates Control

 In planning, the manager sets goals and develops plans to

accomplish these goals. These goals and plans then become
standards or benchmarks against which performance can be
measured. The function of control is to ensure that the 138
activities conform to the plans.
IMPORTANCE OF PLANNING

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 05. Trains Executives
 Planning is also an excellent means for training

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executives. They become involved in the activities of the
organisation, and the plans arouse their interest in the
multifarious aspects of planning.

139
QUESTION: DECISION MAKING
 Decision making is an essential part of modern management.
A manager’s life filled with a constant series of decisions

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where to invest profits, what to do about an employee who is
always late, where should the firm’s new warehouse be built,

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what subject will have top priority at the departmental
meeting the next morning, and so on. The actions are usually
carried out by other. Decisions which are relatively minor are
taken almost subconsciously, following rules and patterns of
behavior established over many previous encounters with the
problem. All major decisions, however, are taken very
carefully and consciously.
 Decision making is thus a key part of a manager’s activities.
It permeates through all managerial functions such as
planning, organization, direction and control. 140
MEANING OF A DECISION
 A decision is a choice between two or more alternatives.
This implies three things:

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 When managers make decisions they are choosing they are
deciding what to do on the basis of some conscious and

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deliberate logic or judgment.
 Managers have alternatives available when they are making
a decision. It does not require a wise manager to reach a
decision when there are no other possible choices. It does
require wisdom and experience to evaluate several
alternatives and select the best one.
 Managers have a purpose in mind when they make a
decision. There would be no reason for carefully making a
choice among alternatives, unless the decision brings them 141
closer to some goal.
TYPES OF DECISIONS

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1. Programmed and Non-Programmed Decisions
2. Major and Minor Decisions

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3. Routine and Strategic Decisions
4. Individual and Group Decisions

142
PROGRAMMED AND NON-PROGRAMMED
DECISIONS
 Programmed decisions are those that are made in accordance

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with some policy, rule or procedure so that they do not have to
be handled de novo each time they occur. These decisions are
generally repetitive, routine and are obviously the easiest for

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managers to make. Examples of such decisions are: pricing
ordinary customers’ orders, determining salary payments to
employees who have been ill, recording office supplies, and so
on. Non-programmed decisions are novel and not-repetitive. If a
problem has not arisen before or if there is no cut and dry
method for handling it or if it deserves a custom-tailored
treatment, it must be handled by a non-programmed decision.
Such problems as how to allocate and organisation’s resources,
what to do about a failing product line, how community relations
should be improved will usually required non-programmed 143
decisions for which no definite procedure exists.
MAJOR AND MINOR DECISIONS
SOME DECISIONS ARE CONSIDERABLY MORE IMPORTANT THAN
OTHERS. WE CAN MEASURE THE RELATIVE SIGNIFICANCE OF A
DECISION IN FOUR WAYS:
 01. Degree of Futurity of Decision A decision which has a

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long-range impact, like replacement of men by machinery or
diversification of the existing product lines must be rated as

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a very major decision. The decision to store raw material
may be taken as a minor decision, since it does not have a
long-range impact, although the amount involved may be
substantial.
 02. Impact of the Decision on Other Functional Areas If a
decision affects only one function, it is a minor decision. But
a decision to change the basis of overhead allocation in
preparing department profit and loss account affects all other
functional areas, and as such it is a major decision.
144
MAJOR AND MINOR DECISIONS
SOME DECISIONS ARE CONSIDERABLY MORE IMPORTANT THAN
OTHERS. WE CAN MEASURE THE RELATIVE SIGNIFICANCE OF A
DECISION IN FOUR WAYS:

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 03. Qualitative Factors that Enter the Decision A decision
which involves certain subjective factors is an important
decision. These subjective factors include basic principles of

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conduct, ethical values, social and political beliefs, etc.
 04. Recurrence of Decision Decisions which are rare and
have no precedents as guides may be regarded as major
decisions and may have to be made at a high level.
Decisions which recur very often, for example, whether or
not to renew the office’s subscription to Business Week,
become minor and routine decisions and may be taken at a
lower level.
145
ROUTINE AND STRATEGIC DECISIONS
 Routine, tactical or housekeeping decisions are those

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which are supportive of, rather than central to, the
company’s operations. They relate to the present. Their
primary purpose is to achieve as high a degree of

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efficiency as possible in the company’s ongoing
activities. On the other hand, lowering the price of the
product, changing the product line installation of an
automatic plant, etc. are strategic decisions strategic
decision required lengthy deliberation and large funds
and are taken by managers at higher levels.

146
INDIVIDUAL AND GROUP DECISIONS
 Individual decisions are taken where the problem is of a routine nature,
where the analysis of variable is simple and where definite procedure to deal

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with the problem already exist. Important and strategic decisions which may
result into some change in the organization are generally taken by a group.
 Some advantages of group decisions are:

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 01. Increased acceptance by those affected Decisions made by a group are
mostly accepted by the group’s members, and they help implement those
decisions more readily.
 02. Easier coordination Decision made by groups reduce the amount of
coordination necessary bring the decision into play.
 03. Easier communication Decisions made by groups reduce the amount of
communication necessary to implement the decision.
 04. More information processed Because many individuals are involved,
more data and information can be brought to bear on the decision. This can
help improve the quality of the decision and uncover obstacles in the way of
147
its execution.
FOLLOWING ARE THE DISADVANTAGES
OF GROUP DECISIONS:

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 01. Group decisions take longer Groups take longer than individuals to
make decisions.
 02. Groups can be indecisive Groups can drag on and never take

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decisions because they can always blame other members of the group for
lack of progress.
 03. Groups can compromise This can lead to decisions that satisfy the
“lowest common denominator”. It can lead to “group think” or
conformity to peer pressure and neglect of better solutions.
 04. Groups can be dominated The highest status individual, if he
chooses, can influence the group so that it notices his or her choice. This
negates the advantages of group decision-making
 05. Groups may have a prior commitment to a particular solution
This may be due to ties to persons outside the groups, “empire building”148
attempts, or belief that a decisions will have sufficient personal impact.
SIMPLE AND COMPLEX DECISIONS
 When variables to be considered for solving a problem are few, the
decision is simple; when they are many, the decision is complex.

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When we combine these two types of decisions with the low or
high certainty of their outcomes, we get four types of decisions:

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 01. Decisions in which the problem is simple and the outcome has a
high degree of certainty. These are called mechanistic or routine
decisions.
 02. Decisions in which the problem is simple but the outcome has a
low degree certainty. These are called judgmental decisions.
 03. Decisions in which the problem is complex but the outcome has
a high degree of certainty. These are called analytical decisions.
 04. Decisions in which the problem is complex and the outcome has
a low degree of certainty. These are called adaptive decisions.
149
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CHAPTER-7
WHAT IS AN
“ORGANISATION”?

150
 WHAT IS AN “ORGANISATION”?
 There is no standard definition of the word “organization.

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 According to Amitai Etzioni an organization is a social unit or
human grouping deliberately structured for the purpose of attaining
specific goals.

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 Sehein defines an organization as the rational coordination of the
activities of a number of people for the achievement of some
common explicit purpose or goal, through division of labour and
function, and through a hierarchy of authority and responsibility.
 Allen defines the term as the process of identifying and grouping
of the work to be performed, defining and delegating responsibility
and authority and establishing relationships for the purpose of
enabling people to work most effectively together in
accomplishing their objectives. 151
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 In terms of all the above definitions, corporations,
armies, schools, hospitals, churches, prisons, etc. all are
organization. But tribes, ethnic and friendship groups

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and families are not organization because they do not
involve any significant amount of conscious planning,
coordination or deliberate structuring.

152
CHARACTERISTICS OF AN ORGANIZATION
 An attempt to synthesize some important definitions indicates
that every organization has :

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 01. a purpose, goal or goals, which is already indicated in a
previous chapter are the task of planning.

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 02. a clear concept of the major duties or activities required to
achieve the purpose,
 03. classification of activities into jobs, and

 04. establishment of relationships between these jobs in order to

ensure coordination. This is achieved through division of labour
and delegation of authority.
 A group of organisations sharing a common profile of
characteristics is called an organisations configuration.
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