Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

UNIT-1 : NATURE AND SIGNIFICANCE OF MANAGEMENT

CONCEPT OF MANAGEMENT

Definition of Management:

“Management is defined as the process of planning, organising, actuating and controlling

an organisation’s operations in order to achieve coordination of the human and material
resources essential in the effective and efficient attainment of objectives.”
- Robert L. Trewelly and M. Gene Newport

Meaning of Management:

Management is a process of getting things done with the aim of achieving goals
effectively and efficiently.

 Process: the primary functions/activities that the management performs to get

things done – planning – organising – staffing – directing – controlling etc.

 Effectively: doing the right task, completing activities and achieving goals. It is
concerned with the end result i.e., effective = finishing the task

 Efficiently: doing the task correctly – with minimum cost – efficient/less use of
resources – cost reduction – higher profits.

Effectiveness Vs. Efficiency

Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

Characteristics of Management:

1. Management is a goal-oriented process

2. Management is all pervasive: omnipresent, ubiquitous – for every organisation
3. Management is multi-dimensional (complex activity):
a. Management of work
b. Management of people
c. Management of operations (POLC-ing – HFMI resources)
4. Management is a continuous process: Series of continuous, composite but
separate functions – performed simultaneously.
5. Management is a group activity: collection of diverse individuals working towards
fulfilling the common organisational goal
6. Management is a dynamic function : adapting to the changing environment
(changing itself acc. to the needs of the environment)
7. Management is an intangible force: cannot be seen but the effect of management
can be noticeable where targets are met/employees are happy/orderliness/high-
profits.

OBJECTIVES OF MANAGEMENT:

Organisational Objectives of Management:

- Achieve objectives considering the interest of its stakeholders:
Shareholders, Employees, Customers & Government
o Main objective is to utilize HFMI resources to maximum advantage i.e., to
achieve the economic objectives of the business: Survival – Profit – Growth.

Social Objectives of Management:

- Creation of benefit for society – fulfilment of social obligation – social responsibility.
o Using environment friendly methods of production
o Giving employment opportunities to disadvantaged sections of society
o Providing basic amenities to employees (schools/creches etc)

Personal/Individual Objectives of Management:

- Satisfying the diverse needs of the people associated with the organisation
o Financial needs (competitive salaries/perks)
o Social needs (peer recognition)
o Higher level needs (personal growth & development)

IMPORTANCE OF MANAGEMENT:

1. Management helps in achieving group goals

2. Management increases efficiency
3. Management creates a dynamic organisation
4. Management helps in achieving personal objectives
5. Management helps in development of society
Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

NATURE OF MANAGEMENT

Management as an Art:
- Art is the skilful application of existing knowledge to achieve desired results.
- Basic features of an Art:
o Existence of theoretical knowledge
o Personalized application
o Based on practice and creativity
- Management is said to be an art since it satisfies the following criteria:
o A successful manager practices the art of management in the day-to-day job
of managing an enterprise based on study, observation & experience.
(study of available literature on various areas of management like marketing,
finance, human resources). [existence of theoretical knowledge.]
o To a given situation, issue or a problem, a manager applies various theories of
management in his own unique manner through a combination of creativity,
imagination, initiative and innovation. [Personalized application]
o The manager applies the knowledge by studying critical situations and by
formulating his own theories for use in a given situation giving rise to different
styles of management. [Based on practice and creativity]

Management as a Science:
- Science is a systematised body of knowledge that explains certain general truths or
the operation of general laws.
- Basic features of science:
o Systematized body of Knowledge
o Principles based on experimentation
o Universal Validity
- Principles of management constitute the science of management. Management does
not meet the exact criteria of Science, but it has some features of a science. Hence,
management can be called as an INEXACT SCIENCE.
o Management has its own theory and principles that had developed over a
period of time and also draws on other disciplines such as Economics,
Psychology, Sociology & Mathematics. It also has its own vocabulary of terms
and concepts. [Systematized body of knowledge]
o Principles of management have evolved over a period of time based on
experimentation and observation in different types of organisations. [criteria
not strictly met]. Since management deals with human beings and human
behaviour, these experiments cannot replicate or predict accurately.
o The application and use of principles of management is not universal. They
have to be modified according to given situation. However, they provide certain
standardized techniques for different situations. [No Universal validity]

Management as a Profession:
- Profession includes those activities, which require special knowledge and skill to be
applied by individuals in their occupation.
- Basic features of Profession:
o Well-defined body of knowledge
o Restricted entry
o Professional association
o Ethical Code of Conduct
o Service Motive
Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

- Management does not meet the exact criteria of a profession, but it has some
features of a profession, hence Management is not a full-fledged profession:

o Management is based on a systematic body of knowledge comprising well-

defined principles based on a variety of business situations. This knowledge
can be acquired at different colleges and professional institutes.
o There is no restriction on anyone to be a manager. Irrespective of educational
qualifications possessed, anyone can be a manager, but Professional
Knowledge and training is considered to be a desirable qualification for
managers.
o There are several associations of practising managers ex: AIMA, that laid down
code of conduct to regulate the activities of their members. However, there is
no statutory compulsion for managers to be members of such associations.
o The basic objective of management is to achieve its stated goal. Profit
maximisation is not the sole objective of an organisation. In the process of
working effectively and efficiently, a good management automatically serves
society by providing good quality products and services at reasonable prices.

LEVELS OF MANAGEMENT:

Management includes certain functions

performed by individuals in an enterprise
who are bound together in a hierarchy of
relationships with responsibilities for
successful completion of particular tasks.
To be able to fulfil that responsibility they
are assigned a certain amount of authority
or the right to take a decision. This
authority-responsibility relationship
binds individuals as superiors and
subordinates and gives rise to different
levels in an organisation.

There are three levels in the hierarchy of an

organisation:

1. Top Management

 Top management is a team consisting of managers from different functional

levels.
 Their basic task is to integrate diverse elements and coordinate the activities of
different departments.
 They formulate overall organisational goals and strategies for achievement.
 Consists of the senior-most executives of the organisation ex: chairman, CEO,
COO, president & vice-president.
 To be responsible for the welfare and survival of the organisation.
 To analyse the business environment and its implications for the survival of the
firm.
 They are responsible for all the activities of the business and its impact on
society.
Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

2. Middle Management

 It is the link between the top and lower level managers.

 Usually known as Divisional Heads, Operations Manager or Plant Superintendent.
 They are responsible for implementing and controlling plans and strategies
developed by the top management. For this they need to:
o Interpret the policies framed by the top management
o Ensure that their department has the necessary personnel
o Assign necessary duties and responsibilities to them
o Motivate them to achieve desired objectives
o Co-operate with other departments for smooth functioning of the
organisation.
 They are also responsible for all the activities of first line managers.

3. Operational/Supervisory Management

 Foremen and Supervisors comprise the lower level in the hierarchy of

organisation.
 Supervisors oversee the efforts of the workforce.
 Their authority and responsibility is limited according to the plans drawn by the top
management.
 They play the most important role as they interact with the actual workforce and
pass on instructions of the middle management to the workers.
 Through their work, Quality of the output, minimisation of wastes, safety standards
can be ensured.

FUNCTIONS OF MANAGEMENT

Management is described as the process of planning, organising, directing and

controlling the efforts of organisational members and of using organisational resources
to achieve specific goals.

1. Planning
 It is the function of determining in advance what is to be done and who is to
do it.
 Setting goals in advance and developing a way of achieving them efficiently and
effectively.
 Planning cannot prevent problems, but it can predict them and prepare
contingency plan to deal with them if and when they occur.

2. Organising
 It is the function of assigning duties, grouping tasks, establishing authority
and allocating resources required to carry out a specific plan.
 Examines the activities and resources required to implement the plan.
 Determining what, who, when, where of doing a particular task.
 Involves grouping of required tasks into manageable departments/work-
units/reporting relationships within the organisational hierarchy.
 Organisational techniques help in the accomplishment of work and promote both
the efficiency of operations and the effectiveness of results.
Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

3. Staffing
 Also known as Human Resource Function involves making sure that the right
people with the right qualifications are available at the right places and times
to accomplish the goals of the organisation.
 Involves activities such as recruitment, selection, placement and training of
personnel.

4. Directing
 It involves leading, influencing and motivating employees to perform the tasks
assigned to them.
 This requires establishing an atmosphere that encourages employees to do their
best.
 Motivation and leadership are two key components of direction.
 Motivating workers means simply creating an environment that makes them want
to work.
 Leadership is influencing others to do what the leader wants them to do.
 A good manager directs through praise and criticism in such a way that it brings
out the best in the employee.

5. Controlling
 It is the function of monitoring organisational performance towards the
attainment of organisational goals.
 The task of controlling involves establishing standards of performance,
measuring current performance, comparing this with established standards and
taking corrective action where any deviation is found.

The various functions of a manager are usually discussed in the order given above,
suggesting that a manager first plans, then organises, puts staff in position, then directs,
and finally controls. In reality, managers are rarely able to carry out these functions in
isolation. The activities of a manager are interrelated and it is often difficult to pinpoint
where one ended and the other began.

COORDINATION

Definition of Coordination:
Coordination is the orderly synchronising of efforts of subordinates to provide proper
amount, timing and quality of execution so that their united efforts lead to the stated
objectives, namely, the common purpose of the enterprise. - Theo Haimann
- A manager has to perform five interrelated functions (POSDC) in the process of
managing an organisation which is a system made up of different interlinked and
interdependent subsystems.
- A manager has to link these diverse groups towards the achievement of a common
goal.
- The process by which a manager synchronises the activities of different
departments is known as coordination
- Coordination is the force that binds all the other functions and it is the essence of
management for achieving harmony among individual efforts towards the
accomplishment of group goals.
- Each managerial function is an exercise contributing individually to coordination.
- Coordination is implicit & inherent in all functions of an organisation.
Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

Nature of Coordination:

1. Coordination integrates group efforts: Unifies unrelated diverse interests into

purposeful work activity
2. Coordination ensures Unity of Action: binding force between departments to
ensure that all action is aimed at achieving organisational goals.
3. Coordination is a Continuous Process: not a one-time function.
4. Coordination is an all pervasive function: required at all levels of
management
5. Coordination is the responsibility of all managers: Managers of all levels to
coordinate with each other
6. Coordination is a Deliberate Function: Coordination gives a direction to the
willing spirit of cooperation. Cooperation without Coordination, leads to wasted
effort; Coordination without Cooperation leads to dissatisfaction among
employees.

Therefore, Coordination is:

 a not a separate function of management, but its very essence
 essential for effectively and efficiently achieving organisational objectives.

Need / Importance of Coordination:

1) Growth in Size: with more number of people employed with diverse backgrounds
and habits of work, Coordination ensures Organisational Efficiency by integrating
the efforts & activities of employees; harmonizing individual and organisational
goals.

2) Functional Differentiation: Organisations with various departments having

specific objectives, policies and own style of working, may face conflicts when
each department performs activities in isolation from others. Coordination
accomplishes the process of linking the activities of various departments as they
depend on each other for information and resources to perform activities for
achieving common organisational goals.

3) Specialisation: Conflict may arise amongst Specialists and others in the

organisation. Coordination by an independent person is required to reconcile the
differences in approach, interest or opinion of the specialists.
Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

PRACTICE QUESTIONS
1. Vinod Limited’s target production was 25,000 units in a year. Production manager
was able to achieve this target but at a higher production cost. In this case, manager
is ________ but not ________.
2. Synergy Limited’s target production was 22,000 units in a year. Production manager
was able to cut down the cost but could not achieve the target. In this case,
manager is ________ but not ________
3. A company’s target production is 5000 units in a year, to achieve this target the
manager has to operate in double shifts due to power failure. The manager is able
to meet the target but at a higher production cost. Is the manager efficient or
effective?
4. 'Is Management concerned only with doing the right task, completing activities and
achieving goals without taking into consideration the cost benefit?' Give reason in
support of your answer.
5. Effectiveness is concerned with ____________ [ ]
a. Doing the right task, completing activities and achieving goals
b. Getting things done with the aim of achieving goals effectively and efficiently
c. Doing the task correctly with minimum cost
d. None of these
6. Efficiency is concerned with: [ ]
a. Right man at right job
b. Cooperation
c. Utilisation of minimum resources
d. Completion of task
7. In order to be successful an organization must change its goals according to the
need of the environment. Which characteristic of management in highlighted in the
statement?
8. “A collection of diverse individuals with different needs but working towards fulfilling
the common organizational goals” this statement highlights which characteristic of
management?
9. The Activities involved in managing an enterprise are common to all organizations
whether economic, social or political. (OR) The management principles can be
applied to all types of activities. Which characteristics of management is highlighted
by this statement?
10. To meet the objectives of the firm the management of Angora Ltd. offer employment
to physically challenged persons. Identity the organizational objective it is trying to
achieve.
11. An achievement of which organizational objectives results in “an increase in sales
volume, increase in number of employees, no of products ,and increase in capital
investment’
Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

12. Which is not an organisational/economic objective of management out of the

following? [ ]
a. Growth of the organisation
b. Survival of the organisation
c. Providing employment
d. Earning Profits
13. Identify the nature of management when it is practiced as personal
application of existing knowledge to achieve desired results.
14. Identify the nature of management when it is said to be a systematized body of
knowledge that explains certain general truths.
15. Is management a science? Give any three reasons in support of your answer.
16. Management is a profession like medical or legal profession. Do you agree with this
statement? Give any four reasons in support of your answer.
[OR]
Is management a full-fledged profession? Give any three reasons in support of your
answer.
17. Science is a systematized body of knowledge that explains certain general truths
or the operation of general laws. In the light of this statement, describe whether
management is a science.
18. Rishitosh Mukherjee has recently joined AMV Ltd, A company manufacturing
refrigerators. He found that his department was under-staffed and other departments
were not cooperating with his department for smooth functioning of the organisation.
Therefore, he ensured that his department has the required number of employees
and its cooperation with other departments is improved.
a. Identify the level at which Rishitosh Mukerjee was working.
b. Also, state three more functions required to be performed by him at this level.
19. How does co-ordination integrate group efforts? State Briefly.
20. ABC ltd. is facing a lot of problem these days. The company’s profit margin is declining
day-by-day. The production manager is blaming marketing management whereas
marketing is blaming production department for not maintaining the quality. Finance
department is blaming both. What quality of management do you think is lacking.
Explain it briefly.
_______________________________________________________________________________________________________________________________________________________________________

21. What is meant by 'Management'? Explain its any three features that establish it as an
Art.
22. Ashutosh Goenka was working in 'Axe Ltd.', a company manufacturing air purifiers.
He found that the profits had started declining from the last six months. Profit has an
implication for the survival of the firm, so he analysed the business environment to
find out the reasons for this decline.
a. Identify the level of management at which Ashutosh Goenka was working.
b. State three other function being performed by Ashutosh Goenka.
Grade 12 Business Studies QUICK NOTES Unit-1 Nature & Significance of Management

23. Aman, Ahmad and Ally are partners in a firm engaged in the distribution of dairy
products in Maharashtra state. Aman is a holder of Senior Secondary School
Certificate from Central Board of Secondary Education with Business Studies as one
of his elective subjects. Ahmad had done his post-graduation in History and Ally in
dairy farming. One day there was a serious discussion between Ahmad and Ally
regarding the nature of management, Ahmad argued that management was a
profession. Whereas Ally argued against it saying that the legal and medical
profession are the only professions because they fulfil all the conditions of profession.
Aman, on the basis of his knowledge of business studies explained the nature of
management as a profession to Ahmad and Ally. Explain, how Aman would have
satisfied both Ahmad and Ally.
24. Which is not a separate function of management out of the following? [ ]
a. Staffing
b. Planning
c. Coordinating
d. Controlling
25. As per the nature of management, Management can be considered as [ ]
a. Neither a science nor an art
b. Both art and science
c. An Art
d. A science
26. Policies and strategies are formulated in this function of management [ ]
a. Directing
b. Organising
c. Controlling
d. Planning
27. Who is responsible for the welfare and survival of an organisation? [ ]
a. Middle level Management
b. Top Level Management
c. Operational Management
d. None of these
28. Why management is also considered as a profession? [ ]
a. Membership of Professional Association is compulsory
b. Well-defined body of knowledge
c. Entry to profession is restricted
d. Professions are bound by code of conduct
29. Marketing and Personnel Managers are part of _____________ [ ]
a. Top Level Management
b. Middle Level Management
c. Operational Level Management
d. None of these
30. A good manager synchronises all the activities of different departments through the
process….. [ ]
a. Coordination
b. Staffing
c. Planning
d. Supervision