Notes on Nature and Significance of Management Business Studies Part I CBSE 12th Class

Definitions of Management

Harold Koontz and Heinz Weihrich

Management is the process of creating and sustaining a work environment where individuals, through collaborative group efforts, can efficiently achieve predetermined goals.

Robert L. Trewelly and M. Gene Newport

Management involves planning, organizing, leading, and controlling an organization's operations to ensure the coordinated use of human and material resources for effective and efficient achievement of goals.

Kreitner

Management is the process of achieving organizational goals effectively by working with and through people and efficiently utilizing limited resources in a constantly evolving environment.

Concept of Management

Management is defined as the process of planning, organizing, staffing, directing, and controlling resources efficiently and effectively to achieve organizational goals.

• Effectiveness refers to doing the right tasks, completing activities, and achieving stated goals. It emphasizes goal completion within time limits.
• Efficiency means doing tasks correctly with the least amount of resources and cost. It focuses on minimizing wastage and maximizing output.

Key Insight: An ideal management system ensures that goals are met (effectiveness) using minimal resources (efficiency).

Characteristics of Management

1. Goal-Oriented Process
   Management focuses on achieving specific organizational goals by aligning and directing individual efforts toward a common purpose.
2. All-Pervasive
   Management principles apply universally across all types of organizations—economic, social, or political—and in all countries, despite cultural differences.
3. Multidimensional
   Management deals with:
• Work: Planning and organizing tasks to achieve goals.
• People: Managing individuals and groups effectively.
• Operations: Coordinating processes that convert inputs into outputs.
4. Continuous Process
   Management is an ongoing activity involving functions like planning, organizing, staffing, directing, and controlling, performed simultaneously.
5. Group Activity
   It involves coordination of diverse individuals working together as a team to achieve common goals, while also supporting individual growth.
6. Dynamic Function
   Management must adapt to external changes (social, economic, political) to remain effective in a changing environment.
7. Intangible Force
   Though invisible, the presence of good management is reflected in an organization’s efficiency, employee satisfaction, and goal achievement.

Objectives of Management

Management strives to fulfill objectives in three major domains:

A. Organizational/Economic Objectives

These objectives ensure the economic stability and financial viability of an organization:

1. Survival – To sustain in a competitive environment by covering operational costs.
2. Profit – To generate sufficient profit to cover risks and reinvest for growth.
3. Growth – To expand the business by increasing sales, production, investment, and workforce.

B. Social Objectives

These reflect the organization's commitment towards society:

• Using eco-friendly production methods.
• Creating employment, especially for underprivileged sections.
• Providing employee welfare amenities like schools, medical facilities, and childcare.

C. Personal Objectives

These focus on fulfilling the needs of employees:

• Financial Needs – Competitive salaries and incentives.
• Social Needs – Peer recognition and teamwork.
• Self-actualization Needs – Opportunities for training, promotion, and development.

Importance of Management

1. Increases Efficiency: Helps in optimal use of resources and cost reduction through effective planning and supervision.
2. Development of Society: By producing quality goods, generating employment, and promoting innovation.
3. Achieving Group Goals: It aligns individual efforts towards a shared organizational vision.
4. Creates a Dynamic Organization: Helps adapt to changes in environment (e.g., market trends, technology).
5. Helps in Achieving Personal Objectives: Management supports individual growth through motivation, leadership, and rewards.

Nature of Management

A. Management as an Art

Art involves the creative and personalized application of theoretical knowledge. Management is an art because:

1. It is based on theoretical knowledge (finance, marketing, HR).
2. Managers apply this knowledge personally to different scenarios.
3. Practice and creativity enhance managerial effectiveness.

B. Management as a Science

Science is a structured body of knowledge based on principles and observations. Management is considered an inexact science due to:

1. A systematized body of knowledge.
2. Principles developed through experimentation and observation.
3. Universal but flexible applicability—principles must be adapted to human behavior.

C. Management as a Profession

A profession requires specialized knowledge, formal training, and adherence to ethical codes. Management partially qualifies as a profession:

1. It has a well-defined body of knowledge.
2. Entry is partially restricted (through business schools).
3. Associations like AIMA exist but membership is not mandatory.
4. Ethical codes exist but are not legally binding.
5. The primary aim remains profit, unlike service-focused traditional professions.

Levels of Management

1. Top-Level Management

Comprises senior executives (CEO, MD, Chairman, President):

• Sets organizational vision and goals.
• Analyzes the external environment.
• Responsible for overall survival and growth.

2. Middle-Level Management

Includes departmental heads (Marketing, HR, Finance Managers):

• Implements top-level policies.
• Manages departmental operations and teams.
• Coordinates with other departments.

3. Operational/Lower-Level Management

Includes supervisors and foremen:

• Directly oversees daily activities of workers.
• Ensures output quality and minimizes wastage.
• Acts as a bridge between middle management and workers.

Functions of Management

1. Planning – Setting goals and choosing the best course of action to achieve them.
2. Organizing – Structuring resources and activities to implement plans.
3. Staffing – Recruiting and selecting competent individuals for specific roles.
4. Directing – Leading and motivating employees to achieve organizational objectives.
5. Controlling – Monitoring performance and making necessary corrections to stay on track.

Concept and Importance of Coordination

Meaning:

Coordination refers to synchronizing the efforts and activities of various departments to ensure unity of action.

Characteristics of Coordination:

1. Integrates group efforts.
2. Ensures unity of direction and action.
3. Continuous and ongoing process.
4. Pervasive across all levels and functions.
5. Responsibility of every manager, not a separate function.

Need for Coordination:

1. Large Size of Organizations: To manage complex structures and people.
2. Functional Differentiation: To unify departments like finance, marketing, etc.
3. Specialization: To bridge the gap between technical experts and general staff.

Key Management Terms – Definitions

1. Management
   The process of getting work done through others with the aim of achieving organizational goals efficiently and effectively.

2. Process
   A series of interrelated steps or functions (planning, organizing, staffing, directing, controlling) undertaken systematically to accomplish objectives.

3. Efficiency
   Achieving maximum output with minimum input; completing tasks correctly using the least amount of resources.

4. Effectiveness
   Completing the right tasks and achieving desired goals within the stipulated time, regardless of the cost.

5. Art
   The personal and skillful application of knowledge to achieve desired outcomes; involves creativity, experience, and practice.

6. Science
   A systematized body of knowledge based on principles developed through observation, study, and experimentation.

7. Profession
   An occupation requiring specialized knowledge and formal education, guided by a code of conduct and often associated with a professional body.

8. Planning
   The process of setting objectives and determining the best course of action to achieve them.

9. Organising
   Arranging resources and tasks in a structured way to implement the plans efficiently.

10. Staffing
    Recruiting, selecting, training, and developing the right people for the right jobs at the right time.

11. Directing
    Guiding, leading, motivating, and supervising employees to ensure the achievement of organizational goals.

12. Controlling
    Monitoring performance, comparing it with standards, and taking corrective actions to ensure objectives are met.

13. Coordination
    Synchronizing the activities and efforts of different individuals and departments to ensure unity of action and achievement of goals.