PRINCIPLES OF MANAGEMENT UNIT-I Management – Definition: “Management is the art and science of getting work done by other peoples.” F. W. Taylor - “Management is an art of knowing what is to be done and seeing that it is done in the best possible manner.” Henry Fayol - “Management is to forecast, to plan, to organize, to command, to co-ordinate and control activities of others.” Importance of Management 1. It helps in Achieving Group Goals - It arranges the factors of production, assembles and organizes the resources, integrates the resources in effective manner to achieve goals. It directs group efforts towards achievement of pre-determined goals. By defining objective of organization clearly there would be no wastage of time, money and effort. Management converts disorganized resources of men, machines, money etc. into useful enterprise. These resources are coordinated, directed and controlled in such a manner that enterprise work towards attainment of goals. 2. Optimum Utilization of Resources - Management utilizes all the physical & human resources productively. This leads to efficacy in management. Management provides maximum utilization of scarce resources by selecting its best possible alternate use in industry from out of various uses. It makes use of experts, professional and these services leads to use of their skills, knowledge, and proper utilization and avoids wastage. If employees and machines are producing its maximum there is no under employment of any resources. 3. Reduces Costs - It gets maximum results through minimum input by proper planning and by using minimum input & getting maximum output. Management uses physical, human and financial resources in such a manner which results in best combination. This helps in cost reduction. 4. Establishes Sound Organization - No overlapping of efforts (smooth and coordinated functions). To establish sound organizational structure is one of the objective of management which is in tune with objective of organization and for fulfillment of this, it establishes effective authority & responsibility relationship i.e. who is accountable to whom, who can give instructions to whom, who are superiors & who are subordinates. Management fills up various positions with right persons, having right skills, training and qualification. All jobs should be cleared to everyone. 5. Establishes Equilibrium - It enables the organization to survive in changing environment. It keeps in touch with the changing environment. With the change is external environment, the initial co-ordination of organization must be changed. So it adapts organization to changing demand of market / changing needs of societies. It is responsible for growth and survival of organization. 6. Essentials for Prosperity of Society - Efficient management leads to better economical production which helps in turn to increase the welfare of people. Good management makes a difficult task easier by avoiding wastage of scarce resource. It improves standard of living. It increases the profit which is beneficial to business and society will get maximum output at minimum cost by creating employment opportunities which generate income in hands. Organization comes with new products and researches beneficial for society.
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PRINCIPLES OF MANAGEMENT
UNIT-I
Management – Definition:
“Management is the art and science of getting work done by other peoples.”
F. W. Taylor - “Management is an art of knowing what is to be done and seeing that it is done in
the best possible manner.”
Henry Fayol - “Management is to forecast, to plan, to organize, to command, to co-ordinate and
control activities of others.”
Importance of Management
1. It helps in Achieving Group Goals - It arranges the factors of production, assembles
and organizes the resources, integrates the resources in effective manner to achieve goals.
It directs group efforts towards achievement of pre-determined goals. By defining
objective of organization clearly there would be no wastage of time, money and effort.
Management converts disorganized resources of men, machines, money etc. into useful
enterprise. These resources are coordinated, directed and controlled in such a manner that
enterprise work towards attainment of goals.
2. Optimum Utilization of Resources - Management utilizes all the physical & human
resources productively. This leads to efficacy in management. Management provides
maximum utilization of scarce resources by selecting its best possible alternate use in
industry from out of various uses. It makes use of experts, professional and these services
leads to use of their skills, knowledge, and proper utilization and avoids wastage. If
employees and machines are producing its maximum there is no under employment of
any resources.
3. Reduces Costs - It gets maximum results through minimum input by proper planning and
by using minimum input & getting maximum output. Management uses physical, human
and financial resources in such a manner which results in best combination. This helps in
cost reduction.
4. Establishes Sound Organization - No overlapping of efforts (smooth and coordinated
functions). To establish sound organizational structure is one of the objective of
management which is in tune with objective of organization and for fulfillment of this, it
establishes effective authority & responsibility relationship i.e. who is accountable to
whom, who can give instructions to whom, who are superiors & who are subordinates.
Management fills up various positions with right persons, having right skills, training and
qualification. All jobs should be cleared to everyone.
5. Establishes Equilibrium - It enables the organization to survive in changing
environment. It keeps in touch with the changing environment. With the change is
external environment, the initial co-ordination of organization must be changed. So it
adapts organization to changing demand of market / changing needs of societies. It is
responsible for growth and survival of organization.
6. Essentials for Prosperity of Society - Efficient management leads to better economical
production which helps in turn to increase the welfare of people. Good management
makes a difficult task easier by avoiding wastage of scarce resource. It improves standard
of living. It increases the profit which is beneficial to business and society will get
maximum output at minimum cost by creating employment opportunities which generate
income in hands. Organization comes with new products and researches beneficial for
society.
Nature/ Characteristics of Management
Universal: All the organizations, whether it is profit-making or not, they require
management, for managing their activities. Hence it is universal in nature.
Goal-Oriented: Every organization is set up with a predetermined objective and
management helps in reaching those goals timely, and smoothly.
Continuous Process: It is an ongoing process which tends to persist as long as the
organization exists. It is required in every sphere of the organization whether it is
production, human resource, finance or marketing.
Multi-dimensional: Management is not confined to the administration of people only,
but it also manages work, processes and operations, which makes it a multi-disciplinary
activity.
Group activity: An organization consists of various members who have different needs,
expectations and beliefs. Every person joins the organization with a different motive, but
after becoming a part of the organization they work for achieving the same goal. It
requires supervision, teamwork and coordination, and in this way, management comes
into the picture.
Dynamic function: An organization exists in a business environment that has various
factors like social, political, legal, technological and economic. A slight change in any of
these factors will affect the organization’s growth and performance. So, to overcome
these changes management formulates strategies and implements them.
Intangible force: Management can neither be seen nor touched but one can feel its
existence, in the way the organization functions.
Precisely, all the functions, activities and processes of the organization are interconnected
to one another. And it is the task of the management to bring them together in such a way
that they help in reaching the intended result.
Scope of Management
The field of management is very wide. The operational areas of business management may be
classified into the following categories:
(i) Production Management: Production management implies
planning, organizing, directing and controlling the production
function so as to produce the right goods, in right quantity, at
the right time and at the right cost. It includes the following
activities:
(a) designing the product
(b) location and layout of plant and building
(c) planning and control of factory operations
(d) operation of purchase and storage of materials
(e) repairs and maintenance
(f) inventory cost and quality control
(g) research and development etc.
(ii) Marketing Management: Marketing management refers to the
identification of consumer’s needs and supplying them the goods
and services which can satisfy these wants. It involves the
following activities:
(a) marketing research to determine the needs and expectation of consumers
(b) planning and developing suitable products
(c) setting appropriate prices
(d) selecting the right channel of distribution, and
(e) promotional activities like advertising and salesmanship to communicate with the
customers.
(iii) Financial Management: Financial management seeks to ensure the right amount and type
of funds to business at the right time and at reasonable cost.
It comprises the following activities:
(a) estimating the volume of funds required for both long-term and short-term needs of
business
(b) selecting the appropriate source of funds
(c) raising the required funds at the right time
(d) ensuring proper utilization and allocation of raised funds so as to maintain safety and
liquidity of funds and the creditworthiness and profitability of business, and
(e) administration of earnings
Thus, financial management involves the planning, organizing and controlling of the financial
resources.
(iv) Personnel Management: Personnel management involves planning, organizing and
controlling the procurement, development, compensation, maintenance and integration of human
resources of an organization. It consists of the following activities:
(a) manpower planning
(b) recruitments,
(c) selection,
(d) training
(e) appraisal,
(f) promotions and transfers,
(g) compensation,
(h) employee welfare services, and
(i) personnel records and research, etc.
Levels of Management
Top-Level Management: This is the highest level in the organizational hierarchy, which
includes Board of Directors and Chief Executives. They are responsible for defining the
objectives, formulating plans, strategies and policies.
Middle-Level Management: It is the second and most important level in the corporate ladder,
as it creates a link between the top and lower-level management. It includes departmental and
division heads and managers who are responsible for implementing and controlling plans and
strategies which are formulated by the top executives
Lower Level Management: Otherwise called as functional or operational level management. It
includes first-line managers, foreman, supervisors. As lower-level management directly interacts
with the workers, it plays a crucial role in the organization because it helps in reducing wastage
and idle time of the workers, improving the quality and quantity of output.
The three management levels form the management hierarchy, which represents the position and
rank of executives and managers in the chart.
UNIT - II
Definitions:
Gorge R. Jerry – "Planning is the selection and relating of fact and making & using of
assumptions regarding the future in the visualization and formalization of proposed activities
believed necessary to achieve deserved result".
Mc. Farland – "Planning may be broadly defined as a concept of executive action that embodies
the skills of anticipating, influencing and controlling the nature and direction of change" -
Anticipating, controlling everything for direction of change, believe that environment of
planning is very dynamic & ever changing
Planning is deciding in advance the future course of action. What is to be done in future?
When, what, why, where, who ,how are different aspects of planning .
Need, Importance and advantages of Planning
1. Basis of success
2. Keystone management function
3. To manage by objectives
4. To offset growing complexity of business
5. Better utilization of resources
6. To gain economy in operation
7. Establishes coordinated effort
8. Facilitates control
9. Coping with change
10. Improves competitive strength
11. Creates forward looking attitude
12. Promotes order
13. Prevents hasty judgment and haphazard action
14. Stay on track
15. Managing crises
16. Providing motivation
17. Promotes growth and improvement
18. Encourages creativity
19. Facilitates decentralization
20. It provides alternative courses of action
21. Efficient methods and procedures of action can be developed.
Steps in Planning or Process of planning
Planning involves a number of steps ranging from determining the objectives to follow-up action
as detailed below. The main steps that are taken in planning process are as follows:
1. Establishing Objectives:
Establishing the objectives is the first step in planning. Plans are prepared with a view to achieve
certain goals. Hence, establishing the objectives is an important step in the process of planning.
Plans should reflect the enterprise’s objectives. Objectives should clearly define as to what is to
be achieved by policies, procedures, rules, strategies, budgets and programmes. Plan must make
sure that every activity undertaken contributes to the achievement of objectives.
The objectives fixed must clearly indicate what is to be achieved, where action should take place,
who is to perform it, how it is to be undertaken and when it is to be accomplished. That is,
managers should be able to restate the objectives of the firm in definite and clear terms that will
motivate examination and evaluation of performance against targeted performance in the plan.
Objectives should be measurable.
2. Determining Planning Premises
This is the second step in planning. Premises include actual forecast data, policies and plans of
the enterprise. Planning involves looking into the future which necessitates the enterprise to
know, how future conditions will affect its activities. Thus, forecasting is an important step in
planning. There are two types of forecasting namely,
Prediction of general economic conditions
Prediction of market conditions for a specific product or service dealt with by the
enterprise.
Keeping the general economic conditions in mind, a study of the industry is made. Then the
manager proceeds to make a study of his company’s share of the market. Forecasting will reveal
those areas where control is lacking. Planning will be reliable when the forecast methods are
accurate. Hence, the success of the planning depends very much upon the forecasts.
3. Determining Alternative Courses
Determining alternative courses is the third step in the planning process. The planner should
study all the alternatives, consider the strong and weak points of them and finally select the most
promising ones.
4. Evaluating Alternative Courses
Alternative courses so selected should be evaluated in the light of premises and goals. Evaluation
involves the study of performance of various actions. Various factors such as profitability,
investment requirements, etc., of such alternatives should be weighed against each other. Each
alternative should be closely studied to determine its suitability.
Many other factors such are uncertain future trend, problems faced financially, future
uncertainties renders the evaluation process, complex and difficult. Usually, alternative plans are
evaluated against factors such as cost, risks, benefits, organizational facilities, etc. Computer
based mathematical plans and techniques can also be utilized to identify best course of action.
5. Selecting the Best Course
After having evaluated the various alternatives, the most suitable alternative is selected. With
this, the plan can be considered to have been adopted. It is exactly the point at which decisions
are made. Sometimes, in the best interests of the enterprise, several alternative courses can be
adopted.
6. Formulating Derivative Plans
Planning is not complete as soon as the best course is selected. The main plan should be
supported by a number of derivative plans. Within the framework of a basic plan, derivative
plans are formulated in each functional area. Segregation of master plan into departmental,
sectional and individual plans, helps to understand the real nature of future uncertainties. To
make the planning process more effective, it should also provide for a feedback mechanism.
These plans are meant for the implementation of the main plan.
7. Implementation of Plans
Implementation of plans is the final step in the process of planning. This involves putting the
plans into action so as to achieve the business objectives Implementation of plans requires
establishment of policies, procedures, standards, budgets, etc.
Types of plans
The major types of plans are classified into hierarchical, frequency-of-use (repetitiveness), time-
frame, organizational scope, and contingency.
Hierarchical Plans
Strategic plans (institutional)—define the organization’s long-term vision; articulate the
organization’s mission and value statements; define what business the organization is in
or hopes to be in; articulate how the organization will integrate itself into its general and
task environments.
Administrative plans—specify the allocation of organizational resources to internal
units of the organization; address the integration of the institutional level of the
organization (for example, vision formulation) with the technical core (vision
implementation); address the integration of the diverse units of the organization.
Operating plans (technical core)—cover the day-to-day operations of the organization.
Frequency-of-Use Plans
Standing Plans
Policies—general statements of understanding or intent; guide decision-making,
permitting the exercise of some discretion; guide behavior (for example, no employee
shall accept favors and/or entertainment from an outside organization that are substantial
enough in value to cause undue influence over one’s decisions on behalf of the
organization).
Rules—guides to action that do not permit discretion in interpretation; specify what is
permissible and what is not permissible.
Procedures—like rules, they guide action; specify a series of steps that must be taken in
the performance of a particular task.
Single-Use Plans
Programs—a complex set of policies, rules, and procedures necessary to carry out a
course of action.
Projects—specific action plans often created to complete various aspects of a program.
Budgets—plans expressed in numerical terms.
Time-Frame Plans
Short-, medium-, and long-range plans—differ in the distance into the future projected:
o Short-range—several hours to a year
o Medium-range—one to five years
o Long-range—more than five years
Organizational Scope Plans
Business/divisional-level plans—focus on one of the organization’s businesses (or
divisions) and its competitive position.
Unit/functional-level plans—focus on the day-to-day operations of lower-level
organization units; marketing, human resources, accounting, and operations plans
(production).
Tactical plans—division-level or unit-level plans designed to help an organization
accomplish its strategic plans.
Contingency Plans
Plans created to deal with events that might come to confront the organization (e.g.,
natural disasters, terrorist threats); alternative courses of action that are to be
implemented if events disrupt a planned course of action.
What is Management By Objectives?
Management By Objectives (MBO) is an performance management approach in which a
balance is sought between the objectives of employees and the objectives of an organization. The
essence of Peter Drucker ’s basic principle: Management By Objectives is to determine joint
objectives and to provide feedback on the results. Setting challenging but attainable objectives
promotes motivation and empowerment of employees. By increasing commitment, managers are
given the opportunity to focus on new ideas and innovation that contribute to the development
and objectives of organizations.
However, Peter Drucker sets a number of conditions that must be met:
Objectives are determined with the employees;
Objectives are formulated at both quantitative and qualitative levels;
Objectives must be challenging and motivating;
Daily feedback on the state of affairs at the level of coaching and development instead of
static management reports;
Rewards (recognition, appreciation and/or performance-related pay) for achieving the
intended objectives is a requirement;
The basic principle is growth and development not punishments.
UNIT – III
Organization -
Definition: Organization refers to a collection of people, who are involved in pursuing defined
objectives. It can be understood as a social system which comprises all formal human
relationships. The organization encompasses division of work among employees and alignment
of tasks towards the ultimate goal of the company. It can also be referred as the second most
important managerial function, which coordinates the work of employees, procures resources
and combines the two, in pursuance of company’s goals.
Need and importance of organization
A comprehensive approach to organizing helps the management in many ways. Organizing
aligns the various resources towards a common mission.