Ch.5 Management - Meaning, nature and importance Flashcards
Concept (Meaning) of management
The term ‘management’ is used in various senses. Some people consider it an activity, some treat it as a group, some call it discipline while others look at it as a process.
- Management as an activity - As an activity, management means the art of getting things done through the efforts of other people.
According to B.O. Wheeler, “Business management is a human activity which directs and controls the organisation and operations of business enterprise. Management is centred in the administrators or managers of the firm who integrate men, material and money into an effective operating unit”.
It integrates the inputs of men, money, material, machinery and methods and makes a productive enterprise out of them.
The 3 M’s of management are men, material and money.
The 5 M’s of management are manpower, materials, machinery, methods and money + diagram.
Management as an activity has the following implications:
i) Management is an interpersonal activity because the manager has to interact with other people in order to get things done
ii) Management is a group effort
iii) Management is a goal-oriented activity
iv) Management is a decisional activity
- Management as a group - As a group, management refers to all those persons who perform the task of mana the management of Tata Iron ging an organisation. It is a collective noun consisting of board of directors, chief executives, head of departments, branch managers, superintendents, supervisors etc.
All the managers from chief executive tot he first line supervisor are collectively known as management.
When we say that the management of Tata Iron & Steel Company is good, wea re referring to the persons who are managing this company.
Senior managers of companies take decisions that affect the lives of a large number of people.
For example, if the managers of Tata Iron & Steel Company decide to expand production, it will create jobs for thousands of people.
Senior managers also enjoy a high standard of living in society.
As a group, management is a rule-making and rule-enforcing body.
Management refers to a group of people well versed in planning and piloting an enterprise towards the attainment of definite objectives.
There are several types of managers:
(a) Family managers who have become managers by virtue of their being owners or relatives of the owners of a company
(b) Professional managers who have been appointed on account of their degree or diploma in the management
(c) Civil servants or IAS officers who manage public sector undertakings
- Management as a discipline - As a discipline, management implies a specialised branch of knowledge which involves the study of principles and practices of administration.
It refers to the systematised body of knowledge and a separate field of study. But it is a fast growing and an independent subject of study as part of social sciences.
Management as a discipline comprises several specialised functional areas such as Financial Management, Marketing Management, Personnel Management, Production Management etc. - Management as a process - As a process, management is what manager do. Management is considered as a process because it consists of a series of interrelated elements. These functions should be performed systematically in an orderly manner and proper sequence. These functions are performed to transform inputs into outputs so as to receive the desired results. The management process consist of planning, organising, staffing , directing and controlling functions.
Management as a process has the following implications:
i) Management is an integrated process because it brings together human. physical and financial resources and integrates them. It integrates human elements with material, machinery, methods, money and markets to achieve predetermined goals.
ii) Management is a continuous process
iii) Management is a iterative process as all managerial functions are contained within each other.
iv) Management is a social process
v) Management is a universal process
Definitions of management
- Classical concept - Management as a process
According to James L. Lundy, “Management is what management does. It is the task of planning, executing and controlling”. - Productivity concept - Management as art of increasing productivity
According to F.W. Taylor, “Management is the art of knowing exactly what you want people to do and seeing that they do it in the best and cheapest way”. - Human Relations (Neo-classical) concept - Management is the art of working with and through people.
According to Harold Koontz, “Management is the art of getting things done through and with people in formally organised groups” - Decision-making and leadership concept - Management as the art and science of decision-making and leadership,
According to Ross Moore, “Management as the art and science of decision-making and leadership”.
Concepts of management diagram
- Integration concept (Modern management) - According to Keith and Gubelini, “Management is the force that integrates human and non-human resources into ineffective operating unit.”
Process of management diagram
Characteristics of management ( What is effective management?)
- Management is goal-oriented - Management aims to achieve economic and social objectives. The success of management is measured by the fulfilment of desired goals. Therefore, effective management is always management by objectives.
- Management is universal - Management is all-pervading: it is required in all types of organisations big or small, business or non-business. The basic functions of management are performed at every level of authority - top, middle or lower.
- Management is a group activity - It unites the efforts of different members of the group so that they can function as a team. It implies the skill in getting things done through group effort. It involves team work.
- Management is a system of authority - Management is a rule-making and rule-enforcing authority. There is a chain of authority among people working at different levels of the organisation.
- Management is a social process- Management involves getting things done with and through people. A manager has to direct and coordinate the efforts of humans.
- Management is both ana art and a science - Management is a science because it contains certain principles having universal application. The results of management depend upon the personal skill of managers. In this sense, management is an art.
- Management is multi-disciplinary - In management, knowledge drawn from several disciplines such as economics, sociology, psychology, anthropology etc.
- Management is adynamic function
- Management is a distinct entity
- Management is intangible
- Management is an integrating force
- Management is creative
Nature of management
- Management as a science - Science means a systematised body of knowledge which can be acquired through observation and experimentation.
The essential features of science are:
i) Systematised body of knowledge - Management is a systematised body of knowledge in the form of basic principles and concepts.
ii) Observations and experiments - Management knowledge has been built up through continued observations and experiments. Management experts and practitioners have developed the knowledge after careful analysis, enquiry and experience.
iii) Cause and effect relationship - Principles of management establish a cause and effect relationship between various factors.
iv) Universal validity of principles - Scientific principles represent basic truths. These principles have universal validity and application. Fundamental principles of management are universally applicable.
- Management as an art
The essential features of art are as follows:
i) Practical knowledge - Art involves application of theorical knowledge. Management is the art of getting things done through people to accomplish the desired results.
ii) Personal skill - Management is basically an individual skill. He tackles various problems on the basis of his own thinking and understanding of the situation.
iii) Creativity - Management is creative in the sense that it converts inputs into outputs. It is goal-oriented and result-oriented.
iv) Perfection through practice - Management involves regular practice like art. Thus, management is considered as science as well as art. Science without art is fruitless and art without science is blind.
- Management as a profession
The essential features of a profession are as follows:
i) Specialised knowledge - Management has a well-defined body of specialised knowledge which is transferable.
ii) Formal education and training - There are specialised management institutions which provide education and training in management.
iii) Service motive - Like other professionals managers are expected to serve the society rather than simply earning profits for the owners.
iv) Statutory body - Every profession is regulated by legally recognised body (eg. Institute of Chartered Accountants of India)
v) Code of conduct - Managers also have a code of conduct. But this code is not legally binding on managers.
Management and administration meaning + diagram
Generally, the terms management and administration are used interchangeably. But there is a difference between the two in a strict sense.
Administration is a thinking and decision-thinking function whereas management is largely a doing and executing function.
The element of administration increases as one move towards higher ranks.
Diagram
Distinction between administration and management meaning
Table
Objectives of management
- Profitability - Management must ensure that the enterprise that the enterprise earns sufficient profits to meet it various needs. The investors must be given a reasonable return on their money in the form of dividend, interest etc.
- Prosperity and growth - Management should aim at continuously improving the performance of the organisation. It should create an environment in which people can give their best to the organisation.
- Change and innovation - Management should aim at technological and other innovations so that the enterprise can successfully face the challenges posed by the uncertainties of the future.
- Discipline and morale - It motivates people through financial and non-financial incentives. It helps create a better work environment.
- Rightful decision-making - Decision-making is an essential part of management and managers take decisions at every step of the business.
- Quality goods at fair prices - Management aims at providing products of better quality at a reasonable prices.
Importance of management
According to Peter F. Drucker, “Management is the dynamic life-giving element in every business. Without it the resources of production remain resources and never become production.”
- Achievement of group objectives - A human group consists of several persons each specialising in doing a part of the total task. Each person may be working efficiently but the group as a whole cannot realise its objectives without mutual cooperation and coordination among the individual efforts. Management creates coordination and team spirit in the group.
- Optimum utilisation of resources - Management brings together human and material resources in the right proportion. Best utilisation of resources helps to increase productivity and profitability of business.
- Minimisation of cost - Management improves efficiency and reduces costs through better planning, sound organisation and effective control.
- Survival and growth - Managers continuously monitor environment changes and take the necessary steps to ensure that the enterprise is successfully facing the uncertainties of the future.
- Higher standard of living - It raises the standard of living of the people by providing good quality products and services at the lowest possible costs.
Levels of management
There aree three olevels of management in a company.
- Top Management - Top management of a company consists of the Board of Directors, the Chief Executive, General manager, Secretary etc.
The main functions of top management are:
i) to analyse changes in th eexternal environment of the company
ii) to establish long-term corporate plans of the company
iii) to formulate the master budget
iv) to design a broad organisation structure
v) to appoint departmental heads
- Middle Management - It comprises the departmental and sectional heads of the company.
Its main functions are:
i) to interpret the plans and policies of the top management
ii) to monitor and control the operating performance
iii) to cooperate among themselves so as to integrate the various activities of a department
iv) to train and develop suprrvisory personnel
Diagram of levels of management
- Lower/Operating/Supervisory Management - This is the lowest or first level of management in an organisation. It consists of supervisors, foreman, sale officers, accounts officers, purchase officers etc. The distinguishing feqature of supervisory kangement is that it deals with non-managers i.e. workers.
The functions of supervisory mangement are:
i) to planday-to-day production within the goals laid down by higher authorities
ii) to assign jobs to workers and to make arrangements for their training and development.
iii) to issue orders and instructions
iv) to supervise and control workers’ operations
v) To arrange materials and tools
Scope (Branches) of management
- Production management - Production management implies planning, organising, directing and controlling the production function so as to produce the right goods, in the right quantity, at the right time and at the right cost.
It includes the following activities:
i) designing the product
ii) location and layout of plant and buildings
iii) operation of purchase and storage of materials
iv) planning and control of factory operations
v) repairs
- Marketing management - marketing management refers to the identification of the consumers’ needs and supplying them the goods and services which can satisfy their wants.
It involves the following activities:
a) marketing research to determine the needs of the consumers
b) planning and developing suitable products
c) setting appropriate prices
d) selecting the right channel of distribution
e) promotional activities like advertising
Diagram of branches of management
- Financial management - It seeks to ensure the right amount an type of funds to business at the right time and at a reasonable cost.
It comprises of the following activities:
a) estimating the volume of funds required for both long-term and short-term needs of business
b) selecting the appropriate sources of funds
c) raising the required funds at the right time
- Personnel management - It involves planning, organising and controlling the development, compensation and so on of an organisation.
It consists of the following activities:
a) manpower planning
b) recruitment
c) selection
d) training
e) appraisal
f) promotion and transfers
g) compensation
h) employee welfare services
i) personnel records and research
- Purchasing management - Purchasing management is concerned with the purchasing of raw materials, maintenance of purchase records, materials control, issuing materials etc.
- Office management - Office management is concerned with planning, coordinating and controlling office activities. An office serves as the nerve centre of business activities.
