ACADEMIC YEAR : 2023-24

CHAPTER 1: NATURE AND SIGNIFICANCE OF MANAGEMENT

Prepared by Commerce Department, DPSN

Weightage: 16 marks (Chapter 1 to 3)

SUB-TOPICS

❖ Management- concept, objectives and importance

❖ Management as Science, Art and Profession
❖ Levels of Management
❖ Management functions- planning, organising, staffing, directing and controlling
❖ Coordination- concept and importance

Meaning of Management

Management is a process of getting things done with the aim of achieving goals effectively and efficiently. It is
an activity which is necessary wherever there is a group of people working in an organisation.

Definition of Management

According to Harold Koontz and Heinz Wehrich, “Management is the process of designing and maintaining an
environment in which individuals working together in groups efficiently accomplish selected aims.”

Management, has, therefore, been defined as a process of getting things done through others effectively and
efficiently in order to achieve organizational goals.

The word Process refers to the primary functions or activities that management performs to get things done.
These functions are planning, organizing, staffing, directing and controlling.

Relation between Efficiency and Effectiveness

Effectiveness is concerned with doing the right task, completing activities and achieving goals. It means
finishing the given task on time. In management, it means doing the right things, completing activities and
achieving the goals within targeted time period .In other words , it is concerned with the end result.

For example: A manager has been given a target to produce 5,000 units in a year. He achieves this target on
time. This shows he is effective.

Efficiency means doing the task correctly and with minimum cost.

For example: If in the above example, manager is able to produce 5,000 units in a year but at a higher
production cost, he is effective but not efficient.

There is a kind of cost benefit analysis involved and the relationship between inputs and outputs. The efficiency
is high when minimum inputs have been used to produce a given level of output.
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Effectiveness and efficiency are the two sides of a same coin, one without other is of no use. Therefore, it is
important for management to achieve goals (effectiveness) with minimum resources i.e., as efficiently as
possible while maintaining a balance between effectiveness and efficiency.

Difference between Effectiveness and efficiency

Basis Effectiveness Efficiency

Meaning It refers to completion of task on time. It refers to completion of task
correctly with minimum cost.
Focus Producing target production on time. Producing target production to its
minimum cost.

Features of management (MCD PIGG) [My Charming Dad is Giving Grand Party]

1. Management is a goal oriented process:. The purpose of management is to achieve the goals of the
organization. Goals should be simple and clearly stated. Every business enterprise has different set of
goals depending upon the nature of organization. For example: management of business unit aims at
earning profits through satisfaction of customers but the management of a charitable institute aims at
providing better services to its clients at minimum cost. The success of management is judged by the
extent to which organizational goals are achieved.

2. Management is all pervasive: Management is a universal phenomenon. The use of management is not
restricted to business firms only, it is applicable in profit-making, non-profit making, business or non-
business organizations; even a hospital, school etc. has to be managed properly. Thus, activities involved
in managing an enterprise are common to all organizations whether they are economic, political or social
in nature.

3. Management is multi dimensional: Management is a complex activity which has three dimensions

MANAGEMENT

MANAGEMENT
MANAGEMENT MANAGEMENT
OF
OF WORK OF PEOPLE OPERATIONS

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a) Management of work: All organizations exist for the performance of certain work. Management
translates the work to be done in terms of goals to be achieved and assigns the means to achieve it. It
involves preparation of plans, budgets, assignment of authority and responsibilities etc.

b) Management of people: People refer to human resources and they are the most important assets of an
organisation. Managing people has two dimensions:

• Dealing with employees as individuals with diverse needs and behaviour

• Dealing with employees as a group of people.

The task of manager is to make people work towards the achievement for the organization’s goals by
making their strengths effective and their weaknesses irrelevant.

b) Management of operations: In an organisation, operations include all those activities through which
products are created to be used by ultimate customers. Management of operations involves managing all
such activities. This requires a production process which entails the flow of input material and the
technology for transforming this input into the desired output for consumption.

Management of operations concentrates on mixing management of work with management of

people, i.e., deciding what work has to be done, how it has to be done and who will do it.

4. Management is a continuous process: The process of management is a series of continuous, composite

but separate functions- planning, organizing, staffing, directing and controlling. These functions are
simultaneously performed by the manager all the time. Thus, management is an ongoing process.

5. Management is a group activity: An organisation is a collection of diverse individuals with different

needs. Management involves the use of group efforts in the pursuit of well-defined goals or objectives. It
cannot exist independent of the group or organization it manages. It involves growth and development of
all members along with the growth and development of organization.

6. Management is a dynamic function: Management has to adapt itself to the changing environment. In
order to be successful an organization must change itself and its goals according to the needs of the
environment, which consist of various political, social, legal economic and technological factors. For
example: McDonald’s, the fast food giant, made major changes in its menu to be able to survive in theIndian
market.

7. Management is an intangible force: Management cannot be seen but its presence can be felt. The
effect of management is noticeable when:

• Targets are met according to the plans

• Employees are happy and satisfied

• There is orderliness instead of chaos.

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Objectives of Management(Oops)

Objectives of management

Organizational objectives Social objectives Personal objectives

1. Organisational objectives: The main objective of any organization should be to utilize human and
material resources to the maximum possible advantage. The main organizational objectives are:

➢ Survival: The main purpose of every organization is to survive in the market for a longer period of time
and it is possible only when it is able to earn sufficient revenues to cover its cost.

➢ Profit: Mere survival is not enough for business. Management has to ensure that the organization makes
profit, which is an incentive for the continuous successful operations of the business. Profit is essential
to cover costs and risks of the business

➢ Growth: To add to its prospects the business organization must grow and expand their activities.
Indicators of growth are increase in sales volume, increase in number of products and employees,
increase in capital investment etc.

2. Social objectives: It involves the creation of benefits for the society by consistently creating economic
value for various constituents of society. The various social objectives are:

➢ Supply of good quality products at reasonable prices.

➢ Using environmental friendly methods of production.

➢ Providing basic amenities like; schools, hospitals etc.

➢ Generating employment opportunities to the disadvantaged section of the society.

* Also refer to GREY BOX given in NCERT titled ITC- Empowering Rural India

3. Personal objectives: These are related to the employees of the organization. It includes:

➢ Providing competitive salary.

➢ Peer recognition

➢ Good and healthy working conditions.

➢ Social recognition

➢ Personal growth and development.

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 Management has to reconcile personal goals with organisational objectives for harmony in the
organisation.

Importance of management (GDP depends upon Efficient Society)

1. It helps in achieving group goals: Management tries to integrate the objectives of individuals along
with the organisational goals. Management directs the efforts of all the individuals in the common
direction of achieving organizational goals.

2. Management increases efficiency: The aim of manager is to reduce costs and increase productivity
through better planning, organizing, directing, staffing and controlling the activities of the organisation.

3. Creates a dynamic organisation: All organizations have to survive in dynamic environment so

managers keep making changes in the organisations to match the environmental changes. Management
helps people to adapt to these changes so that the organization is able to maintain its competitive edge.

4. Helps in achieving personal objectives: A manager motivates and leads its team in such a manner that
individual members are able to achieve personal goals while contributing to overall organizational
objectives. Through motivation and leadership the management helps individuals to develop team spirit,
cooperation and commitment to group success.

5. It helps in development of society: Management helps in development of society by:

• Supply of good quality products at reasonable prices.

• Using environmental friendly methods of production.
• Adopting new technology for benefit of people
• Generating employment opportunities to the disadvantaged section of the society.

Nature of management

➢ MANAGEMENT AS AN ART

➢ MANAGEMENT AS A SCIENCE

➢ MANAGEMENT AS A PROFESSION

Management as an Art ( BEP)

Art requires application of personal skills and knowledge to achieve desired results. It can be acquired
through study, observation and experience.

Features of Art

1. Existence of theoretical knowledge: Art presupposes the existence of theoretical knowledge. For eg.,
literature on dancing, public speaking, acting or music is widely recognized.

2. Personalized application: The use of this basic knowledge varies from individual to individual.
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 Therefore, art is a very personalized concept. For example: two dancers or two actors always differ in
demonstrating their art. For eg., two writers or two dancers will always differ in demonstrating their art.

3. Based on practice and creativity: Art involves regular practice and creative application of theoretical
knowledge. Every artist has an element of creativity. That is why, he aims at producing something that
has never existed before. For eg., music is based on seven basic notes. What makes the composition of a
musician unique or different is his use of these notes in a creative manner.

Management can said to be an art as it satisfies the following criteria:

1. Theoretical knowledge in management: A successful manager uses his art to manage day to day
activities of enterprise based on experience and observation. There is a lot of literature available in
various areas of management like marketing, finance and human resources which the manager has to
specialize in. Thus, there is existence of theoretical knowledge.

2. Personalized application in management: A manager applies these scientific methods and body of
knowledge to a given situation, an issue or a problem in his own unique manner. A manager applies
these methods or principles of management differently under different situations.

3. Practice and creativity in management: Manager applies his acquired knowledge in a personalized
manner in the light of realties of a given situation. Through continuous practice, a manager eliminates all
irrelevant activities for achieving desired results and becomes more effective.

Conclusion: On comparing the features of art with management, we find that all features of art are present in
management. Thus, management is an art of getting things done by the others.

Management as a Science ( SUE)

Science is a systematic body of knowledge. It establishes cause and effect relationship between two or
more events. The basic features of science are:

1. Systematic body of knowledge: Science is a systematic body of knowledge. Its principles are based on
cause and effect relationship. For example: the phenomenon of an apple falling from a tree towards the
ground is explained by the law of gravity.

2. Principles based on experimentation: Scientific principles are first developed through observation and
then tested through repeated experimentation under controlled conditions.

3. Universal validity: Scientific Principles have universal application and validity. They give the same
results everywhere if prescribed conditions are satisfied.

Management principles are said to be science because they satisfy following criteria:

1. Management has a systematic body of knowledge. It has its own theory and principles that have been
developed over a period of time. It is cross-disciplinary as it draws on other disciplines such as
Economics, Sociology, Psychology and Mathematics.
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 * Also refer to GREY BOX given in NCERT titled some Interesting Cross- Disciplinary Perspectives

2. The principles of management have evolved over a period of time based on repeated experimentation
and observation in different types of organizations. However, since management deals with human
beings and human behaviour, the outcomes of these experiments are not capable of being accurately
predicted. Therefore, management can be called an inexact science.

3. Since the principles of management are not as exact as the principles of science, their application and
use is not universal. They have to be modified according to a given situation. However, they provide
managers with certain standardized techniques that can be used in different situations.

Conclusion: Therefore, management is a science but not a pure science like Physics, Chemistry. It is an
inexact or social science because it deals with human beings, whose behaviour is very difficult to predict
accurately.

Management is both Science and Art

Art requires application of personal skills and knowledge to achieve desired results. It can be acquired
through study, observation and experience. Science is a systematic body of knowledge. It establishes
cause and effect relationship between two or more events.

Management is defined as both science and art:

1. Management is a science as it has systematic body of knowledge having its own principles, techniques.
These principles are universal in nature and evolved through experimentation and observation.
2. Management is an art as it involves application of theoretical knowledge in a creative manner.

3. Management is both Science and Art: Management is a judicious blend of both science and art.
Management as science is a systematized body of knowledge in the form of principles and techniques.
Management as an art helps to apply these principles and techniques to solve managerial problems.
Science teaches to know and art teaches to do. For example: a person cannot become a good singer
unless he has knowledge of ragas and he also applies his personal skills in the art of singing. Similarly, it
is not sufficient for a manager to just know the principles but he also applies them in solving various
management problems. Art without science has no direction and science without art is wastage of
knowledge. Art is descriptive and science is prescriptive. That is why, science and art are not mutually
exclusive but they are complementary to each other.

Therefore, management is both science and art. Management as science provides knowledge and
management as an art deals with application of skills and knowledge.

Management as a Profession

Profession can be defined as an occupation backed by specialized knowledge and training in which entry is
restricted.

Features of profession
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 1. Well defined body of knowledge: In every profession there is practice of systematic body of
knowledge which helps the professionals to gain specialized knowledge of that profession.

2. Restricted entry: The entry to a profession is restricted through an examination or through acquiring
an educational degree. For example: to become a Chartered Accountant in India a candidate has to clear
a specified examination conducted by the Institute of Chartered Accountants of India.

3. Professional association: All professions are affiliated to a professional association which regulates
entry, grants certificate of practice and formulates and enforces a code of conduct. To be able to practise
law in India, lawyers have to become members of Bar Council of India which regulates and controls
their activities.

4. Ethical code of conduct: All professional bodies are bound by a code of conduct fixed by professional
associations which guides the behaviour of its members.

5. Service motive: The basic motive of profession is to serve their clients’ interest by rendering dedicated
and committed services.

Management does not meet exact criteria of a profession. However, it does have some features of profession:

1. 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 and through a number of books and journals.

2. There is no restriction on anyone being designated or appointed as manager in any business enterprise.
There is no need of specific degree. But professional knowledge and training is considered to be
desirable qualification, since there is more demand of those who possess such degrees. Thus, the
criterion of “Restricted Entry” is not fully met.

3. There are several associations of practicing managers in India like AIMA ( All India Management
Association) has laid down appropriate code of conduct in order to regulate the activities of managers.
However, there is no compulsion for mangers to be a member of such associations.

4. In order to survive in a dynamic environment, an organization has to fulfill its social obligations too
along with its objectives of maximizing profits.

5. There is no compulsion for managers to abide by the code of conduct laid by AIMA.

Conclusion: Thus, on the basis of above discussions we can say that management does not fulfill the exact
criteria of a profession. Hence, it cannot be recognized as a full fledged profession as law or medicine.
Management is on the path of becoming full-fledged profession.

Levels of management

The levels of management denote demarcation between various managerial positions in an organization on the

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 basis of their relative responsibility, authority and status. There are three levels of management:

Top Level Management

This level consists of senior most executives of the organization. They are usually referred to as the chairman,
Chief executive Officer, Chief Operating Officer, president and Vice president. Top management is a team
consisting of managers from different functional levels, heading finance, marketing etc. for eg., Chief Finance
Officer, Vice President (Marketing).

Functions:

1. They formulate overall organizational goals and strategies for their achievement.

2. Their basic task is to integrate diverse elements and coordinate the activities of different departments
according to overall objectives of organization.

3. They are responsible for the welfare and survival of the organisation.

4. They build and maintain relationship with outside public i.e. financial institutions, suppliers,
government, media etc.

5. They also frame the plans and policies to achieve the pre determined objectives.

• Middle Level Management

This level generally consists of divisional heads, regional managers, production managers, finance managers,
marketing managers, executive officer, plant superintendent, Operations Manager, Plant Manager etc. It is a
link between top level and operational level management. They are subordinate to top mangers and superior to
the first line mangers.

Functions:

1. The managers are responsible for implementing and controlling plans and strategies developed by the
top level management.

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 2. Interpretation of the policies framed by the top level.

3. They ensure that their department has necessary employees and assign necessary duties and
responsibilities to them.

4. They motivate them to achieve desired objectives.

5. They cooperate with other departments for smooth functioning of the organization.

6. They are responsible for all the activities of first line managers.

• Supervisory or Operational Management

It consists of foremen, supervisors, sub- department executives, clerk, superintendent etc.

Functions:

1. They interact with actual work force and pass on instructions of the middle level management to the
workers.

2. They represent the problems or grievances of workers before the middle level management.

3. They maintain good working conditions and develop healthy relations between superior and
subordinate.

4. They look to the safety of workers and are responsible for boosting the morale of the workers and
developing the team spirit.

5. They help middle level in receiving, selecting and appointing the workers.
Functions of Management

1. Planning: It is deciding in advance what to do and how to do it. It bridges the gap between where
we are and where we want to go. It involves setting objectives and developing appropriate course of
action to achieve these objectives.

2. Organizing: It refers to identification and grouping different activities in the organization and
bringing together the physical, financial and human resources to establish most productive relation
for the achievement of organizational goals. Steps in the organizing process are identification and
division of work, departmentalization, assignment of duties and establishing reporting relationship.

3. Staffing: It refers to the process of hiring and developing the required personnel to fill in various
positions in the organization. It means putting people to job. It is concerned with obtaining, utilizing
and maintaining satisfactory workforce.

4. Directing: It is concerned with instructing, guiding, counseling and motivating the employees in the
organization so that their actions results in achievement of organizational objectives.

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 5. Controlling: It is the process of comparing the actual performance with the standards and if there
are any deviations then corrective actions must be taken.

Coordination

Meaning

It may be defined as the process of integrating the activities and efforts of different units of an organization
for effective accomplishment of organizational objectives.

Nature / Features of coordination

1. Coordination integrates group efforts: The concept of coordination always applies to group efforts
and not to single individual. It gives a common direction to group efforts to achieve pre determined
goals successfully.

2. Ensure unity of action: Coordination acts as a binding force between different departments and
ensures achievement of organizational objectives. It integrates the functions of all departments and
ensures successful accomplishment of organizational goals.

3. It is a continuous process: Coordination is a never ending process. The manager works

continuously to achieve and maintain coordination because without it companies cannot function
efficiently.

4. It is an all pervasive function: It is required at all levels in all the departments and in all the
functions of management, due to interdependence of various activities on each other. In the absence
of coordination there is overlapping and chaos instead of harmony and integration of activities.

5. Responsibility of all managers: It is the function of every manager and at all levels in the
organization. Top level management needs to coordinate with their subordinates to ensure that
overall policies of the organization are duly carried out. Middle level management coordinates with
the top level and operational level. Operational level mangers coordinate the activities of its workers
to ensure that the work done is according to plans

6. Deliberate function: The manger has to coordinate the efforts of different people in a conscious and
deliberate manner. Even where members of department are willing to cooperate, coordination gives
direction to that willing spirit.

* Also refer to GREY BOX given in NCERT –‘DABBAWALLAS’- Excellence through Coordination

Importance of coordination

1. Growth in size: As organization grows in size, the number of people employed by the organization also
increases. Therefore, it becomes difficult to integrate their efforts and activities. Hence, for improved

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 organizational efficiency, coordination becomes necessary to integrate the individual goals with
organizational goals.
2. Functional differentiation: The activities of an organization are divided into various specialized
departments such as purchase, finance, marketing etc. Coordination synchronizes the activities of these
departments so that they proceed uniformly in a single direction rather than work as independent units.

3. Specialization: Organizations hire specialist to handle specific jobs. These specialists may not consult
departmental heads. This lead to conflicts between heads and specialists. Coordination helps to reconcile
difference between specialists and departmental heads.

Coordination – The essence of management

Coordination is considered as the essence of management because of following reasons:

1. Coordination is needed to perform all the functions of management

Planning: In planning, coordination is required between main plan and supportive plans of different
departments.

➢ Organizing: In organizing, coordination is required between resources of an organization and also

between authority, responsibility and accountability.

➢ Staffing: In staffing, coordination is required between skill of a person and job assigned to him.

➢ Directing: In directing, coordination is required between superior and subordinates, between orders,
instructions, guidelines and suggestions etc.

➢ Controlling: In controlling, coordination is required between standards and actual performance.

Coordination is required at all levels.

➢ Top level requires coordination to integrate all the activities

of organization and lead the efforts of all the individuals in
one common direction.

➢ Coordination is also required at middle level to balance the

activities of different departments.
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 ➢ Lower level requires coordination to integrate the activities of
workers towards the achievement of organizational objectivities

Coordination is the most important function of an organization. Like a thread in a garland, coordination binds
all the functions of management.

Tips to crack case studies

S.No. Clue words in the case study Underlying concept
1 Intangible force Management
2 Achieving targets Effectiveness
3 Reducing cost Efficiency
4 Quality of management Coordination
5 Essence of management Coordination

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