MANAGEMENT PRINCIPLES AND APPLICATIONS

Unit-1
Introduction to management: meaning and Defination, Nature and
characteristics of Management, Scope of Management, Levels of
Management, Administration VS Management, Overview of functions of
management: Evolution of management thought: Contribution of FW Taylor
and Henry Fayol Mayo, Marry parker Follett and C.I. Barnard, Behavioural
Approach, Systems approach, Quantitative approach, Systems approach,
Quantitative approach and Contingency approach, Roles and qualities of
manager.

INTRODUCTION:
• Management is a process of allocating human and economic resources of
the organization through managerial functions such as planning, organizing,
Staffing, directing and controlling for the purpose of achieving stated
objectives.
• Management is an activity which is necessary wherever there is a group of
people working in an organization. Though people in an organization have
diverse functions but their aim is to achieve same goals.
• Management is the art of getting things done with the aim of achieving
organizational goals effectively and efficiently.
• Management as the process of getting things done through and with people
to achieve a common goal efficiently and effectively. When we go through
the definition, we find the two buzzwords efficiency and effectiveness which
are alike terms and popularly used by managers.

DEFINATION:
• Mary Parker Follett: “Management is the art of getting things done through
others.”
• Harold Koonz: “Management is the art of getting things done through and
with help of people in formally organized groups.”
• James L. Ludury: “Management is the art of knowing exactly what you
want your men to do and their seeing that they do it in the best and cheapest
way.”
• EFFECTIVENESS: It denotes a situation when the goals are achieved within
a stipulated time with the given resources and means.
• EFFICIENCY: States a situation when goals are achieved correctly and
minimum of cost.

What is Efficiency?
Peter F. Ducker defines efficiency as doing things right. It means completing
the task correctly with minimum cost. It improves the achievement of objectives
through the use of minimum inputs. It aims at enhancing an organization's profit
by reducing the cost involved in completing a particular task. Management is
said to be efficient when for the same level of output, fewer resources are used
and less costs are incurred.
For example, Manager ‘B’ also promised the same company ABC Ltd. to
produce 3,000 units in half the production cost of Manager ‘A’, but in one year.
Now manager ‘B’ can produce 3,000 units but needs a longer period. Here, the
manager was efficient, but not effective, as for the same output, more time was
needed.
What is Effectiveness?
Peter F. Ducker defines effectiveness as doing the right things. It is concerned
with achieving the organizational goals on time. The ultimate goal is to achieve
the end result. It aims at achieving the results on time, no matter what the cost
is. Its goal is to produce target production on time.
For example, manager ‘A’ promised a company ABC Ltd. to produce 3,000
units in six months. To achieve this target within time, the manager increased
the working hours, labour and the number of shifts, etc. Now manager ‘A’ was
able to produce 3,000 units, but at a higher production cost because of high
wastage and mishandling of resources. Here, the manager was effective, but not
so efficient.
LEVELS OF MANAGEMENT:

1: TOP LEVEL MANAGEMENT:

Top level management consists of senior most executives of the organization and
their teams.
• Board of Directors
• Managing Director
• Vice-President
• President
• Chief Executive Officer (CEO)
• Chief Financial Controller (CFC)
The Board of directors is accountable to shareholders in the Annual General
Meeting of the Company. The other officers may carry out the policies and plans
devised by the Board of Directors. Chief Executive Officer looks after the
Overall management of the Company's operations.
2: MIDDLE LEVEL MANAGEMENT
Middle level management acts as a link between top management and the
supervisory level. These are Departmental Heads and are responsible for
implementing and controlling policies and plans decided at the Top level.
• Production Manager
• Operations manager
 • Marketing Manager
• Regional Manager
• Finance Manager
• Divisional Manager
• Human Resource Manager
3: LOWER/OPERATIONAL LEVEL MANAGEMENT
This is the lowest level in the hierarchy of management and actual operations are
the responsibility of this level. The quality and quantity of output depends upon
the efficiency of this level of managers.
• Supervisors
• Foreman
• Superintendents
• Section Officer
• Inspectors

❖ FUNCTIONS OF MANAGEMENT
Planning:
Planning is a process of looking ahead. It is decision in advance, what to do,
when to do, how to do and who will do a particular task. Planning is a process
which involves ‘thinking before doing’. Planning is concerned with the mental
state of a manager.
Organising:
To identify, classify & assign activities, Delegate authority & Responsibility, Co-
ordinate Relationship. The function of organizing is to arrange, guide, co-
ordinate, direct and control the activities of other factor of production through
men, material, money and machines so as to accomplish the objectives of the
enterprise.
Staffing:
The function involves manning the positions created by organisation process. It
is concerned with human resources of an Organisation. It involves Manpower
planning, recruitment selection & training, placement of manpower
development, promotion, transfer, appraisal, and employee remuneration.
Directing:
Management in action. It involves Leadership, Communication,
Motivation, Supervision
Directing is concerned with carrying out the desired plans. It initiates organised
and planned action and ensures effective performance by sub-ordinates towards
the accomplishment of group activities.
Defination:
George R. Terry “Direction is moving to action and supplying stimulative
power to the group.
Co-ordination:
Orderly arrangement of group efforts to provide unity of action in the
pursuit of common objectives.
It is the orderly arrangement of group effort to provide unity of action in the
pursuit of common objectives.
Dalton McFarland defines Co-ordination as the “Process whereby an executive
develops an orderly pattern of group effort among his sub-ordinates and secures
unity of action in the pursuit of common purpose”
Controlling:
Establishing standards, measuring actual performance comparing actual
with standards finding variances taking corrective action.
It can be defined as “Determining what is being accomplished, that is evaluating
the performance, if necessary, applying corrective measures so that the
performance takes place according to plans”.

❖ QUALITIES OF MANAGER:
 Manager: Manager is a person in the Organization who directs the activities of
others.

MANAGERIAL TASKS AND SKILLS:

A Manager has to perform a number of jobs. It necessitates that a manager
should have proper skills to perform different jobs. Henry Fayol put the
qualities required by managers:
a) Physical- Health, vigour, address (physical strength and good health)
b) Mental- Ability to understand and learn : Judgement, Mental vigour and
adaptability
c) Moral- energy, Firmness, willingness to accept responsibility, initiative,
loyalty, tact, dignity
d) Educational
e) Technical
f) Experience

Robert L. Katz conducted research during early 1970’s, and found that
managers need three essential skills or competencies:
Technical Skills- Knowledge of and proficiency in a specialized field
Human Skills- The ability to work well with other people individually and in a
group.
Conceptual Skills- The ability to think to conceptualize about abstract and
unknown situations.
He also found the relative importance of these skills varied according to the
manager’s level within the Organization.
 1.Technical Skills: Technical skills involve skills that give the managers the
ability and the knowledge to use of resources, tools, techniques, procedures to
achieve their objectives. These skills not only involve operating machines and
software, production tools, and pieces of equipment but also the skills needed to
boost sales, design different types of products and services, and market the
services and the products.
2.Human Skills: The human or the interpersonal skills are the skills that present
the managers’ ability to interact, work or relate effectively with people. they
know how to communicate, motivate, lead and inspire enthusiasm and trust.
These skills enable the managers to make use of human potential in the company
and motivate the employees for better results.
3.Conceptual Skills: Conceptual skills is the ability to integrate and co-ordinate
various activities. Managers must have the ability to think and to conceptualise
about abstract solutions. The manager is able to see an entire concept, analyze
and diagnose a problem, and find creative solutions. This helps the manager to
effectively predict hurdles their department or the business as a whole may face.

❖ ROLES OF MANAGER:

A. Interpersonal Roles:
a. Figure Head: A manager has to perform some duties as a figurehead. He may
receive the guests from outside or preside over a social function of employees.
He may have to sign some legal documents as head of the organization. These
are the roles played by figure head.
b. Leader: Managers has also to act as leader when he has to sort out the
activities of subordinates. He has not only to motivate the employees but is
also involved in hiring, firing and associated duties to employees.
c. Liaison: He has to contact outside agencies for collecting business related
information. The outside information providers may be individuals or groups.
B. Informational Roles:
a) Monitor: Manager, as monitor, seeks internal and external information about
issues affecting internal operations, a department’s success and the problems
and opportunities. All such vital information is stored and maintained at his
level.
b) Disseminator: Manager, as disseminator, transmits information received from
internal and external sources across the organisation. The factual or value
based external views are either filtered or highlighted across different cadres
in the organisation. To be active disseminators, managers require filtering and
delegation skills.
c) Spokes person: A manager plays the role of spokesperson in which he
provides the information to outsiders.
C. Decisional Role:
a. Entrepreneur: In this role, the manager constantly looks out for new ideas
and seeks to improve his unit by adapting it to changing conditions in the
environment.
b. Disturbance Handler: The manager works like a disturbance handler in the
organization, when unanticipated problems take place in the organization.
Manager takes corrective actions in response to previously unforeseen
problems.
c. Resource Allocator: The organizational resources must be utilized in such a
way that they can provide the best results. Thus, a manager allocates the scarce
 resources to ensure their best use.the manager assigns and monitors the
allocation of human, physical, and monetary resources.
d. Negotiator: Negotiation is another important role played by the managers in
the organization. They bargain with supplier, customers and others for better
quality, lower prices, better delivery and prices etc.

❖ EVOLUATION OF MANAGEMENT THOUGHTS

After world war-I the concept started growing and gained impetus after World war-
II because of growing competition, complexity, technological evolution etc.
Concept of organization and administration existed in Egypt in 1300 BC. Roman
catholic church gave the concept of staff personnel. Other contributors are
Kautilya, Confucius, Cameralists, etc.

Management thought

Classical Approach Neo-Classical Approach Modern Approach

Quantitative
Bureaucratic Human Approach
Management Relations
System
Approach Approach Approach
Scientific
Behavioral
Management Contingency
Sciences
Approach Approach
Classical Management
Administrative Approach: (Managing worker and organisation more
efficiently) Approach Contemporary
Management Approach
Approach
 ❖ Bureaucratic Management Approach: Max weber introduced it
around 1900.
Bureaucracy: Bureaucracy is an organisational structure that is characterized by
many rules, standardized process, procedures and requirements, number of desks,
thorough division of labour and responsibility, clear hierarchies and professional,
almost impersonal interactions between employees.

Rules, regulations, rigid hierarchy and specialized functions are important feature of
bureaucracy.

BUREAUCRACY:
According to him bureaucratic organisation is more efficient because it aims at
hight degree of precision, objectivity and rationality. This approach implies rules
regulations, procedures, impersonal relationships and rigid hierarchy of authority
in the organisation. Like Government and military. Max weber’s main contribution
to management is his theory of Authority structure and his description of
organisation based on the nature of authority within them.

There are 3 types of legitimate authority:

i. Rational legal Authority (legally established positions or rank
within the hierarchy of a business, military unit or Government)
ii. Traditional Authority (Persons belongs to a traditional recognised
or possessing authority)
iii. Charismatic Authority (Follower’s belief)
SCIENTIFIC MANAGEMENT APPROACH (F.W TAYLOR)
F.W taylor propounded this concept around 1910.F W Taylor has worked as
a chief engineer in a steel company around 1884 in Philadelphia USA. He
studied the causes of low efficiency of workers and concluded that lack of
knowledge on the part of worker and management unable to calculate the
problem. “He suggested that the management should follow as Scientific
approach which comprise observation, investigation, analysis,
measurement, experiments and interference in their work and tackle all
problems.” F W Taylor defined Management as “the art of knowing exactly
what you want men to do and seeing that they do it in the best and cheapest
way”

❖ Principles of Scientific Management:

1. Science, not rule of thumb:

Rule of thumb involves trial and error method or hit and miss method. Taylor
believed that there was only one best method to maximize efficiency and that
can be developed through study and analysis. Scientific method involved
investigation of traditional methods through work study, identifying the best
practices and developing a standard method, which would be followed
throughout the organization.

2. Harmony, not discord:

Taylor indicated and believed that the relationship between the workers and
management should be cordial and completely harmonious. Difference between
the two will never be beneficial to either side. Management and workers should
acknowledge and understand each other’s importance. Taylor also suggested the
mental revolution for both management and workers to achieve total harmony.

3. Mental Revolution:

This technique involves a shift of attitude of management and workers towards

each other. Both should understand the value of each other and work with full
participation and cooperation. The aim of both should be to improve and boost
the profits of the organization. Mental Revolution demands a complete change
in the outlook of both the workers and management; both should have a sense of
togetherness.

4. Cooperation, not Individualism-

It is similar to ‘Harmony, not discord’ and believes in mutual collaboration

between workers and the management. competition should replaced by
cooperation. Managers and workers should have mutual cooperation and
confidence and a sense of goodwill. The main purpose is to substitute internal
competition with cooperation. Management insist on “Paternalistic style of
management”

5. Development of Each and Every Person to his or her Greatest Efficiency-

The effectiveness of a company also relies on the abilities and skills of its
employees. Thus, implementing training, learning best practices and technology,
is the scientific approach to brush up the employee skill. To assure that the
training is given to the right employee, the right steps should be taken at the time
of selection and recruiting candidates based on a scientific selection.

C. ADMINISTRATIVE MANAGEMENT (HENRY FAYOL)

Administrative theory waw given by Henry Fayol. He is also called the

father of management. Henry Fayol started his career as a junior engineer
in a coal mine Company in France and became its general manager in 1880.
He wrote a book on general and industrial Management in 1916 which was
published in English in 1949. This book is considered to be one of the best
classic in Management.

Contribution Of Henry Fayol:

1. Classification of Business Activities:

Henry fayol divided the Activities of a business enterprise into 6 groups:

• Technical activities: Production, Manufacture, Adaption

• Commercial activities: buying, selling and exchange

• Financial activities: Search for and optimum use of capital

• Security Activities: Protection of property and persons

• Accounting activities: Including statistics, stock taking, balance sheet,

costs

• Managerial Activities: planning, organizing, commanding,

coordinating and controlling.

2. Functions of Management:
Fayol divided the key function of administration into 5 sub-groups.
He was first to identify four functions of management:
Planning (to foresee and provide means for the future).
Organizing (Provides everything useful to its functioning, Raw
material, tools, capital, personnel).
Co-ordinating (binding together-unifying and harmonizing all
activity).
Directing (lead the personnel in a better way)
Controlling (ensuring everything goes as per plans)
 Fayol observed that these principles apply not only to business
enterprise, but also to political, religious, philanthropic or other
undertakings.
C. Principles of Management:

1. Division of Work:

Whole work must be divided into small tasks or jobs and each job must be
assigned to a trained specialist who is competent to perform it. Division make
each task simplier and repetitive performance helps in gaining speed, accuracy
and specialization, increase in efficiency. For this reason, big firm have separate
department i.e. Finance, Marketing, Human resources etc.

2. Authority & Responsibility:

There should be proper balance between authority and responsibility.

• Authority is right to give orders to subordinates

• Responsibility is the duty, which subordinate is expected to perform.

These are the two key aspects of management. Authority facilitates the
management to work efficiently, and responsibility makes them responsible for
the work done under their guidance or leadership.

3. Discipline:

It is the obedience to the rules and regulation of the organization, which is

necessary for systematic working of the organization. Without discipline,
nothing can be accomplished. It is the core value for any project or any
management. Good performance and sensible interrelation make the
 management job easy and comprehensive. Employees’ good behaviour also
helps them smoothly build and progress in their professional careers.

4. Unity of command:

This means an employee should have only one boss and follow his command.

Each subordinate should receive orders and be accountable to one and only one
superior. If an employee has to follow more than one boss, there begins a conflict
of interest and can create confusion.

5. Unity of Direction:

• There should be one head and one plan for group of activities having same
objectives. Whoever is engaged in the same activity should have a unified
goal.
• This means all the people working in a company should have one goal and
motive which will make the work easier and achieve the set goal easily. It
ensures unity of action and co-ordination and avoids unnecessary duplication
of efforts.

6. 6. Subordination of individual interest to General interest:

This indicates a company should work unitedly towards the interest of a
company rather than personal interest. Be subordinate to the purposes of an
organization.

7. Fair Remuneration:

remuneration should be fair and satisfactory to both employees and the organization.
This principle leads to harmonious relations in the organization. Fair remuneration should
be determined based on government rules related to wages, financial position of the
organization, nature of work, and cost of living. Employees should be paid reasonable
wages for their service, which should provide them with a moderate standard of living.

8. Centralization:

Centralization refers to the concentration of authority at the top level, and decentralization
means distribution at all levels of management. According to this principle, there should be
a proper balance between centralization and decentralization. The degree of centralization
and decentralization depends on various factors, such as experience of the employees, ability
of subordinates, size of the organization, etc. Too much centralization lead to loss of control
of top management. Therefore an optimum balance should be maintained according to the
need of the organization.

For example, Authority to take vital decisions must be given to the top management, whereas
authority related to operational activities must be given to the middle and lower level.

9. Scalar Chain:

Fayol, on this principle, highlights that the hierarchy steps should be from the top to the lowest.
This is necessary so that every employee knows their immediate senior also they should be
able to contact any, if needed.

10. Order:

According to this principle, there should be a proper place for everything and everyone.
Henri Fayol emphasized on two types of order: material order and social order. In material
order, there must be a plan for everything. It ensures to fix a place for various material tools.
Whereas in social order, there must be an appointed place for every employee, which ensures
a proper and fixed place/cabin for each employee.

For example, there should be specific place for foremen in a factory so that the work can be
done easily.

11.Equity: (Justice and kindness)

All employees should be treated equally and respectfully. It’s the responsibility of a manager
that no employees face discrimination.
For example, workers doing similar jobs in the same organization should be paid same
wages irrespective of their sex, caste, religion and language.

12. Stability:

Fayol said that employees should be kept in their position for a reasonable time to show
stability creates a sense of belonging, and workers are encouraged to improve their
quality of work. This will increase the efficiency of employees, and it will also increase the
reputation of the organization. An employee delivers the best if they feel secure in their job.
It is the duty of the management to offer job security to their employees.

For example, new employees must be given ample time to adapt to new culture and
environment of the workplace.

13. Initiative:

The management should support and encourage the employees to take initiatives in an
organisation. It will help them to increase their motivation and morale. Employees should
be given the chance and opportunity in taking initiative in deciding and implementing the
plans.

For example, organizations must have an employee suggestion system so that they have
feeling of belongingness.

14. Esprit de crops:

management should take reasonable steps to develop a sense of belongingness and a feeling
of team spirit amongst employees. In order to achieve the best possible result, individual
and group efforts need to be integrated. Production is a teamwork and

it requires the full support of all members. For this purpose, a manager should replace ‘I’
with ‘We’ in his conversations to bring a team spirit among the employees.

For example, authority and responsibility meant empowering managers, but now it means
empowerment of employees because of flat organizational structures that are gaining
ground.
 SCOPE OF MANAGEMENT:

1. Production Management

2. Marketing Management

3. Financial Management

4. Personnel Management

5. Office Management

1. PRODUCTION MANAGEMENT:

Production is the creation of goods and services. In relation to goods, production is the
fabrication of a physical object through the use of men, materials, and equipment and
with relation to services. It relates to the goods, and services, in right quantity, at the right
time and at right cost.

Followings activities are part of production function:

1. Designing the product

2. Location and layout of plant and buildings
3. Determine the quantity and quality to be produced
4. Determining of method and procedure of production
5. Deciding the procedure for purchase and storage of materials.
MARKETING MANAGEMENT:
Marketing involves all efforts to create customers for the products and provide maximum
satisfaction to them. It requires identification of customers need and supplying them goods
and services which satisfy them.
Marketing involves following function
1. Conducting research to determine the needs and preferences of customers.
2. Planning and developing suitable products
3. Setting off prices for products
4. Selecting the appropriate channels for distribution.
5. Promotional activities such as advertising, and salesman for communicating with
customers.
FINANCIAL MANAGEMENT:
Financial management is concerned with the planning and controlling of financial resources
of the business. It ensures the availability of right amount of funds when these are needed.
The cost of funds also needs to be taken into account while selecting a particular source of
funds.
Financial management involves following activities:
1. Determining financial requirements for both ling-term and short-term periods.
2. Selecting the appropriate source of funds.
3. Raising the required funds at appropriate time.
4. Ensuring proper allocation and utilisation of funds.
PERSONNEL MANAGEMENT:
Personnel management is concerned with managing people at work. It helps employees to
develop their talent by providing them opportunities, creating job satisfaction and improving
their performance.
Following activities are covered under personnel management:
1. Manpower planning
2. Recruitment and selection of employees
3. Providing proper training and development opportunities
4. Deciding appropriate remuneration and compensation
5. Performance appraisal
OFFICE MANAGEMENT:
Every business organisation needs office to maintain proper records of every activity
undertaken there. Office management is the technique of planning, organisaing, co-
ordinating and controlling office activities with a view to achieve business objectives and is
concerned with efficient and effective performance of the office work
It involves following activities:
1. Maintain proper records
2. Arrange and maintain effective communication system
3. Establish cordial relations between all sections of the enterprise
4. To render help to all areas of management