1

Unit I
MANAGEMENT AND FUNCTIONS

Management – Meaning, Nature, Levels of Management – Functions –

Management VS Administration – Schools of Management Thought –
F W Taylor and Hendry Fayol

Management - Meaning
Management is a universal process in all organized and social and economic
activities. The term ‘Management’ has been used in different senses. Sometimes it is
used to manage the ‘group of managerial personnel’ in an organisation. At other times
management refers to the process of planning, organising, staffing, directing,
co-ordinating and controlling.

Management – Meaning
“Management is a distinct process consisting of planning, organising,
activating and controlling performed to determine and accomplish the objectives by the
use of the human beings and other resources”
− George R Terry.
NATURE OR CHARACTERISTICS OF MANAGEMENT
The term ‘Management’ has been used in different senses. Sometimes it is used
to manage the ‘group of managerial personnel’ in an organisation. At other times
management refers to the process of planning, organising, staffing, directing,
co-ordinating and controlling. The following are the important characteristics of
management.
1. Management is a group activity.
2. Management is goal-oriented.
3. Management is a factor of production.
4. Management is universal in character.
5. Management is needed at all levels of the organisation.
6. Management is a distinct process.
7. Management is a social process.
8. Management is a system of authority.
9. Management is an art as well as a science.
10. Management is a profession.

Principles of Management Dr M Alexpandi

 2

11. Management is intangible.

12. Management is multi-disciplinary.
1. Management is a Group Activity: Management is an essential part of a group
activity. Wherever, there is an organized group of people working towards a common
goal, some type of management becomes essential. Management makes the people
realize the objective to the group and directs their efforts towards the achievement of
these objectives.
2. Management is Goal-Oriented: Management aims to achieve economic and social
objectives. Group efforts in management are always directed towards the achievement
of some pre-determined goals. It is concerned with the establishment and
accomplishment of these objectives.
3. Management is a Factor of Production: Management is not an end in itself but a
means to achieve the group objectives. Management is a factor of production that is
required to co-ordinate the other factors of production for the accomplishment of
pre-determined goals.
4. Management is Universal in Character: Wherever, there is human activity, there is
management. The basic principles of management are universal application and can be
applied in all organisations whether they are business, social, religious, cultural, sports,
educational, politics or military.
5. Management is Needed at all Levels of the Organisation: The important feature of
management is that is needed at all levels of organisation. For example, top level,
middle level and supervisory level.
6. Management is a Distinct Process: Management is a distinct process performed to
determine and accomplish stated objectives by the use of human beings and other
resources. The process of management consists of such functions as planning,
organising, staffing, directing, co-ordinating, motivating and controlling.
7. Management is Social Process: Management consists of getting things done
through others. This involves dealing with people. The efforts of the human beings
have to be directed, co-ordinated and regulated by the management in order to achieve
the desired results.
8. Management is a System of Authority: The management is a process of directing
men to perform a task, authority to accomplish the work from others is implied in the
very concept of management.

Principles of Management Dr M Alexpandi

 3

9. Management is an Art as well as a Science: Management is a science because it

has developed certain principles which are of universal application. But the result of
management depends upon the personal skill of managers and in this sense
management is an art.
10. Management is a Profession: Management is recognised as a profession and has a
systematic and specialised body of knowledge consisting of principles, a technique and
laws and can be taught as a separate discipline or subject.
11. Management is Intangible: Management is intangible i.e., it can be felt in the
form of results and not seen. For example, when we are not able to produce the desired
quantity, we say it is the result of poor management.
12. Management is Multi-Disciplinary: Though management has developed as a
separate discipline but it draws knowledge and concepts from disciplines such as
sociology, psychology, economics, statistics, operations research etc.

IS MANAGEMNET AN ART OR SCIENCE

Management is an Art
An art is often regarded as the systematic application of skill or knowledge in
effecting accomplishment of results. It represents the methods or ways of doing specific
things and indicates how an objective is to be achieved. Every art is a practical and is
concerned with creation of something. The following are, thus, the essential features of
art;
1. Personal skill
2. Practical knowledge
3. Result-oriented approach
4. Regular practice, and
5. Creativity
Management is a Science
The word science literally means knowledge. It is a systematic body of
knowledge acquired by mankind through observation and experimentation and which is
capable of verification. The essential features of science are as follows;
1. It is a systematic body of knowledge that used scientific methods of
observation.
2. The principles are exact and have universal applicability without any
limitation.
Principles of Management Dr M Alexpandi
 4

3. The principles establish a cause and effect relationship between various

factors.

OBJECTIVES OF MANAGEMENT
The primary objective of management is to run the enterprise smoothly.
The profit earning objective of a business is also to be kept in mind while undertaking
various functions. Following are the broad objectives of management:
1. Proper utilisation of resources.
2. Improving performance.
3. Mobilising best talent.
4. Planning for future.
1. Proper Utilisation of Resources: The main objective of management is to use
various resources of the enterprise in a most economic way. The proper use of men,
materials, machines and money will help a business to earn sufficient profits to satisfy
various persons.
2. Improving Performance: Management should aim at improving the performance of
each and every factor of production. The fixing of objectives of various factors of
production will help them in improving their performance.
3. Mobilising Best Talent: The management should try to employ persons in various
fields so that better results are possible. The employment of specialists in various fields
will be in increasing the efficiency of various factors of production.
4. Planning for Future: No management should feel satisfied with today’s work if it
has not thought of tomorrow. Future plans should take into consideration what is to be
done next. Future performance will depend upon present planning. So, planning for
future is essential to help the concern.

SCOPE OR BRANCHES OF MANAGEMENT

Management is an all pervasive function since it is required in all types of
organised activities. Thus, its scope is very large. In the operational aspects of business
management, called the branches of management, are as follows;
1. Production Management
2. Marketing Management
3. Financial Management
4. Personnel Management
5. Office Management
Principles of Management Dr M Alexpandi
 5

1. Production Management: Production means creation of utilities. This creation of

utilities takes place when raw materials are converted into finished products. Plant
location and layout, production policy, type of production, plant facilities, material
handling, production planning and control, repair and maintenance, research and
development, quality control and value analysis are the main problems involved in
production management.
2. Marketing Management: Marketing is a sum of total of physical activities which
are involved in the transfer of goods and services and which provide for their physical
distribution. A process of identifying and assessing the consumer needs with a view to
first converting them into products or services and them involving the same to the final
consumer or user so as to satisfy their wants with a stress on profitability that ensures
the optimum use of the resources available to the enterprise.
3. Financial Management: Financial management is concerned with the managerial
activities pertaining to the procurement and utilisation of funds or finance for the
business purposes. The main functions of financial management include;
1. Estimation of capital requirements
2. Determining the suitable sources of funds
3. Co-ordinating the operations of various departments
4. Creation of suitable dividend policy.
4. Personnel Management: Personnel management is that phase of management
which deals with the effective control and use of manpower. Effective management of
human resources is one of the most important factors associated with the success of an
enterprise. Personnel management is concerned with managerial and operative
functions.
5. Office Management: The concept of management when applied to office is called
‘office management’. Office management is the technique of planning, co-ordinating
office activities with a view to achieve common business objective.

IMPORTANCE OF MANAGEMENT
Wherever there is an organized group of people working towards common
goals, some type of management becomes essential. The following points further
highlight the importance of management.
1. Achievement of Group Objectives
2. Optimum Utilisation of Resources

Principles of Management Dr M Alexpandi

 6

3. Minimization of Cost
4. Increased Profit
5. Smooth Functioning of Business
6. Provides Innovation
7. Change of Growth
8. Social Benefits
9. Special Importance of Management in India’s Developing Economy.
1. Achievement of Group Objectives: It is the management which makes the people
realizes the objectives of the group and directs their efforts towards the achievement of
these objectives. It brings the human and material resources together to mobilize the
people for the achievement of the objectives of the management.
2. Optimum Utilisation of Resources: No business activity can be undertaken without
the five factors of production such as, the land, labour, capital, enterprise and the
management. The four factors may prove ineffective in the absence of fifth—the
management.
3. Minimization of Cost: In the present days of increasing competition, only that
business enterprise can survive which can produce quality goods at the lowest of cost.
Through, better planning, sound organisation and effective control, management
enables a concern to reduce costs and enables an enterprise to face cut-throat
competition.
4. Increased Profit: Profits can be increased in any organisation either by increasing
the sales revenue or reducing cost. To increase the sales revenue is beyond the control
of an organisation.
5. Smooth Functioning of Business: Management ensures efficient and smooth
running of business through better planning, sound organisation, effective control and
the various tools of management.
6. Provides Innovation: Management provides new ideas, imagination and visions to
the organisation.
7. Change of Growth: An enterprise operates in a changing environment. Management
moulds the enterprise in such a changing environment.
8. Social Benefits: Management is beneficial not only to the business enterprise but to
the society as a whole. It raises the standard of living of the people by providing good

Principles of Management Dr M Alexpandi

 7

quality products and services at the lowest cost. It also makes the optimum utilisation
of scarce resources and promotes peace and prosperity in the society.
9. Special Importance of Management in India’s Developing Economy:
Management has to play a more vital role in the developing countries, like India, where
productivity is low and the resources limited.

CLASSIFICATION OF MANAGEMENT FUNCTIONS

Different authors have given different management functions. Henry Fayol, the
pioneer of management process approach gave (i) Planning (ii) Commanding
(iii) Co-ordinating and (iv) Controlling as the functions of management.
Koontz and O’ Donnel adopted managerial functions as; planning, organising,
staffing, directing and controlling. However, the following comprehensive
classification can be given of various management functions.
1. Planning
2. Organising
3. Staffing
4. Directing
a. Leadership
b. Communication
c. Motivation
d. Supervision
5. Co-ordinating
6. Controlling
1. Planning: Planning helps in determining the course of action to be followed for
achieving various organizational objectives. It is a 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’. Plans may be of many types, such as short range
plans, medium range plans, long range plans, strategic plans, administrative plans and
operational plans.
2. Organising: The function of organising is to arrange, guide, co-ordinate, direct and
control the activities of other factors of production, such as men, material, money and
machines so as to accomplish the objectives of the enterprise. The process of
organisation involves the following steps;

Principles of Management Dr M Alexpandi

 8

i. To identifying the work to be performed

ii. To classify or group the work
iii. To assign these groups of activities or work to individuals
iv. To delegate authority and fix responsibilities and
3. Staffing: The function of staffing involves filling, and keeping filled, positions in the
organisation structure through defining work-force requirements, appraising, selecting,
compensating and training. Thus, staffing consists of the following:
i. Manpower planning
ii. Recruitment, selection and training
iii. Placement of manpower
iv. Development, promotion, transfer and appraisal
v. Determination of employee remuneration.
4. Directing: Directing is concerned with carrying out the desired plans. It initiates
organized and planned action and ensures effective performance by sub-ordinates
towards the accomplishment of group activities. Directing is a continuous function and
is performed at all levels of management. The main activities of direction are as
follows;
a. Leadership
b. Communication
c. Motivation
d. Supervision
5. Co-ordinating: Co-ordination is one of the most important functions of
management. It is essential to channelize the activities of various individuals in the
organisation for the achievement of common goals. Co-ordination creates a team spirit
and helps in achieving goals through collective efforts.
6. Controlling: Controlling is the process which enables the management to get its
policies implemented and take corrective actions if performance is not according to the
pre-determined standards. The process of controlling involves the following steps;
i. Establishing standards of performance
ii. Measuring actual performance
iii. Comparing the actual performance with the standard
iv. Finding variances or deviations, if any; and
v. Taking corrective action or measures.

Principles of Management Dr M Alexpandi

 9

Difference between Administration and Management

Sl. Basis of
Administration Management
No Difference

It is primarily concerned with

It is doing function and it
Nature of the determination of objectives
1 involves the implementation
Work and broad policies. It is the
of plan and the policies.
thinking function.

It takes major decisions and is

It takes the decision within the
2 Scope a wider term than
framework of administration.
management.

3 Level of It is a top management It is a lower level management

Authority function function.

It consists of managerial
4 It consists of owners of an personnel with specialised
Status
enterprise. knowledge who may be the
employees.

Generally, it is used in relation

It is used mainly in business
5 Nature of to government, military,
firms which have economic
Organization educational and religious
motives.
organizations.

Its decisions are generally Its decisions are influenced by

6 influenced by external factors internal factors such as values,
Influence
such as social, political, legal
etc. beliefs and opinions.

Principles of Management Dr M Alexpandi