Indian School Muscat Class 12 Management PDF

INDIAN SCHOOL MUSCAT SENIOR SECTION DEPARTMENT OF COMMERCE AND HUMANITIES CLASS XII – BST HANDOUT - CHAPTER 1: NATURE AND SIGNIFICANCE OF MANAGEMENT Contents to be covered:  Management as a process (Process (5 functions...

INDIAN SCHOOL MUSCAT SENIOR SECTION DEPARTMENT OF COMMERCE AND HUMANITIES CLASS XII – BST HANDOUT - CHAPTER 1: NATURE AND SIGNIFICANCE OF MANAGEMENT Contents to be covered:  Management as a process (Process (5 functions of management), Effectives and Efficiency)  Characteristics of management (7 points) (Goal oriented, pervasive, multidimensional, continuous, dynamic, group Activity and intangible force)  Objectives of management (Organisational (survival, profit and growth), Social and Personal)  Importance of management (5 points) (Achieving group goals, increases efficiency, creates a dynamic organization, Achieving personal objectives, development of society)  Nature of management (Art, Science and Profession)  Levels of management (Top, Middle and lower/Supervisory)  Coordination (As binding force, essence of Mgt, Characteristics and importance) MANAGEMENT: Management is defined as a process of getting things done with the aim of achieving goals effectively and efficiently. Process means the primary functions or activities that management performs to get things done. These functions are planning, organising, staffing, directing and controlling. Being effective or doing work effectively basically means finishing the given task. Effectiveness in management is concerned with doing the right task, completing activities and achieving goals. In other words, it is concerned with the end result. (All three points are important and must be in your answer) Efficiency means doing the task correctly and with minimum cost. There is a kind of cost-benefit analysis involved and the relationship between inputs and outputs. Efficiency can be increased when for the same benefit or outputs, fewer resources are used and less costs are incurred. Because reduction in costs, ultimately lead to higher profits. CHARACTERISTICS OF MANAGEMENT: (i) Goal Oriented process: Notes by Deepa Shiby An organisation has a set of basic goals which are the basic reason for its existence. These should be simple and clearly stated. Different organisations have different goals. (Any eg) Management unites the efforts of different individuals in the organisation towards achieving these goals. (ii) Management is all pervasive: The activities involved in managing an enterprise are common to all organisations whether economic, social or political. What managers do in India, the USA, Germany or Japan is the same. How they do it may be quite different. This difference is due to the differences in culture, tradition and history. (iii) Management is multidimensional: (a) Management of work: All organisations exist for the performance of some work. In a factory, a product is manufactured, in a garment store a customer’s need is satisfied and in a hospital a patient is treated. Management translates this work in terms of goals to be achieved and assigns the means to achieve it. This is done in terms of problems to be solved, decisions to be made, plans to be established, budgets to be prepared, responsibilities to be assigned and authority to be delegated. (b) Management of people: Human resources or people are an organisation’s greatest asset. Managing people has two dimensions. (i) it implies dealing with employees as individuals with diverse needs and behavior; (ii) it also means dealing with individuals as a group of people. The task of management is to make people work towards achieving the organisation’s goals, by making their strengths effective and their weaknesses irrelevant. (c) Management of operations: Though the organization has some basic product or service to provide in order to survive, it requires a production process which entails the flow of input material and the technology for transforming this input into the desired output for consumption. Such operation interlinked with both the management of work and the management of people. (iv) Management is a continuous process: The process of management is a series of continuous, composite, but separate functions (planning, organising, directing, staffing and controlling). These functions are simultaneously performed by all managers all the time. The task of a manager consists of an ongoing series of functions. (v) Management is a group activity: An organisation is a collection of diverse individuals with different needs. Every member of the group has a different purpose for joining the organisation but as Notes by Deepa Shiby members of the organisation they work towards fulfilling the common organisational goal. This requires teamwork and coordination of individual effort in a common direction. At the same time management should enable all its members to grow and develop as needs and opportunities change. (vi) Management is a dynamic function: Being dynamic it has to adapt itself to the changing environment. An organisation interacts with its external environment which consists of various social, economic and political factors. In order to be successful, an organisation must change itself and its goals according to the needs of the environment. Any ex: McDonalds, the fast-food giant made major changes in its menu to be able to survive in the Indian market. (vii)Management is an intangible force: Management is an intangible force that cannot be seen but its presence can be felt in the way the organisation functions. The effect of management is noticeable in an organisation where targets are met according to plans, employees are happy and satisfied, and there is orderliness instead of chaos. OBJECTIVES OF MANAGEMENT: (i) Organisational Objectives: Management is responsible for setting and achieving objectives for the organization by considering the interest of all stakeholders including, shareholders, employees, customers and the government. The main objective of any organization is to fulfill the economic objectives of a business. These are survival, profit and growth. Survival: In order to survive, an organisation must earn enough revenues to cover costs. Profit: Mere survival is not enough but to ensure that the organisation makes a profit. Profit provides a vital incentive for the continued successful operation of the enterprise. Profit is essential for covering costs and risks of the business. Growth: A business needs to continue in long run and so it is important for the business to grow. Growth of a business can be measured in terms of sales volume increase in the number of employees, the number of products or the increase in capital investment, etc. There can be other indicators of growth. (ii) Social objectives: As a part of society, every organisation whether it is business or non-business, has a social obligation to fulfill. This includes:  consistently creating economic value for various constituents of society.  Using environmentally friendly methods of production  giving employment opportunities to the under privileged sections of society.  providing basic amenities like schools and healthcare, etc., for community (iii) Personnel objectives: People of an organization consist of different personalities, backgrounds, experiences and objectives and become part of the organisation to satisfy their diverse needs. These vary from financial needs such as competitive salaries and perks, social needs such as peer recognition and higher-level needs such as personal growth and development. Notes by Deepa Shiby Management has to reconcile personal goals with organisational objectives for harmony in the organisation. IMPORTANCE OF MANAGEMENT: (i) Management helps in achieving group goals: - The task of a manager is to give a common direction to the individual effort in achieving the overall goal of the organisation. (ii) Management increases efficiency: - The aim of a manager is to reduce costs and increase productivity through better planning, organising, directing, staffing and controlling the activities of the organisation. (iii)Management creates a dynamic organisation: - All organisations have to function in an environment which is constantly changing. Individuals in an organisation resist change as it often means moving from a familiar, secure environment into a newer and more challenging one. Management helps people adapt to these changes so that the organisation is able to maintain its competitive edge. (iv) Management helps in achieving personal objectives: - A manager motivates and leads his team members to able to achieve personal goals while contributing to the overall organisational objective. Through motivation and leadership, the management helps individuals to develop team spirit, cooperation and commitment to group success. (v) Management helps in the development of society: - Management helps in the development of the organisation and through that it helps in the development of society. It helps to provide good quality products and services, creates employment opportunities, adopts new techno-logy for the greater good of the people and leads the path towards growth and development. NATURE OF MANAGEMENT MANAGEMENT CAN BE SAID TO BE AN ART BECAUSE (i) Existence of theoretical knowledge: A successful manager practices the art of management in the day-to-day job of managing an enterprise based on study, observation and experience. There is a lot of literature available in various areas of management like marketing, finance and human resources which the manager has to specialise in. (ii) Based on practice and creativity: There are various theories of management, as propounded by many management thinkers, which prescribe certain universal principles. 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 good manager works through a combination of practice, creativity, imagination, initiative and innovation. A manager achieves perfection after long practice. Students of management also apply these principles differently depending on how creative they are Notes by Deepa Shiby (iii) Personalised application: A manager applies this acquired knowledge in a personalised and skillful manner in the light of the realities of a given situation. He is involved in the activities of the organisation, studies critical situations and formulates his own theories for use in a given situation. This gives rise to different styles of management. MANAGEMENT HAS SOME CHARACTERISTICS OF SCIENCE (i) Management has a systematised body of knowledge. It has its own theory and principles that have developed over a period of time, but it also draws on other disciplines such as Economics, Sociology, Psychology and Mathematics. Like all other organised activity, management has its own vocabulary of terms and concepts. For example, all of us discuss sports like cricket and soccer using a common vocabulary. The players also use these terms to communicate with each other. Similarly managers need to communicate with one another with the help of a common vocabulary for a better understanding of their work situation. (ii) The principles of management have evolved over a period of time based on repeated experimentation and observation in different types of organisations. However, since management deals with human beings and human behaviour, the outcomes of these experiments are not capable of being accurately predicted or replicated. Therefore, management can be called an inexact science. Despite these limitations, management scholars have been able to identify general principles of management. For example, scientific management principles by F.W. Taylor and Functional Management principles by Henri Fayol which you will study in the next chapter. (iii) 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 standardised techniques that can be used in different situations. These principles are also used for training and development of managers. MANAGEMENT DOES NOT MEET THE EXACT CRITERIA OF A PROFESSION Well defined body of Knowledge: 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. The subject of management is taught at different institutions but entry to such colleges and professional institutes are not restricted through an examination or through acquiring an educational degree unlike profession of Medicine and engineering. Restricted Entry: There is no restriction on anyone being designated or appointed as manager in any business enterprise. Anyone can be called a manager irrespective of the educational qualifications possessed. Unlike professions such as medicine or law which require a practicing doctor or lawyer to possess valid degrees, nowhere in the world is Notes by Deepa Shiby it mandatory for a manager to possess any such specific degree. But professional knowledge and training is considered to be a desirable qualification, since there is greater demand for those who possess degrees or diplomas from reputed institution. Service Motive : The basic purpose of management is to help the organisation achieve its stated goal. This may be profit maximisation for a business enterprise and service for a hospital. However, profit maximisation as the objective of management does not hold true and is fast changing. Therefore, if an organisation has a good management team that is efficient and effective it automatically serves society by providing good quality products at reasonable prices. 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. There are several associations of practising managers in India, like the AIMA (All India Management Association) that has laid down a code of conduct to regulate the activities of their members. However no compulsion for managers to be members of such an association nor does it have any statutory backing. LEVELS OF MANAGEMENT (i) Top Management:( senior-most executives like chairman, the 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 example chief finance officer, vice president (marketing). Their basic task is to :  integrate diverse elements  coordinate the activities of different departments according to the overall objectives of the organisation.  responsible for the welfare and survival of the organisation.  analyse the business environment and its implications for the survival of the firm.  formulate overall organisational goals and strategies for their achievement.  responsible for all the activities of the business and for its impact on society.  The job of the top manager is complex and stressful, demanding long hours and commitment to the organization. (ii) Middle Management: is the link between top and lower level managers. They are subordinate to top managers and superior to the first line managers. Ex division heads, production manager.  Middle management is responsible for implementing and controlling plans and strategies developed by top management.  Responsible for all the activities of first line managers.  Their main task is to carry out the plans formulated by the top managers.  For this they need to: (i) interpret the policies framed by top management, (ii) ensure that their department has the necessary personnel, Notes by Deepa Shiby  (iii) assign necessary duties and responsibilities to them, (iv) motivate them to achieve desired objectives, and (v) co operate with other departments for smooth functioning of the organisation. (iii) Supervisory or Operational Management: Foremen and supervisors comprise the lower level in the hierarchy of the organisation. Supervisors directly oversee the efforts of the workforce. Their authority and responsibility is limited according to the plans drawn by the top management. Supervisory management tasks include  They interact with the actual work force and pass on instructions of the middle management to the workers.  Through their efforts quality of output is maintained, wastage of materials is minimised and safety standards are maintained.  The quality of workmanship and the quantity of output depends on the hard work, discipline and loyalty of the workers. COORDINATION is the process by which a manager synchronises the activities of different departments. Explain : The process of coordinating the activities of an organisation begins at the planning stage itself. Top management plans for the entire organisation. According to these plans the organisational structure is developed and staffed. In order to ensure that these plans are executed according to plans directing is required. Any discrepancies between actual and realised activities are then taken care of at the stage of controlling. It is through the process of coordination that a manager ensures the orderly arrangement of individual and group efforts to ensure unity of action in the realisation of common objectives. Coordination therefore involves synchronisation of the different actions. Coordination is the force that binds all the other functions of management. Explain: It is the common thread that runs through all activities such as purchase, production, sales, and finance to ensure continuity in the working of the organization. This provides the requisite amount, quality, timing and sequence of efforts which ensures that planned objectives are achieved with a minimum of conflict. Coordination is the essence of management, for achieving harmony among individual efforts towards the accomplishment of group goals. Each managerial function is an exercise contributing individually to coordination. Coordination is implicit and inherent in all functions of an organization. Therefore coordination involves synchronisation of the different actions or efforts of the various units of an organisation. This provides the requisite amount, quality, timing and sequence of efforts which ensures that planned objectives are achieved with a minimum of conflict. OR You can also conclude the answer as Coordination is the process by which a manager synchronises the activities of different departments (explain the point) and is the force that binds all the other functions of management (explain the point) Notes by Deepa Shiby CHARACTERISTICS OF COORDINATION (i) Coordination integrates group efforts: Coordination unifies unrelated or diverse interests into purposeful work activity. It gives a common focus to group effort to ensure that performance is as it was planned and scheduled. (ii) Coordination ensures unity of action: The purpose of coordination is to secure unity of action in the realisation of a common purpose. It acts as the binding force between departments and ensures that all action is aimed at achieving the goals of the organisation. (iii) Coordination is a continuous process: Coordination is not a one-time function but a continuous process. It begins at the planning stage and continues till controlling. Eg Smita plans her dewali collection in the month of June itself. She has to then ensure that there is adequate workforce and continuously monitor whether production is proceeding according to plans. Her marketing department also has to be briefed in time to prepare their promotional and advertising campaigns. (iv) Coordination is an all pervasive function: Coordination is required at all levels of management due to the interdependent nature of activities of various departments. It integrates the efforts of different departments and different levels. The purchase, production and sales departmental efforts have to be coordinated by Smita for achieving organisational objectives harmoniously. The purchase department is responsible for procuring fabric. This then becomes the basis of the activities of the production department and finally sales can take place. If fabric purchased is of an inferior quality or is not according to the specifications of the production department, further sales will also decline. In the absence of coordination there is overlapping and chaos instead of harmony and integration of activities. (v) Coordination is the responsibility of all managers: Coordination is the function of every manager in the organisation. Top level managers need to coordinate with their subordinates to ensure that the overall policies for the organisation are duly carried out. Middle level management coordinates with both the top level and first line managers. Operational level management coordinates the activities of its workers to ensure that work proceeds according to plans. (vi) Coordination is a deliberate function: A manager has to coordinate the efforts of different people in a conscious and deliberate manner. Even where members of a department willingly cooperate and work, coordination gives a direction to that willing spirit. Cooperation in the absence of coordination may lead to wasted effort and coordination without cooperation may lead to dissatisfaction among employees IMPORTANCE OF COORDINATION Notes by Deepa Shiby Coordination is important as it integrates the efforts of INDIVIDUALS, DEPARTMENTS AND SPECIALISTS (Three area). managers need to reconcile differences in approach, timing, effort or interest. At the same time, there is a need to harmonise individual goals and organisational goals. (Hint: First point explains the importance of individual person and his/her purpose of joining and organizational goals etc. (Here priority is given to individual and common goal of organization) (i) Growth in size: As organisations grow in size, the number of people employed by the organisation also increases. At times, it may become difficult to integrate their efforts and activities. All individuals differ in their habits of work, background, approaches to situations and relationships with others. It becomes necessary to ensure that all individuals work towards the common goals of the organisation. But employees may have their own individual goals also. Therefore, for organisational efficiency, it is important to harmonise individual goals and organisational goals through coordination. (Hint: Second point explains about the functional differentiation of each department. Here no invidual but consider each department as individual function.) (ii) Functional differentiation: Functions of an organisation are divided into departments, divisions and sections. In an organisation there may be separate departments of finance, production, marketing or human resources. All these departments may have their own objectives, policies and their own style of working. For example, the marketing department’s objective may be to increase sales by 10 per cent by offering discounts. But, the finance department may not approve of such discounts as it means loss of revenue. These kinds of conflict arise in organisations because each unit/ department is performing activities in isolation from others and barriers between departments are becoming more rigid all departments and individuals are interdependent and they have to depend on each other for information to perform their activities. The activity of each department needs to be focused on attainment of common organisational goals. The process of linking the activities of various departments is accomplished by coordination (Hint: Third point explains about specialist people who does their specialized work and these people are hired by organization with the their professional qualification. Such a specialist generally are not ready to adjust with any others.) (iii) Specialisation: Modern organisations are characterised by a high degree of specialisation. Specialisation arises out of the complexities of modern technology and the diversity of tasks to be performed. Organisations, therefore, need to employ a number of specialists. Specialists usually think that they only are qualified to evaluate, judge and decide according to their professional criteria. They do not take advice or suggestions from others in matters pertaining to their area of specialisation. This often leads to conflict amongst different specialists as well as others in the organisation. Notes by Deepa Shiby Therefore, some coordination is required by an independent person to reconcile the differences in approach, interest or opinion of the specialists Notes by Deepa Shiby