Chapter 2 Management Updated 2019 PDF

Course: Introduction to Business Course Code: BAMG1100 /BSIB1101 College of Economics and Business administration Chapter 02 MANAGEMENT Outcome 2: Discuss the meaning of management and its functions, describe the organizational structure of a business and its functio...

Course: Introduction to Business Course Code: BAMG1100 /BSIB1101 College of Economics and Business administration Chapter 02 MANAGEMENT Outcome 2: Discuss the meaning of management and its functions, describe the organizational structure of a business and its functional departments and Contents: committees, and explain the concept of corporate governance and social responsibility.. Meaning of Management & Characteristics : Pages 169-172 Nature of Management : Pages 173-174 Levels of Management : Pages 175 - 178 Functions of Management : Pages 179-182 Organizing as a structure : Pages 235-238 Organization charts : Pages 242 -245 Formal and Informal organization Structure : Page 241 Social responsibility of Business : Pages 33-43 2  Recommended Reading 1. Louis E. Boone and David L. Kurtz , Contemporary Business. (8th Edition,. McGraw-Hill: Boston. 2. Les Dlabay, Ed.D, James L. Burrow, Steven A. England, Introduction to Business, (6th Edition), Cengage Learning, 3. Pride, Hughes, Kapoor, Foundations of Business, , (4th Edition), Cengage Brain Recommended Reading: ProQuest Resource Rao, P. Subba, and Hari Shankar Pande. Principles and Practice of Management, Global Media, 2009. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/momp/detail.action? docID=3011383.Created from momp on 2019-01-27 00:08:25. 3 MEANING AND CHARACTERISTICS OF MANAGEMENT Meaning of Management The term 'management' refers to a set of functions, processes and techniques designed to get things done in an organized setting through the efficient utilization of resources to achieve organization goals. Definitions of Management Management is an art of knowing that what is to be done and seeing that it is done in the best possible manner". -F. W Taylor "Management is to forecast, to plan, to organize, to direct, to coordinate and to command others activities". -Henri Fayol 4 "Management is the art of getting things done by others" A critical evaluation This statement is often made to define management. A careful analysis of this statement, however, would point out its inadequacies(shortages/lack) and fallacies(mistakes) about management, especially the following: (a) that managers do not have any work earmarked for them in the organization; (b) that in order to get things done, managers use or may use objectionable methods and unethical practices; (c) that things get done automatically, without utilizing organizational resources; and 5 Cont……… In the modem context, therefore, management is no more a mere art of getting things done by others; rather, management has developed as a body of systematized knowledge. Authors and thinkers of management regard it as: 1. Management is a set of activities performed by managers and may include decision-making, communication, coordination, creation and maintenance of inter-personal relations with other working under their command. 2. Management is a process of getting things done by performing functions such as planning, organizing, staffing, directing and controlling. 3. Management is a force in an organization which directs and coordinates the activities of its members in a purposeful manner. 6 Characteristics of Management 1. Management is a process 2. Management is goal-oriented 3. Management is a social process 4. Management involves use of authority 5. Management is multi-disciplinary 6. Management is a combination of science and art 7. Management is a dynamic(active) process 8. Management is a continuous process 9. Management involves efficient utilization of resources 10.Management knowledge has universal application 7  NATURE OF MANAGEMENT Management as a Science As a science, management has the following characteristics : a) Management has a body of systematized knowledge consisting of well-defined concepts, principles, and techniques with-wide applications. b) Management knowledge has been developed and formulated on the basis of observation, experimentation, research and analysis. c) Management knowledge is scientific in nature because it is based on cause and-effect relationship. 8  Management as an Art As an art, the knowledge of management has the following characteristics: a) Management knowledge is not abstract(theoretical) in nature. It has practical application. The concepts, principles and techniques of management are used to solve problems that arise in an organization. b) Application of management knowledge calls for innovativeness and creativity on the part of a manager in order to get better results and higher efficiency. c) Management knowledge is considered to be an art because, in many situations, the theoretical knowledge of management may be inadequate and irrelevant to solve a practical problem. 9  LEVELS OF MANAGEMENT  A level of management determines the amount of authority and status enjoyed by managers at that level of organization.  As one moves upwards in the organization, the amount of authority and status of a manager increases and the manager plays more important a role and makes valuable contribution for achieving objectives. 10  LEVELS OF MANAGEMENT In a smaller organization, generally, managerial positions are kept at two levels: 1. Functional level and operative level: At the functional level, objectives are determined, policies and plans are made, and course of action is developed. 2. At the operative level, managers are mainly concerned with implementation of plans and carrying out courses of actions. In a big organization such as a joint stock company, however, the chain of command has three important levels of management: 1. Top-level, 2. Middle-level, and 3. Lower-level (or supervisory-level). 11  Top-level Management  It consists of Board of Directors, Managing Director, Chief Executive Officer (CEO) and General Manager.  The top-level managers enjoy higher status and more authority, and, at the same time, are directly accountable for achieving organizational goals. They perform the following functions: a) They make corporate plan for the whole organization. b) They decide upon the important matters and issues which directly affect profitability, survival, development and competitive strength of the organization. c) They determine objectives for the organization as a whole. d) They exercise overall control over each and every activity being performed in the organization. e) They design structure of the organization and create various positions in it. f) They select key officials arid executives for the organization. 12  Middle Level Management  In order to fill the gap between functional and operative levels, managerial positions are created at the middle level of the organizational hierarchy.  In fact middle level managers are connecting links between higher and lower levels.  The middle level management consists of departmental managers, deputy and assistant managers, administrative heads, etc. The main functions performed by these managers are as under: (a) To prepare departmental plans covering all departmental activities within the framework of corporate plan. (b) To determine departmental goals and to decide about ways and means of achieving them, and thereby contributing towards the overall objectives of the organization. (c) To perform managerial functions of planning, organizing, staffing, directing and 13 controlling in their respective departments.  Lower Level Management This level consists of first-line supervisors, inspectors, section officers, etc.  They are in direct touch with 'frontline workers' or 'core workers' such as operators, assemblers, salesmen, clerks, etc. They perform the following functions : a) Supervising /Getting work performed by the rank-and-file people. b) Deciding the work time-table. c) Giving orders and instructions to workers for their work duties. d) Maintaining team spirit among workers for better inter- personal relations. 14 https://images.app.goo.gl/UkHYYHZf4qXqonsa6 15  Functions of Management The various functions of management include the following: 1. Planning; 2. Organizing; 3. Staffing; 4. Directing; and 5. Controlling. 16  1. Planning  Planning is a primary function of management.  All other functions of management are based on it.  To get things done, a manager has to plan activities.  Through the process of planning, a manager decides: what is to be done, how it is to be done, when and by whom it is to be done, etc. planning is a process of making these decisions in advance. 17  2.Organising  It is a process of establishing working relationships among employees of the organization.  In the process of organizing, work is assigned to employees, they are made responsible for doing it, authority is delegated, and the relationship of superior and subordinate is created throughout the organization. Organizing as a process, it involves the following activities: 1. Determination of various activities which are essential for achieving objectives of the organization. 2. Dividing and sub-dividing these activities into small jobs and tasks. 3. Grouping these jobs and tasks into identifiable groups on the basis of common features. 4. Creation of various departments and assigning these groups to them. 18  3.Staffing  Once plans have been made and the structure of organization has been designed, then a manager makes all necessary arrangements for filling various positions created in the structure of organization.  Staffing is mainly concerned with an effective procurement of human resources and managing them properly.  Staffing is regarded as a unique and very important function because it is only through human force that all other resources of the organization are utilized optimally. The staffing process involves the following elements: 1. Undertaking manpower planning and determining quantity and quality of human force needed in the organization. 2. Making necessary arrangements for procuring required manpower through recruitment and selection. 19 3. Formulating and implementing suitable personnel policies for retaining people in the  4. Directing  In the process of management, the function of directing supports planning, organizing and staffing functions.  Every manager, in order to get things done by subordinates, has to direct their activities.  Directing involves guiding, leading and motivating subordinates so that they contribute towards achieving organizational objectives. Communication, motivation and leadership are the essential elements of directing function. Broadly, the process of directing involves the following elements: 1. Issuing orders and instructions regarding the work to be performed by subordinates. 2. Guiding, counseling and educating them and telling them the right method of doing the given job 20 3. Supervising the work of employees on a regular basis.  5.Controlling  The process of management begins with the planning function and concludes with the controlling function.  The controlling function of management involves comparison between the actual work performance and the planned standards, and taking corrective steps when there is a difference between the two. Broadly, controlling includes the following elements: 1. Determining standards of performance for the subordinates. 2. Measuring actual performance when subordinates complete assigned job. 3. Comparing actual performance with standards so as deviations. to discover 4. Finding out causes responsible for creating deviations and to study and analyse them. 5. Taking corrective measures in order to bring actual performance closer to standards. 21  ORGANISING AS A STRUCTURE Meaning of Organization Structure  The organizing process ultimately results in the creation of an organization structure.  An organization structure is the structural framework of all positions in a set-up.  Each position has a set of tasks, responsibilities, and authority. Each task is inter-related, and the collective performance of all tasks by different position holders enables the achievement of organizational goals.  Thus, an organization structure refers to a network of authority and responsibility relationships by showing who reports to whom and for what in a set-up to facilitate realization of common goals. 22  ORGANISING AS A STRUCTURE  An organization structure is a mix of vertical and horizontal positions. 1. Horizontal positions arise on account of assignment of activities among various departments. 2. Vertical positions arise on account of delegation of authority among employees, from higher levels to lower levels.  Generally, an organization structure has a pyramid shape, with less positions on the upper side and more positions on the lower side. The appearance of a typical organization structure is shown on the next slide: 23 ORGANISING AS A STRUCTURE https://images.app.goo.gl/nTyspBkP3q47HEnt9 https://images.app.goo.gl/FaSAv2S8YAtpZjTV6 24  Characteristics of Organization Structure Characteristics: 1. Network of activities. 2. Authority-responsibility structure 3. Differentiation and Integration Elements of Organization 1. Activities. 2. Authority 3. Coordination 4. Environment 5. Objectives and plans. 25 Features of Good Organization Structure 1. Clear line of authority. A good organization structure clearly specifies the activities to be performed by different people, and the amount of authority granted to them for this purpose. 2. Adequate delegation of authority. A good organization structure ensures parity between authority and responsibility. Authority in excess of responsibility leads to its misuse. And when responsibility is more than the authority granted, it leads to non-performance or low-performance of work. 3. Less managerial levels. A good organization structure permits efficient flow of communication and ensures coordination without much inconvenience. This is greatly facilitated if there are less number of levels of management in the organization. 4. Span of management Span of management refers to a given number of subordinates that manager can effectively supervise. 5. Simple and flexible A good structure is simple to understand and operate, and at the same time flexible enough to accommodate the requirements of changing environment. 26  ORGANISATION CHARTS Meaning of Organization Chart  An organization chart is a diagrammatic representation of the various aspects of an organization structure including job titles, lines of authority, major positions, work-flow in various departments and their units, reporting relationships, and official channels of communication.  An organization chart is generally prepared by using boxes (showing activities performed in the organization and the names and titles of people performing those activities) and lines (showing the relationship among the people and functions and indicating official chain of command and channels of communication).  A typical organization chart has the following appearance (Next Slide): 27 https://images.app.goo.gl/i4hbcQKq8DgnJvM37 28 29  Patterns of Chart Presentation 01 Vertical Charts:  Vertical charts show the organization structure in a pyramid form.  The lines of command flow from top to the bottom (i.e., vertically).  In a big organization, with multiple functions and positions, the chart may have horizontal lines also along with vertical lines.  The conventional organizational charts are arranged in vertical form, and therefore, they are also known as 'top-to- bottom' charts. https://images.app.goo.gl/ZD2uQ3qZdh3PbdBZ7 30  2. Horizontal Charts 02 Horizontal Charts: For all practical purposes, horizontal charts are similar to vertical charts. The only difference is that horizontal charts show the arrangement of functions and positions with the lines of command flowing horizontally, i.e., from left to right. This is the reason that horizontal charts are also known as 'left-to- right' charts. https://images.app.goo.gl/ pD3ozqRoqob1uuoJA 31  3. Circular Charts 03 Circular Charts: These charts show the structure of an organization through the use of circles. The top level of organization is shown at the centre of the chart, surrounded by a series of outwardly moving circles to show middle and lower levels respectively. Circular charts are also known as concentric charts. https://images.app.goo.gl/ gUL9QWKyB2vyco1P6 32  FORMAL AND INFORMAL ORGANISATION Formal Organization : A formal organization structure comes into existence by performing various activities in the organizing process.  A formal organization, thus, is consciously planned and deliberately (purposely/intentionally) designed. It is based on superior-subordinate relationships which are created by assignment of work and delegation of authority. Informal organization:  Informal organization may be defined as a network of personal and social relations, arising out of communication and behavioral tendencies in the course of functioning of a formal structure of organization.  Managers have not direct control on informal groups. However, informal organization does affect the functioning of formal organization. 33  Influence of environment on the Organization Environmental factors include social, technical, economic, political, international and natural (STEPIN). 1. Social Factors: Social factors that influence business include society, culture, religion, family, attitude of people towards work, wealth, family, marriage, education, ethics, human relations etc. Culture is mostly derived from climatic conditions, geographical regions, demographic factors, norms, customs and traditions. These factors affect both the business and management. 2. Technological Factors: Just as necessity is the mother of invention, competition and a host of other reasons are responsible for the rapid technological changes and innovations. As a consequence of these changes, business has to adapt latest technology in addition to employing new technical personnel and providing training to the existing employees. 3. Governmental and Legal Factors: Government influences business through its legislations and policies. Government takes care of customers and society at large while influencing the business. 34 Cont…. 4. Economic Factors: A number of economic factors affect business. Significant among them are, economic system, economic policies, national income, per capita income, industrial policies, wage level and structure, distribution of income and wealth etc. 5. Political Factors: Political stability, political parties and their ideologies naturally affect the business. 6. Natural Factors: Natural factors particularly control of pollution, maintenance of ecological balance, protecting the consumers health influences the business and management. 35 SOCIAL RESPONSIBILILTIES OF BUSINESS 36  SOCIAL RESPONSIBILILTIES OF BUSINESS  The concept of 'Social Responsibility of Business' includes responsibilities towards itself, shareholders, employees, other business firms, government, customers/consumers, creditors and the society. https://images.app.goo.gl/Z8JJNqgR8SsATcxr8 37  RESPONSIBILITIES TOWARDS CONSUMERS/CUSTOMERS  Consumer satisfaction is the ultimate aim of all economic activity. This includes: 1. the goods must meet the needs of the consumers of different classes, tastes and the purchasing power; 2. they must be reasonably priced, be of a dependable quality and of sufficient variety; 3. the sale of such goods must be followed by after sales service to ensure advice, guidance and maintenance; 4. there should be a fair and wide spread distribution of goods and services among all the sections of consumers and community; 38 RESPONSIBILITIES TOWARDS EMPLOYEES  The management should develop its administration in such a way so as to promote a spirit of cooperative endeavor between employers and employees.  The cooperation of workers can be won by creating conditions in which workers are enabled to put forward their best efforts in the common task as free men. This means recognition: 1. of the workers' right to a fair wage; 2. of the right to participate in decisions affecting their working life; 3. to membership of the trade union; to collective bargaining; and to the right to strike. 39  RESPONSIBILITIES TOWARDS OWNERS/SHAREHOLDERS  Management's first duty is to see that enterprise is stable, enterprising and actively engaged in accomplishing its objectives.  It would then be capable of providing those who commit their capital to it with such a fair and adequate reward for risk taken. The expectations of these types of owners are: 1. a fair and reasonable return on the capital invested by them; 2. a part in profit, if the Memorandum so specifies, in the shape of profit-sharing or bonus payment schemes; 40  RESPONSIBILITIES TOWARDS INTER-BUSINESS  The social responsibilities of business include a healthy co- operative business relationship between different businesses.  Businessmen must resist unfair and unethical competition and avoid unfair interference in their rival's business such as: 1. price-rigging, undercutting, unfair canvassing, supply of substandard goods, application of undue financial, legal and political pressure; spreading false rumors/statements about the rival's products. 2. creating labor troubles for the competitors' industry or launching a boycott campaign of their products. 3. employing unethical advertisements and controlling the supply of particular goods/services produced by them only so that an artificial scarcity is created in the market. 41  RESPONSIBILITIES TOWARDS STATE The social responsibilities of business towards the state (government) demands that: a) It will be a law abiding citizens b) it will pay its dues and taxes to the state fully and honestly; c) it will not corrupt public servants and the democratic process for his selfish ends; it will not purchase political support by unfair means; d) it will strive fairly and honestly to stimulate economic growth even by making reasonable sacrifices on occasions of national need; 42  RESPONSIBILITIES TOWARDS COMMUNITY 1. In the field of Industry: Industry/business can help rural areas by introducing 'self help' and 'earn-while-you-learn' programmes. Initially, such programmes may be labor intensive in areas like carpentry, pottery, agro-based industry, farming, dairy farming, poultry and storage etc., 2. Transportation: Business and other agencies can help the government by undertaking studies and programmes of technical and financial assistance for the development of cheap public transport. 3. Health and Education: Business organizations also hold a responsibility towards improvement of the quality of life the people in the community. They can and should be engaged in works like providing water sources for drinking and bathing, improving sewage disposal system, cleaning dirty areas of the solid waste, reducing pollution. 43  CONTACT INFORMATION: Name of the Staff Dr. Sandip Shinde Office: BS 034 Email: …[email protected] VERSION HISTORY Version No Date Approved Changes incorporated 02 Sem. (3) May 05, 2019 2019/2020