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NATURE AND SIGNIFICANCE OF MANAGEMENT Management at Tata Steel Founded in 1868, by Jamsetji Nusserwanji ,Tata the Tata Group 1...

NATURE AND SIGNIFICANCE OF MANAGEMENT Management at Tata Steel Founded in 1868, by Jamsetji Nusserwanji ,Tata the Tata Group 1 CHAPTER L E A R N I N G is a global business conglomerate operating in over 100 countries OBJECTIVES across 5 continents. His strong sense of values and spirit of innovation and entrepreneurship are a legacy that continues to After studying this guide Tata companies till date. He had four goals in life: setting chapter, you should up an iron and steel company, a world-class learning institution, a be able to: unique hotel and a hydro-electric plant. Only the hotel became a reality during his lifetime, with the inauguration of the Taj Mahal n Describe the Hotel at Colaba waterfront in Mumbai on 3 December 1903 at characteristics of the cost of 11 million (worth 11 billion in 2015 prices). At that time it was the only hotel in India to have electricity. management and He believed that satisfied workers create satisfied workers and its importance in in lieu to this principle he paid all his workers gratuity, provident an organisation; fund well before it was made mandatory. His management skills were clearly evident when minute details were chalked in n Explain the nature planning and building the entire city of Jamshedpur. The values of management and principles that have governed the business for a century are as an art, science enshrined in the Tata Code of Conduct (TCOC). From an early foray into steel and automobiles, to staying and profession; abreast of the latest technologies, the Tata Group today has n Explain the 29 publicly-listed Tata enterprises, which include Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power, Tata functions of Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata management; and Communications and Indian Hotels. The group has a combined market capitalisation of around $103.51bn (2016-17). n Appreciate Tata has a strong sense of social responsibility. They balance the nature and economic prosperity, environmental responsibility and social importance of benefits for the community. In India, they are a partner in progress with Odisha, and believe in taking its stakeholders forward in coordination. its journey of growth. Tata Steel Thailand is one of the first 30 companies that joined UNICEF in Child Friendly Business in “The Children Sustainability Forum” to make a commitment in protecting children’s rights. Tata Steel Europe’s Community Partnership Programme- ‘Future Generations’, with sub-themes of education, environment, health and Well-being works across Reprint 2024-25 Ch_01.indd 1 24-09-2019 12:15:10 PM  2 Business Studies the UK, assisting job and wealth creation by supporting small and medium businesses with finance and business premises. They also play a constructive role in addressing climate change – both by reducing carbon footprint, and by creating high performance steels that lead to fuel-efficient vehicles and energy-efficient buildings. Their Environmental Management Systems meet the ISO 14001 standards at all of their main manufacturing sites. Shaped by a lineage of sound and straightforward business principles, the Tata Group is built on a foundation of trust and transparency. Building such huge enterprises, sustaining and running them profitably are possible only through effective and efficient management and co-ordination at all levels. Source: www.tatasteel.com; Accessed June, 2018 Introduction most were poor and jobless, so she The above case is an example of planned to do something to solve a successful organisation which their problems because she knew is amongst the top companies in that imparting skills for livelihood is India. It has risen to the top because needed but she had no idea of how to of its quality of management. implement her idea. Management is required in all In August 2012, she met Abishek kinds of organisations — those Lama, the Branch Manager of manufacturing handlooms, trading NEDFI, Namchi Branch, a financial in consumer goods or providing corporation which support local hairstyling services and even in people with skills development non-business organisations. Let us programs and also channelize take another example. them into revenue generating Smita Rai is a 38-year old activities. Smita got interested. “I entrepreneur who grew up in a love making candles, then, why not rural district called Namchi, South convert my hobby into a venture Sikkim. She was very good in art and involve these rural women and craft particularly, Wax moulds. also”, she thought. This led to the She loved to make candles, often she establishment of Namchi Designer make into toys and small pieces of art Candles with the help of NEDFI, with wax and used it as a gift for her some financial institutions and friends and relatuves. She was loved support from different stakeholders and appreciated for these. Smita in various dimensions. was never happy with the conditions Since then, the women have never of the women in her district as looked back, despite challenges. The Reprint 2024-25 Ch_01.indd 2 24-09-2019 12:15:10 PM  Nature and Significance of Management 3 women also faced a lot of harassment delivery of goods are met. In the but they could overcome all course of the day, she meets those troubles. customers for a general feedback Namchi Designer Candles has and any suggestions that they 100 per cent women as employees may have. and they also produce varieties of Smita is managing Namchi Designer candles. During Diwali, they produce Candles. So is the Principal managing customized candles meant for the your school. They all manage occasion. These Diwali themed candle organisations. Schools, hospitals, has been a success in Sikkim as its shops and large corporations are all demand increases on a yearly basis. organisations with diverse goals that Namchi Designer Candles has been are aimed at achieving something. receiving numerous awards such as No matter what the organisation is or North East Women Entrepreneur what its goals might be, they all have of the year 2015-2016 for Sikkim something in common‑management and Sreemanta Shankar Mission and managers. of Guwahati on 26th April 2018 at You have observed that Smita’s New Delhi. work as a manager consists of A typical day in Smita’s life a series of different activities or consists of a series of interrelated functions aimed at achieving the and continuous functions. She has goals of the organisation. These to plan a special festive collection interconnected and interdependent for Diwali. This means organising functions are part of management. more funds and recruiting more Successful organisations do not workers. She also has to regularly achieve their goals by chance but communicate with her suppliers by following a deliberate process to ensure that deadlines regarding called ‘management’. Definitions of Management “Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.” Harold Koontz and Heinz Weihrich “Management is defined as t he process of planning, organising, actuating and controlling an organisation’s operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives.” Robert L. Trewelly and M. Gene Newport “Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment.” Kreitner Reprint 2024-25 Ch_01.indd 3 24-09-2019 12:15:10 PM  4 Business Studies Management is essential for all Management, has therefore, been organisations big or small, profit or defined as a process of getting things non-profit, services or manufacturing. done with the aim of achieving goals Management is necessary so that effectively and efficiently. We need individuals make their best contri- to analyse this definition. There bution towards group objectives. are certain terms which require Management consists of a series elaboration. These are (a) process, (b) of interrelated functions that are effectively, and (c) efficiently. performed by all managers. Later in Process in the definition means the this chapter you will understand that primary functions or activities that although both of them are managers, management performs to get things they function at different levels in done. These functions are planning, the organisation. The time spent organising, staffing, directing and by managers in different functions controlling which we will discuss later however is different. Managers at the in the chapter and the book. top level spend more time in planning Being effective or doing work and organising than managers at effectively basically means finishing lower levels of the organisation. the given task. Effectiveness in management is concerned with doing Concept the right task, completing activities Management is a very popular term and achieving goals. In other words, and has been used extensively for it is concerned with the end result. all types of activities and mainly for But it is not enough to just taking charge of different activities in complete the tasks. There is another any enterprise. As you have seen from aspect also, i.e., being efficient or as the above example and case study we say doing work efficiently. that management is an activity which Efficiency means doing the task is necessary wherever there is a group correctly and with minimum cost. of people working in an organisation. There is a kind of cost-benefit People in organisations are performing analysis involved and the relationship diverse tasks but they are all working between inputs and outputs. If towards the same goal. Management by using less resources (i.e., the aims at guiding their efforts towards inputs) more benefits are derived achieving a common objective — a (i.e., the outputs) then efficiency has goal. Thus, management has to see increased. Efficiency is also increased that tasks are completed and goals when for the same benefit or outputs, are achieved (i.e., effectiveness) with fewer resources are used and less the least amount of resources at a costs are incurred. Input resources minimum cost (i.e., efficiency). are money, materials, equipment and Reprint 2024-25 Ch_01.indd 4 24-09-2019 12:15:10 PM  Nature and Significance of Management 5 persons required to do a particular This is a case of being efficient but task. Obviously, management is not effective since the goods did not concerned with the efficient use reach the market. of these resources, because they Therefore, it is important for reduce costs and ultimately lead to management to achieve goals higher profits. (ef fectiveness) with minimum resources i.e., as efficiently as possible Effectiveness versus while maintaining a balance between Efficiency effectiveness and efficiency. Usually These two terms are different but they high efficiency is associated with are interrelated. For management, high effectiveness which is the aim of it is important to be both effective all managers. But undue emphasis and efficient. Effectiveness and on high efficiency without being efficiency are two sides of the same effective is also not desirable. Poor coin. But these two aspects need management is due to both ineffi- to be balanced and management ciency and ineffectiveness. at times, has to compromise with efficiency. For example, it is easier Characteristics of to be effective and ignore efficiency Management i.e., complete the given task but at After going through some of the a high cost. Suppose, a company’s definitions we find some elements target production is 5000 units in that may be called the basic a year. To achieve this target the characteristics of management: manager has to operate on double (i) Management is a goal-oriented shifts due to power failure most of the process: An organisation has a time. The manager is able to produce set of basic goals which are the 5000 units but at a higher production basic reason for its existence. cost. In this case, the manager was These should be simple and effective but not so efficient, since for clearly stated. Different organ­ the same output, more inputs (labour isations have different goals. For cost, electricity costs) were used. example, the goal of a retail store At times, a business may con- may be to increase sales, but the centrate more on producing goods goal of The Spastics Society of with fewer resources i.e., cutting India is to impart education to down cost but not achieving the children with special needs. target production. Consequently, the Management unites the efforts goods do not reach the market and of different individuals in the hence the demand for them declines organisation towards achieving and competitors enter the market. these goals. Reprint 2024-25 Ch_01.indd 5 24-09-2019 12:15:10 PM  6 Business Studies The Management Mantra from GE Jack Welch was appointed CEO of GE in 1981. At that time the firm had a market capitalisation of $13 billion. In 2000 when he stepped down the firm’s turnover had increased multifold to $500 billion. What was the secret of Welch’s success? He has laid down the following pointers for managers to be successful: n Create a vision and then ignite your organisation to make this vision a reality. Get people so passionate about what they are doing that they cannot wait to execute this plan. Have great energy, competitive spirit and the ability to spark excitement and achieve results. Search for leaders who have the same qualities. n Focus on strategic issues. Your job is to understand the vital issues within each of your businesses. Recognise the talent needed to win in those markets. n Focus on the main issue. Your job is to see the big picture. Don’t manage every detail. Don’t get caught up in the minute details, but instead inspire others to execute some of your vision. Surround yourself with great people and trust them to do their job and contribute their best to the organisation. n Involve everyone and welcome great ideas from everywhere. Anyone can be a leader, just so long as they contribute, and the most meaningful way for anyone to contribute is to come up with a good idea. Business is all about getting the best ideas from everyone. New ideas are the lifeblood of the organisation, the fuel that makes it run. “The hero is the person with a new idea.” There is simply nothing more important to an organisation than expressing ideas and creating a vision. n Lead by example. To spark others to perform, you must lead by example. Jack Welch’s mastery of the four E’s of leadership – Energy, Energise, Edge, and Execution – was always in evidence. “He had great energy, sparked others, had incredible competitive spirit, and had a record of execution that was second to none. This is a key of the Welch phenomenon. Had he been lacking in any of the traits he espoused, he would not have commanded such acclaim.” Source: www.ge.co.in (ii) Management is all pervasive: (iii) Management is multidimen- The activities involved in managing sional: Management is a an enterprise are common to all complex activity that has three organisations whether economic, main dimensions. These are: social or political. A petrol pump (a) Management of work: All needs to be managed as much organisations exist for the as a hospital or a school. What performance of some work. In managers do in India, the USA, a factory, a product is Germany or Japan is the same. manufactured, in a garment How they do it may be quite store a customer’s need is different. This difference is due satisfied and in a hospital a to the differences in culture, patient is treated. Management tradition and history. translates this work in terms Reprint 2024-25 Ch_01.indd 6 24-09-2019 12:15:10 PM  Nature and Significance of Management 7 of goals to be achieved and (i) it implies dealing with assigns the means to achieve employees as individuals with it. This is done in terms of diverse needs and behavior; problems to be solved, (ii) it also means dealing with decisions to be made, plans to individuals as a group of people. be established, budgets to be The task of management is to prepared, responsibilities to make people work towards be assigned and authority to achieving the organisation’s be delegated. goals, by making their (b) Management of people: Human strengths effective and their resources or people are an weaknesses irrelevant. organisation’s greatest asset. (c) Management of operations: No Despite all developments in matter what the organisation, technology “getting work done it has some basic product or through people” is still a major service to provide in order to task for the manager. Managing survive. This requires a prod- people has two dimensions uction process which entails Together Everyone Achieves More as a Team Reprint 2024-25 Ch_01.indd 7 24-09-2019 12:15:16 PM  8 Business Studies the flow of input material and day. Some days she may spend the technology for transfor- more time in planning a future ming this input into the desired exhibition and on another day, output for consumption. This she may spend time in sorting is interlinked with both the out an employee’s problem. The management of work and the task of a manager consists of an management of people. ongoing series of functions. (iv) Management is a continuous (v) Management is a group activity: process: The process of manage- An organisation is a collection of ment is a series of continuous, diverse individuals with different composite, but separate functions needs. Every member of the (planning, organising, directing, group has a different purpose staffing and controlling). These for joining the organisation but functions are simultaneously as members of the organisation performed by all managers they work towards fulfilling all the time. You may have the common organisational observed that Smita at Namchi goal. This requires team work Designer Candles performs and coordination of individual several different tasks in a single effort in a common direction. Management – a multidimensional activity Reprint 2024-25 Ch_01.indd 8 24-09-2019 12:15:16 PM  Nature and Significance of Management 9 At the same time management organisation there are different should enable all its members to objectives and management has to grow and develop as needs and achieve all objectives in an effective opportunities change. and efficient manner. Objectives (vi) Management is a dynamic can be classified into organisational function: Management is a objectives, social objectives and dynamic function and has to personal or individual objectives. adapt itself to the changing (i) Organisational Objectives: environment. An organisation Management is responsible for interacts with its external envi- setting and achieving objectives ronment which consists of for the organisation. It has to various social, economic and achieve a variety of objectives in political factors. In order to be all areas considering the interest successful, an organisation must of all stakeholders including, change itself and its goals shareholders, employees, cust­ according to the needs of the omers and the government. The environment. You probably know main objective of any organisation that McDonalds, the fast food should be to utilise human giant made major changes in its and material resources to the menu to be able to survive in the maximum possible advantage, Indian market. i.e., to fulfill the economic (vii) Management is an intangible objectives of a business. These force: Management is an intangi­ are survival, profit and growth. ble force that cannot be seen but Survival: The basic objectives its presence can be felt in the of any business is survival. way the organisation functions. Management must strive to The effect of management is ensure the survival of the noticeable in an organisation organisation. In order to survive, where targets are met according to an organisation must earn plans, employees are happy and enough revenues to cover costs. satisfied, and there is orderliness Profit: Mere survival is not enough instead of chaos. for business. Management has to ensure that the organisation Objectives of Management makes a profit. Profit provides a Management seeks to achieve vital incentive for the continued certain objectives which are the successful operation of the desired result of any activity. They enterprise. Profit is essential for must be derived from the basic covering costs and risks of the purpose of the business. In any business. Reprint 2024-25 Ch_01.indd 9 24-09-2019 12:15:16 PM  10 Business Studies Growth: A business needs to add the number of products or the to its prospects in the long run, increase in capital investment, for this it is important for the etc. There can be other indicators business to grow. To remain in of growth. the industry, management must (ii) Social objectives: It involves exploit fully the growth potential the creation of benefit for of the organisation. Growth of society. As a part of society, a business can be measured in every organisation whether it is terms of sales volume increase business or non-business, has in the number of employees, a social obligation to fulfill. This ITC – Empowering Rural India A quiet digital revolution is reshaping the lives of farmers in remote Indian villages. In these villages, farmers grow soyabeans, wheat and coffee in small plots of land, as they have done for thousands of years. A typical village has no reliable electricity and has antiquated telephone lines. The farmers are largely illiterate and have never seen a computer. But farmers in these villages are conducting e-business through an initiative called E-Choupal, created by ITC, one of India’s largest consumer product and agribusiness companies. ITC’s E-Chaupal initiative is a fine example of a business organisation fulfilling corporate social responsibility. The basic aim of the programme is to provide farmers in rural India with the opportunity to make use of a direct marketing channel eliminating multiple intermediation and wasteful handling and unnecessary transaction costs. It is the single-largest information technology-based intervention by a corporate entity in rural India, transforming the Indian farmer into a progressive knowledge-seeking citizen, enriching him with knowledge and elevating him to a new order of empowerment. E-Choupal delivers real-time information and customised knowledge to improve the farmer’s decision-making ability, thereby better aligning farm output to market demands; securing better quality, productivity and improved price discovery. Given the low levels of literacy in the rural sector, the role of the Choupal Sanchalak, the lead farmer of the village, in facilitating physical interface between the computer terminal and the farmers is central to the project. E-Choupal Smart Cards enable farmer identification to provide customised information on the E-Choupal website. Online transactions are captured to reward farmers for volume and value of usage. The E-Chaupal initiative has found its way into the Harvard Business School as a leading case study illustarating the use of modern technology by a leading business house for the benefit of the rural poor. Source: Mohanbir Sawhney, McCormick Tribune Professor of Technology, Kellogg School of Management, USA. Reprint 2024-25 Ch_01.indd 10 24-09-2019 12:15:16 PM  Nature and Significance of Management 11 refers to consistently creating for achieving the goals of the economic value for various organisation. The task of a manager constituents of society. This is to give a common direction to includes using environmental the individual effort in achieving friendly methods of production, the overall goal of the organisation. giving employment opportunities (ii) Management increases effici­ to the underpreviledged sections ency: The aim of a manager is of society and providing basic to reduce costs and increase amenities like schools and productivity through better healthcare, etc., for community. planning, organising, directing, The box given below illustrates staffing and controlling the how a company can fulfill its activities of the organisation. social responsibility. (iii) Management creates a dynamic (iii) Personnel objectives: Organi- organisation: All organisations sations are made up of people have to function in an environment who have different personalities, which is constantly changing. It backgrounds, experiences and is generally seen that individuals objectives. They all become part in an organisation resist change of the organisation to satisfy as it often means moving from a their diverse needs. These vary familiar, secure environment into from financial needs such as a newer and more challenging competitive salaries and perks, one. Management helps people social needs such as peer adapt to these changes so that recognition and higher level the organisation is able to needs such as personal growth maintain its competitive edge. and development. Management (iv) Management helps in achieving has to reconcile personal goals personal objectives: A manager with organisational objectives for motivates and leads his team in harmony in the organisation. such a manner that individual members are able to achieve Importance of Management personal goals while contributing Having understood that management to the overall organisational is a universal activity that is integral objective. Through motivation to any organisation we now examine and leadership the management some of the reasons that have made helps individuals to develop management so important: team spirit, cooperation and (i) Management helps in achieving commitment to group success. group goals: Management (v) Management helps in the is required not for itself but development of society: An orga- Reprint 2024-25 Ch_01.indd 11 19-11-2019 5:06:37 PM  12 Business Studies nisation has multiple objectives relationships. Over a period of time, to serve the purpose of the it has grown into a dynamic subject different groups that constitute it. with its own special characteristics. In the process of fulfilling all However, one question that needs these, management helps in the to be addressed pertaining to the development of the organisation nature of management is whether and through that it helps in the it is a science or an art or both? development of society. It helps to In order to answer this let us provide good quality products examine the features of both science and services, creates employment and art to see how far management opportu­nities, adopts new fulfills them. techno-logy for the greater good of the people and leads the path Management as an Art towards growth and development. What is art? Art is the skillful and personal application of existing Nature of Management knowledge to achieve desired Management is as old as civilisation. results. It can be acquired through Although modern organisations are study, observation and experience. of recent origin, organised activity has Since art is concerned with personal existed since the time of the ancient application of knowledge some kind civilisations. In fact, organisations of ingenuity and creativity is required may be considered the distinguishing to practice the basic principles learnt. feature that separated civilised society The basic features of an art are from uncivilised ones. The earliest as follows: management practices were a set of (i) Existence of theoretical rules and regulations that grew out knowledge: Art presupposes the of the experiences of governmental existence of certain theoretical and commercial activities. The knowledge. Experts in their development of trade and commerce respective areas have derived gradually led to the development of certain basic principles which management principles and practices. are applicable to a particular The term ‘management’ today has form of art. For example, several different connotations that literature on dancing, public highlight the different aspects of its speaking, acting or music is nature. The study of management has widely recognised. evolved over a period of time along (ii) Personalised application: The with the modern organisations; based use of this basic knowledge varies both on the experience and practice from individual to individual. of managers and a set of theoretical Art, therefore, is a very person­ Reprint 2024-25 Ch_01.indd 12 24-09-2019 12:15:16 PM  Nature and Significance of Management 13 alised concept. For example, two manner. A good manager works dancers, two speakers, two actors, through a combination of or two writers will always differ practice, creativity, imagination, in demonstrating their art. initiative and innovation. A (iii) Based on practice and manager achieves perfection creativity: All art is practical. Art after long practice. Students of involves the creative practice of management also apply these existing theoretical knowledge. principles differently depending We know that all music is based on how creative they are. on seven basic notes. However, (iii) A manager applies this acquired what makes the composition of knowledge in a personalised a musician unique or different and skillful manner in the light is his use of these notes in a of the realities of a given situation. creative manner that is entirely He is involved in the activities of his own interpretation. the organisation, studies critical Management can be said to be situations and formulates his an art since it satisfies the following own theories for use in a given criteria: situation. This gives rise to (i) A successful manager practices different styles of management the art of management in the The best managers are committed day-to-day job of managing and dedicated individuals; highly an enterprise based on study, trained and educated, with personal observation and experience. qualities such as ambition, self- There is a lot of literature motivation, creativity and available in various areas of imagination, a desire for development management like marketing, of the self and the organisation finance and human resources they belong to. All management which the manager has to practices are based on the same set specialise in. There is existence of principles; what distinguishes of theoretical knowledge. a successful manager from a less (ii) There are various theories of successful one is the ability to put management, as propounded these principles into practice. by many management thinkers, which prescribe certain Management as a Science universal principles. A manager Science is a systematised body of applies these scientific methods knowledge that explains certain and body of knowledge to a general truths or the operation of given situation, an issue or a general laws. The basic features of problem, in his own unique science are as follows: Reprint 2024-25 Ch_01.indd 13 24-09-2019 12:15:16 PM  14 Business Studies Some Interesting Cross-disciplinary Perspectives Anthropology – Anthropology is the study of societies, which helps us learn about human beings and their activities. Anthropologists’ work on cultures and environments, for instance, has helped managers to better understand differences in fundamental values, attitudes, and behavior between people in different countries and within different organisations. Economics – Economics is concerned with the allocation and distribution of scarce resources. It provides us with an understanding of the changing economy as well as the role of competition and free markets in a global context. An understanding of free trade and protectionist policies is absolutely essential to any manager operating in the global marketplace, and these topics are addressed by economists. Philosophy – Philosophy courses inquire into the nature of things, particularly values and ethics. Ethics are standards that govern human conduct. These ethics have shaped today’s organisations by providing a basis for legitimate authority, linking rewards to performance, and justifying the existence of business and the corporate form. Political Science – Political science is the study of the behavior of individuals and groups within a political environment. Management is affected by a nation’s form of government – by whether it allows its citizens to hold property, by its citizens’ ability to engage in and enforce contracts, and by the appeal mechanisms available to redress grievances. A nation’s stand on property, contracts, and justice, in turn, shapes the type, form, and policies of its organisations. Psychology – Psychology is the science that seeks to measure, explain, and sometimes change the behaviour of humans and other animals. Today’s managers confront both a diverse customer base and a diverse set of employees. Psychologists’ efforts to understand gender and cultural diversity provide managers with a better perception of the needs of their changing customer and employee populations. Psychology courses are also relevant to managers in terms of gaining a better understanding of motivation, leadership, trust, employee selection, performance appraisals, and training techniques. Sociology – Sociology is the study of people in relation to their fellow human beings. What are some of the sociological issues that have relevance to managers? Here are a few. How are societal changes such as globalisation, increasing cultural diversity, changing gender roles, and varying forms of family life affecting organisational practices? What are the implications of schooling practices and education trends on future employees’ skills and abilities? Answers to questions such as these have a major effect on how managers operate their businesses. Source: Fundamentals of Management Stephen P. Robbins David A. DeCenzo Reprint 2024-25 Ch_01.indd 14 24-09-2019 12:15:16 PM  Nature and Significance of Management 15 (i) Systematised body of knowledge: of a common vocabulary for a Science is a systematic body better understanding of their of knowledge. Its principles are work situation. based on a cause and effect (ii) The principles of management relationship. For example, the have evolved over a period phenomenon of an apple falling of time based on repeated from a tree towards the ground experimentation and observation is explained by the law of gravity. in different types of organisations. (ii) Principles based on experimen- However, since management tation: Scientific principles are deals with human beings and first developed through observation human behaviour, the outcomes and then tested through of these experiments are not repeated experimentation under capable of being accurately controlled conditions. predicted or replicated. Therefore, (iii) Universal validity: Scientific management can be called an principles have universal validity inexact science. Despite these and application. limitations, management scholars Based on the above features, we have been able to identify general can say that management has some principles of management. For characteristics of science. example, scientific management (i) Management has a systematised principles by F.W. Taylor body of knowledge. It has its and Functional Management own theory and principles that principles by Henri Fayol which have developed over a period you will study in the next chapter. of time, but it also draws on (iii) Since the principles of mana- other disciplines such as gement are not as exact as Economics, Sociology, the principles of science, their Psychology and Mathematics. application and use is not universal. Like all other organised They have to be modified according activity, management has its to a given situation. However, they own vocabulary of terms and provide managers with certain concepts. For example, all of standardised techniques that us discuss sports like cricket can be used in dif ferent and soccer using a common situations. These principles vocabulary. The players also are also used for training and use these terms to communicate development of managers. with each other. Similarly You must have understood from the managers need to communicate foregoing discussion that manage- with one another with the help ment has features of both art and Reprint 2024-25 Ch_01.indd 15 24-09-2019 12:15:16 PM  16 Business Studies science. The practice of management degree. For example, to become is an art. However, managers can a chartered accountant in work better if their practice is based on India a candidate has to the principles of management. These clear a specified examination principles constitute the science of conducted by the Institute of management. Management as an Chartered Accountants of India. art and a science are therefore not (iii) Professional association: All mutually exclusive, but complement professions are affiliated to a each other. professional association which regulates entry, grants certificate Management as a Profession of practice and formulates and You have understood so far that enforces a code of conduct. To be all forms of organised activity need able to practice in India lawyers to be managed. You would also have to become members of the have observed that organisations Bar Council which regulates look for individuals with specific and controls their activities. qualifications and experience to (iv) Ethical code of conduct: All manage them. It has also been professions are bound by a code observed that there has been an of conduct which guides the increase in the corporate form of behaviour of its members. All business on the one hand and doctors, for example, take the increasing emphasis on managed oath of ethical practice at the business concerns. Does this imply time they enter the profession. that management is a profession? To (v) Service motive: The basic answer this question let us examine motive of a profession is to the salient features of a profession serve their client’s interests and see whether management by rendering dedicated and satisfies them. committed service. The task of A profession has the following a lawyer is to ensure that his characteristics: client gets justice. (i) Well-defined body of know- Management does not meet ledge: All professions are based the exact criteria of a profession. on a well-defined body of However, it does have some of the knowledge that can be acquired features of a profession: through instruction. (i) All over the world there is (ii) Restricted entry: The entry to a marked growth in management profession is restricted through as a discipline. It is based on a an examination or through systematic body of knowledge acquiring an educational comprising well-defined Reprint 2024-25 Ch_01.indd 16 24-09-2019 12:15:17 PM  Nature and Significance of Management 17 principles based on a variety Association) that has laid down a code of business situations. This of conduct to regulate the activities knowledge can be acquired of their members. There is, however, at different colleges and professional no compulsion for managers to be institutes and through a number members of such an association nor of books and journals. The does it have any statutory backing. subject of management is taught (iv) The basic purpose of manage- at different institutions. Some ment is to help the organisation of these have been set up with achieve its stated goal. This may the specific purpose of providing be profit maximisation for a management education such business enterprise and service as the Indian Institutes of for a hospital. However, profit Management (IIMs) in India. maximisation as the objective Entry to different institutes is of management does not hold usually through an examination. true and is fast changing. (ii) There is no restriction on anyone Therefore, if an organisation being designated or appointed has a good management team as manager in any business that is efficient and effective it enterprise. Anyone can be automatically serves society by called a manager irrespective of providing good quality products the educational qualifications at reasonable prices. possessed. Levels of Management Unlike professions such as Management is a universal term medicine or law which require used for certain functions performed a practicing doctor or lawyer to by individuals in an enterprise who possess valid degrees, nowhere in the world is it mandatory are bound together in a hierarchy of for a manager to possess any relationships. Every individual in the such specific degree. But hierarchy is responsible for successful professional knowledge and completion of a particular task. To be training is considered to be a able to fulfill that responsibility he is desirable qualification, since assigned a certain amount of authority there is greater demand for those or the right to take a decision. This who possess degrees or diplomas authority-responsibility relationship from reputed institutions. binds individuals as superiors and Therefore, as such the second criterion has not been strictly met. subordinates and gives rise to different (iii) There are several associations of levels in an organisation. Generally practising managers in India, like speaking there are three levels in the the AIMA (All India Management hierarchy of an organisation. Reprint 2024-25 Ch_01.indd 17 24-09-2019 12:15:17 PM  18 Business Studies (i) Top Management: They consist production manager. Middle of the senior-most executives of the management is responsible for organisation by whatever name implementing and controlling they are called. They are usually plans and strategies developed referred to as the chairman, by top management. At the the chief executive officer, chief same time they are responsible operating officer, president and for all the activities of first line vice-president. Top management managers. Their main task is to is a team consisting of managers carry out the plans formulated from different functional levels, by the top managers. For this they heading finance, marketing etc. need to: (i) interpret the policies For example chief finance officer, framed by top management, vice president (marketing). Their (ii) ensure that their department basic task is to integrate diverse has the necessary personnel, elements and coordinate the (iii) assign necessary duties activities of different departments and responsibilities to them, according to the overall objectives (iv) motivate them to achieve of the organisation. These top desired objectives, and (v) co­ - level managers are responsible operate with other departments for the welfare and survival of for smooth functioning of the the organisation. They analyse the business environment and its implications for the survival of the firm. They formulate overall organisational goals and strategies for their achievement. They are 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 organisation. (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. They are usually known as “You don’t learn management division heads, for example from books alone...” Reprint 2024-25 Ch_01.indd 18 24-09-2019 12:15:18 PM  Nature and Significance of Management 19 organisation. At the same time management to the workers. they are responsible for all the Through their efforts quality of activities of first line managers. output is maintained, wastage (iii) Supervisory or Operational of materials is minimised and Management: Foremen and safety standards are maintained. supervisors comprise the lower The quality of workmanship and level in the hierarchy of the the quantity of output depends organisation. Supervisors on the hard work, discipline and directly oversee the efforts of loyalty of the workers. the workforce. Their authority and responsibility is limited Functions of Management according to the plans drawn Management is described as the by the top management. process of planning, organising, Supervisory management plays directing and controlling the efforts a very important role in the of organisational members and of organisation since they interact using organisational resources to with the actual work force and pass achieve specific goals. on instructions of the middle Planning is the function of determining in advance what is to be done and who is to do it. This implies setting goals in advance and developing a way of achieving them efficiently and effectively. In Smita’s organisation the objective TOP is production and sale of candles. MANAGEMENT Smita has to decide quantities, variety MIDDLE MANAGEMENT OPERATIONAL MANAGEMENT Managerial Levels Reprint 2024-25 Ch_01.indd 19 24-09-2019 12:15:18 PM  20 Business Studies and colour and then allocate resources important aspect of management is for their purchase from different to make sure that the right people suppliers. Planning cannot prevent with the right qualifications are problems, but it can predict them available at the right places and and prepare contingency plans to times to accomplish the goals of deal with them if and when they the organisation. This is also known occur. as the human resource function Organising is the management and it involves activities such as function of assigning duties, recruitment, selection, placement grouping tasks, establishing and training of personnel. Infosys Technologies which develops authority and allocating resources software needs systems analysts and required to carry out a specific programmers. plan. Once a specific plan has been Directing involves leading, influ­ established for the accomplishment encing and motivating employees of an organisational goal, the to perform the tasks assigned to organising function examines the them. This requires establishing activities and resources required to an atmosphere that encourages implement the plan. It determines employees to do their best. Motivation what activities and resources are and leadership are two key required. It decides who will do a components of direction. Directing particular task, where it will be also involves communicating done, and when it will be done. effectively as well as supervising Organising involves the grouping of employees at work. Motivating the required tasks into manageable workers means simply creating an departments or work units and the environment that makes them want establishment of authority and to work. Leadership is influencing reporting relationships within the others to do what the leader wants organisational hierarchy. Proper them to do. A good manager directs organisational techniques help through praise and criticism in in the accomplishment of work such a way that it brings out the and promote both the efficiency of best in the employee. operations and the effectiveness of Controlling is the management results. Different kinds of business function of monitoring organisational require different structures performance towards the attainment according to the nature of work. of organisational goals. The task You will read more about this in a of controlling involves establishing later chapter. standards of performance, measuring Staffing simply stated, is finding the current performance, comparing right people for the right job. A very this with established standards and Reprint 2024-25 Ch_01.indd 20 24-09-2019 12:15:18 PM  Nature and Significance of Management 21 taking corrective action where any and finance to ensure continuity deviation is found. Here management in the working of the organisation. must determine what activities and Coordination is sometimes considered outputs are critical to success, how a separate function of management. and where they can be measured It is however, the essence of and who should have the authority management, for achieving harmony to take corrective action. among individual efforts towards The various functions of a the accomplishment of group goals. manager are usually discussed in Each managerial function is an the order given above, suggesting exercise contributing individually to that a manager first plans, then coordination. Coordination is implicit organises, puts staff in position, and inherent in all functions of an then directs, and finally controls. organisation. In reality, managers are rarely The process of coordinating the able to carry out these functions activities of an organisation begins in isolation. The activities of a at the planning stage itself. Top manager are interrelated and it is management plans for the entire often difficult to pinpoint where one organisation. According to these ended and the other began. plans the organisational structure Coordination — The is developed and staffed. In order to ensure that these plans are executed Essence of Management according to plans directing is You have understood by now that required. Any discrepancies between a manager has to perform five actual and realised activities are interrelated functions in the process then taken care of at the stage of of managing an organisation which controlling. It is through the process is a system made up of different of coordination that a manager interlinked and interdependent ensures the orderly arrangement of subsystems. A manager has to link individual and group efforts to ensure these diverse groups towards the achievement of a common goal. unity of action in the realisation of The process by which a manager common objectives. Coordination synchronises the activities of therefore involves synchronisation different departments is known as of the different actions or efforts of coordination. the various units of an organisation. Coordination is the force that This provides the requisite amount, binds all the other functions of quality, timing and sequence of management. It is the common efforts which ensures that planned thread that runs through all activities objectives are achieved with a such as purchase, production, sales, minimum of conflict. Reprint 2024-25 Ch_01.indd 21 24-09-2019 12:15:19 PM  22 Business Studies Characteristics of the goals of the organisation. At Namchi Designer Candles, Coordination the production and sales The definitions given above department have to coordinate highlight the following features of their work, so that production coordination: takes place according to the (i) Coordination integrates group demand in the market. efforts: Coordination unifies (iii) Coordination is a continuous unrelated or diverse interests process: Coordination is not into purposeful work activity. a one-time function but a It gives a common focus to continuous process. It begins at group effort to ensure that the planning stage and continues performance is as it was planned till controlling. Smita plans her and scheduled. dewali collection in the month (ii) Coordination ensures unity of June itself. She has to then of action: The purpose of ensure that there is adequate coordination is to secure unity workforce and continuously of action in the realisation of monitor whether production is a common purpose. It acts proceeding according to plans. as the binding force between Her marketing department also departments and ensures that has to be briefed in time to all action is aimed at achieving prepare their promotional and advertising campaigns. In the absence of coordination (iv) Coordination is an all pervasive what results is chaos 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 Reprint 2024-25 Ch_01.indd 22 24-09-2019 12:15:21 PM  Nature and Significance of Management 23 and finally sales can take place. If and deliberate manner. fabric purchased is of an inferior Even where members of a quality or is not according to the department willingly cooperate specifications of the production and work, coordination gives a department, further sales will direction to that willing spirit. also decline. In the absence of Cooperation in the absence coordination there is overlapping of coordination may lead to and chaos instead of harmony wasted effort and coordination and integration of activities. without cooperation may (v) Coordination is the responsibi- lead to dissatisfaction among lity of all managers: Coordi- employees. nation is the function of every Coordination, therefore, is not a manager in the organisation. Top separate function of management, level managers need to coordinate but its very essence. For an with their subordinates to ensure organisation to effectively and that the overall policies for the efficiently achieve its objectives organisation are duly carried coordination is required. Like a out. Middle level management thread in a garland, coordination is coordinates with both the top a part of all management functions. level and first line managers. Operational level management Importance of Coordination coordinates the activities of its workers to ensure that work Coordination is important as it proceeds according to plans. integrates the efforts of individuals, (vi) Coordination is a deliberate departments and specialists. The function: A manager has primary reason for coordination is to coordinate the efforts of that departments and individuals in different people in a conscious the organisation are interdependent, Definitions of Coordination Coordination is balancing and keeping together the team by ensuring suitable allocation of tasks to the various members and seeing that the tasks are performed with harmony among the members themselves. E.F.L. Brech Coordination is the process whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of action in the pursuit of common purpose. McFarland Coordination is the orderly synchronising of efforts of subordinates to provide proper amount, timing and quality of execution so that their united efforts lead to the stated objectives, namely, the common purpose of the enterprise. Theo Haimann Reprint 2024-25 Ch_01.indd 23 24-09-2019 12:15:21 PM  24 Business Studies i.e. they depend on each other their habits of work, background, for information and resources to approaches to situations and perform their respective activities. relationships with others. It Thus, managers need to reconcile becomes necessary to ensure that differences in approach, timing, all individuals work towards the effort or interest. At the same common goals of the organisation. time, there is a need to harmonise But employees may have their own individual goals and organisational individual goals also. Therefore, goals. for organisational efficiency, it is (i) Growth in size: As organisations important to harmonise individual grow in size, the number of people goals and organisational goals employed by the organisation also through coordination. increases. At times, it may become (ii) Functional differentiation: difficult to integrate their efforts and Functions of an organisation are activities. All individuals differ in divided into departments, divisions ‘DABBAWALLAS’ – Excellence through Coordination The Dabbawallas of Mumbai is the story of a SIX SIGMA business enterprise. The success of the business lies in the complex yet well coordinated exercise that is carried out on the streets of Mumbai day after day. What is the secret behind the efficiency with which their business is conducted? The story of the dabbawallas begins in the kitchens of Mumbai. After they step out of their door, someone begins the time-consuming process of preparing the worker a fresh, home- cooked lunch. What happens next for demonstrates the coordination of the dabbawallas system. The first dabbawalla picks up the tiffin from home and takes it to the nearest railway station.The second dabbawalla sorts out the dabbas at the railway station according to destination and puts them in the luggage carriage. The third one travels with the dabbas to the railway stations nearest to the destinations. The fourth one picks up dabbas from the railway station and drops them off at the offices. By mid-morning, thousands of dabbawallas are bicycling through the streets of Mumbai, ensuring a hot home cooked lunch for their customers. The whole tiffin distribution requires negligible technology. The dabbawallas rely on low capital and use cycles, wooden carriages and local trains to achieve their target.There are several groups that work independently and network with each other to achieve their goal. Each area is divided into several small distribution sectors and each sector is handled by a particular person. This person understands the address in that locality very well. Also, this perfection comes with practice. Many new employees work for months under the guidance of their seniors. Punctuality and time management are on top of the agenda for dabbawallas. Whatever be the circumstances, the dabbawallas never get delayed even by a few minutes. Reprint 2024-25 Ch_01.indd 24 24-09-2019 12:15:21 PM  Nature and Significance of Management 25 and sections. In an organisation However, all departments and there may be separate departments individuals are interdependent of finance, production, marketing and they have to depend on each or human resources. All these other for information to perform departments may have their own their activities. The activity of objectives, policies and their own each department needs to be style of working. For example, the focused on attainment of common marketing department’s objective organisational goals. The process may be to increase sales by 10 per of linking the activities of various cent by offering discounts. But, the departments is accomplished finance department may not approve by coordination. of such discounts as it means loss of (iii) Specialisation: Modern revenue. These kinds of conflict arise organisations are characterised in organisations because each unit/ by a high degree of specialisation. department is performing activities Specialisation arises out of the in isolation from others and barriers complexities of modern technology between departments are becoming and the diversity of tasks to be more rigid. performed. Organisations, therefore, Management in the Twenty-first Century Even as you read this chapter, the organisation and its management are changing. As boundaries between cultures and nations get blurred and new communication technology makes it possible to think of the world as a ‘global village’, the scope of international and intercultural relationships is rapidly expanding. The modern organisation is a global organisation that has to be managed in a global perspective. What does this imply? A global manager today is one who possesses what can be termed as ‘hard’ types of skills as well as ‘softer’ types of skills. Managers who understand analysis, strategy, engineering, and technology are still going to be needed, but extremely critical to global success are people who understand how teams work, how organisations work, how people are motivated. A manager who really understands different cultures should be able to work in a West European, non-English speaking country, then move to a developing country like Malaysia or Kenya, and then be transferred to an office based in New York, USA, and be almost immediately productive in all three places. It can thus be understood that the role of a global manager has evolved in much the same way that the global industry and economy have evolved. It has changed from being a single dimensional role in a defined business context, to being a multi-faceted role that calls for a diverse combination of technical skills, soft management and people skills, and the ability to imbibe and learn different cultural experiences. Reprint 2024-25 Ch_01.indd 25 24-09-2019 12:15:21 PM  26 Business Studies need to employ a number of Management in the specialists. Specialists usually think that they only are qualified to Twenty-first Century evaluate, judge and decide according Even as you read this chapter, the to their professional criteria. They organisation and its management are do not take advice or suggestions changing. As boundaries between from others in matters pertaining cultures and nations get blurred and to their area of specialisation. This new communication technology makes often leads to conflict amongst it possible to think of the world as a different specialists as well as others ‘global village’, the scope of international in the organisation. Therefore, and intercultural relationships is some coordination is required by an rapidly expanding. The modern independent person to reconcile the organisation is a global organisation differences in approach, interest or that has to be managed in a global opinion of the specialists. perspective. What does this imply? Key Terms Management Process Efficiency Effectiveness Art Science Profession Planning Organising Staffing Directing Controlling Coordination Summary Concept Management is the process of planning, organising, staffing, directing and controlling the enterprise resources efficiently and effectively for achieving the goals of the organisation. Effectiveness in management is concerned with doing the right task, completing activities and achieving goals. Efficiency means doing the task correctly and with minimum cost. Characteristics The key features of management are: (i) goal oriented process (ii) all pervasive (iii) multidimensional (iv) continuous process (v) group activity (vi) dynamic function (vii) tangible force. Objectives Management fulfills three basic objectives: organisational, social and personal. Reprint 2024-25 Ch_01.indd 26 24-09-2019 12:15:21 PM  Nature and Significance of Management 27 Importance Management is important because it helps in achieving group goals, increases efficiency, creates a dynamic organisation, helps achieve personal objectives and contributes to the development of society. Nature Management is a combination of an organised body of knowledge (science) and its skillful application (art). Although it does not satisfy all the requirements of a profession, it is to a large extent professional in character. Levels Management is considered a three-tier activity. The top management focuses on determination of objectives and policies, middle management attempts to achieve these objectives through the effort of other managers and supervisory or operational management directly oversees the efforts of the workforce. Functions All managers perform the following interrelated functions: Planning, Organising, Staffing, Directing and Controlling. Coordination Coordination is the essence of management. It is the process of achieving unity of action among interdependent activities and departments of an organisation. Exercises Very Short Answer Type: 1. What is meant by management? 2. Name any two important characteristics of management. 3. Identify and state the force that binds all the other functions of management. 4. List any two indicators of growth of an organisation. 5. Indian Railways has launched a new broad gauge solar power train which is going to be a path breaking leap towards making trains greener and more environment friendly. The solar power DEMU (Diesel Electric Multiple Unit) has 6 trailer coaches and is expected to save about 21,000 liters of diesel and ensure a cost saving of Rs 12, 00,000 per year. Name the objectives of management achieved by Indian Railways in the above case. Reprint 2024-25 Ch_01.indd 27 24-09-2019 12:15:21 PM  28 Business Studies Short Answer Type: 1. Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions? 2. State the basic features of management as a profession. 3. Why is management considered to be a multi-dimensional concept? 4. Company X is facing a lot of problems these days. It manufactures white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are not of good quality meeting customers’ expectations. The finance department blames both production and marketing for declining return on investment and bad marketing. State the quality of management that the company is lacking? What quality of management do you think the company is lacking? Explain briefly. What steps should the company management take to bring the company back on track? 5. Coordination is the essence of management. Do you agree? Give reasons. 6. Ashita and Lakshita are employees working in Dazzling enterprises dealing in costume jewellery. The firm secured an urgent order for 1,000 bracelets that were to be delivered within 4 days. They were assigned the responsibility of producing 500 bracelets each at a cost of Rs 100 per bracelet. Ashita was able to produce the required number within the stipulated time at the cost of Rs 55,000 whereas, Lakshita was able to produce only 450 units at a cost of Rs 90 per unit. State whether Ashita and Lakshita are efficient and effective.