BUSINESS

A business activity involves production, exchange of goods and services to earn

profit. The literal meaning of the word ‘Business’ is a state of being busy.

When a person carries out production or purchase of goods and services for
himself, cannot be a business activity. Production or purchase of goods and
services should be carried out with an objective of earning some profit or
consideration. Various authors bring out different characteristics in their
definitions.

According to L.H.Haney “Business may be defined as human activities directed

towards providing or acquiring wealth through buying and selling goods.”

According to Urwick and Hunt “a business is an enterprise which makes,

distributes or provides an article or service which other members of the community
need and are able and willing to pay for it”.

Spiegal considers “all activities concerned with the production and sale of goods”.
Therefore, “business is concerned with production and selling for profit”

CHARACTERISTICS OF BUSINESS

(1) Entrepreneur : There must be someone to take initiative for establishing a

business. The person who recognises the need for a product or service is known as
entrepreneur. The entrepreneur visualises a business, combines various factors of
production and puts them into a going concern.

(2) Economic Activity: Business includes only economic activities. All those
activites relating to the production and distribution of goods and services are called
economic activities. These are undertaken with profit motive.

(3) Production of Goods and Services: A business must involve production of

goods and services. These goods may be of consumer goods and producer goods.
Consumer goods are those which are purchased by ultimate consumer. Example :
Soaps, Paste, etc. Producer goods are those which are used for production process.
Example : Raw material, plant and machinery, etc.
(4) Exchange of Goods and Services: A business must involve exchange of goods
and services with a profit motive. Production or purchase of goods and services for
personal consumption do not constitute business. Purchase of goods by a consumer
is not business while purchase of goods by a retailer constitutes business.

(5) Profit Motive: The profit motive is an important element of business. Any
activity undertaken without profit motive is not business.

(6) Uncertainity: Business involves a large amount of risk and uncertainity.

Furture is most uncertain. Unforeseen future uncertainities makes the business
more risky. Industrial disputes, price changes, wars, floods, earthquakes etc., leads
the business into losses.

(7) Continuity of Transactions: The business inolves the regular and constinuous
transactions. If a person purchased a T.V. set and sells and earns profit on it, it
does not constitute business. If he keeps stock of T.V. sets and sell them to earn
profit becomes business

8) Creation of Utility: The goods are produced according to the tastes and
requirements of the consumers. Business creates various types of utilities is goods.
When raw materials are converted into finished goods creates form utility. The
goods are transported from the place of production to the consumers create place
utility. The process of storing goods and supplying them in times of need creates
time utility.

(9) Satisfaction of Consumer: The ultimate aim of business is to supply the goods
according to the tastes and requirements of the consumer. If consumer is satisfied,
he will purchase it again and again. So the businessman should produce the goods
and satisfy the consumer.

(10) Satisfying Social Needs: The business is a socio-economic institution.

Business should aim at serving the soiety at large. It must look to the public good.

(11) Financing: A proper capital structure is a must for the success of the business.
Business enterprises cannot move a step without finance. Business requirers two
types of capital. (1) Fixed Capital (2) Working Capital. After estimating these
financial requirements, businessman tries to findout the sources of finance.
 Organization
Definition:-The term ‘Organising’ and ‘Organisation’ are given a variety of
interpretations. In the first sense, ‘organising’ refers to a dynamic process and a
managerial activity by which different elements or parts of an enterprise are
brought together to obtain a desired result. This process places the enterprise into
working order by defining and allocating the duties and responsibilities of different
employees and provides it with everything useful to its functioning—raw material,
tools, capital and personnel.
It thus combines and co-ordinates their activities for commonness of purpose. So
the term ‘organising’ implies co-ordination and arrangement of men and materials
of an undertaking in order to achieve a certain purpose. When used in the other
sense, the term ‘Organising’ is understood as the creation of a structure of
relationships among various positions and jobs for the realisation of the objectives
and goals of the enterprise. In this sense, ‘Organisation’ is the vehicle through
which goals are sought to be attained. The organisation structure is also viewed
differently by various writers.

Organising is a part of management activity devoted to establish a structural

relationship of the resources of an undertaking and is a mechanism that enables the
employees to work together. The work of organising in this way looks to the
structural as well as functional aspects of business and correlates the different
factors with their functions. All business enterprises, irrespective of their forms,
require organisation for their economic operation and smooth running of business.
The larger the size of a business, the more complicated and formal becomes the
task of organising.

Nature of Organisation (Characteristics):-

1. Division of Labour: The total work to be done is divided into small parts and
each work is entrusted to particular individual. After the division of the total effort
into functions and sub-functions, the next step is to group the activities on the basis
of a Similarity of work Efficiency. So that the similar type of activities can be
grouped together and placed under the name of department or Sub-department. Ex:
The manufacturing enterprise, its total activities may be divided and grouped under
production, marketing, finance, personnel etc.
Division of labour will lead to specialization because of doing the same work again
and again. It helps to increase the quantity and quality of output without waste of
time, energy and resources.
2. Co-Ordination: The people in the organisation are assigned with different
functions, but the aim is to attain organisational goal. So they have to co-ordinate
between 1. The employee and his work 2. One employee and another one
employee 3. One department and another.
3. Objectives: Every organisation should have specific and well defined
objectives. Objectives cannot be accomplished without an organisation. Similarly
the organisation cannot exist for a long time without objective and goals.
4. Authority-Responsibility relationship: An organisation structure consists of
various positions arranged in a hierarchy with a clear definition of the authority
and responsibility, associated with each position.
5. Communication: Every organisation has its own method of communication. In
organisation group of persons work together towards the goal. So effective
communication is needed between the people for understanding. The channels of
communication may be formal, informal, downward, upward or horizontal.
6. Huge Investment and Complicated Technology: Modern organisation
involves huge investment and complicated technology, their management and
operation is a complex affair. It needs assistance from specialists at all levels.

7. Mutually Agreed Purpose: There must be mutually agreed purpose because

all activities in an organisation are goal-oriented.

8. Proper System of Working in All Organisations: There must be proper

system of working in all organizations. It means there must be well defined
hierarchical levels, a chain of command, rules and procedures and communication
network, so that consistency and uniformity in behaviour may exist.

9. Differentiation is a Must: A chain of systematic division of labour takes place

by assigning authority and responsibility to an individual who is supposed to be
specialized in the job and this leads to differentiation.

10. Interaction with Other Systems is Also Must: All systems are interdependent
and exert influence on others and are influenced by others. Mutual dependence
necessitates interaction and consequently adaptation.
 Management
Management is a process of planning, decision making, organizing, leading,
motivation and controlling the human resources, financial, physical, and
information resources of an organization to reach its goals efficiently and
effectively. To understand the definition of management and its nature, a threefold
concept of management for emplacing a broader scope for the viewpoint of
management.

 According to Harold Koontz and Heinz Weihrich, Management is the

process of designing and maintaining an environment in which individuals,
working together in groups, efficiently accomplish selected aims.

 According to Robert L. Trewelly and M. Gene Newport, Management is

defined as the 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.

 According to Kreitner, “Management is the process of working with and

through others to effectively achieve organisational objectives by efficiently
using limited resources in the changing environment.

 According to George R Terry, Management consists of planning, organising,

actuating and controlling, performed to determine and accomplish the
objectives by the use of people and resources.

Modern Concept of Management

Management is a process through which an organisation designs and maintains an

environment in which individuals work together with the motive of achieving
organisational goals effectively and efficiently. The three essential elements that
come under the modern concept of Management are as follows:

1. Management is a ‘Process’: Management involves a series of int-related

functions like planning, organising, staffing, directing, and controlling, which
makes it a process. Every manager performs these functions to achieve goals.
2. Management requires Effective Performance: Effectiveness in Management
means achieving goals on time. In simple terms, it aims at end result. For
example, if an organisation achieves its sales target within time, it is said to be
effective.

3. Management needs Efficiency: Efficiency in Management means doing tasks

correctly and with minimum cost. It is not enough to just complete the task on
time, it should be accurate also. Besides, management also aims at using its
resources efficiently as it reduces the cost of the firm ultimately resulting in higher
profits.

Nature/Characteristics of Management:-

1. Management is an activity. It is a process of organized activity concerned

with efficient utilization of resources of productionlike men, material, machine,
money etc.

2. Management is a purposeful activity. It is concerned withthe achievement

of an objective through its functions. Objectives may be explicit or implicit.

3. Management concerned with the efforts of a group. Management is

concerned with management of people and not the direction of things. It
motivates the workers to contribute their best.

4. Management is getting things done. A manager does not do any operating

work himself but gets it done through others.

5. Management applies economic principles. Management is the art of

applying the economic principles that underlie a control of men and materials in
the enterprise under consideration.

6. Management involves decision-making. It is a decision-making process and

the decisions are involved in all the functions of management.

7. Management coordinates all activities and resources. It is concerned with

coordination of all activities and resources to attain the specific objectives.

8. Management is a universal activity. The techniques and tools of

management are universally applicable.
9. Management is an integrating process. It integrates the men, materials and
machines for achieving stated objectives.

10. Management is concerned with direction and control. It is concerned

with direction and control of human efforts to attain the specific objectives.

11. Management is intangible. It is abstract and cannot be seen. It is evidenced

by the quality of organization and through its results.

12. Management is both science and an art. Management has certain

universally applicable principles, laws etc. Hence, it is a science. It is also an
art, because it is concerned with application of knowledge for the solution of
organizational problems.

13. Management is a profession. It is becoming a profession because there is

established principles of management which being applied in practice.

14. Management is an inter-disciplinary approach. Management as a body

of discipline takes the help or other social science like psychology, sociology,
engineering, economics, mathematics etc.

15. Management is dynamic and not static. Management adopts itself to the
social changes and also introduces innovation in methodology.

Objectives of Management

1. Social Objectives: These refer to the objectives which are desired to be

achieved for the benefit of society. Every organisation has a social
responsibility to fulfill during its existence. Some of the social obligations of an
organisation include implementing environment friendly practices in the
production process, providing basic amenities to employees such as healthcare,
education, etc., and providing the unprivileged sections of society with
employment opportunities.

2. Organisational Objectives: With the help of management, every

organisation sets and achieves organisational goals. The three major
organisational objectives are survival, profit, and growth.
 Survival: One of the basic objectives of every organisation is survival. It
does so by making positive decisions for the organisation with the help of
the business management process.

 Profit: Survival is not enough for an organisation; it has to earn profits to

grow and expand in the future. Hence, every organisation has to ensure its
profit so that it can cover its costs and risks.

 Growth: Besides earning a profit, an organisation has to grow in order to

remain in the industry. For this purpose, the management of an organisation
has to exploit its resources effectively and efficiently.

3. Personal or Individual Objectives: As discussed earlier, people are the

main asset of an organisation having different goals, backgrounds and
personalities. It is the duty of the managers to ensure that the personnel
objectives are aligned with the organisational objectives. Individual or Personal
Objectives of an organisation consist of satisfying needs like Social Needs,
Financial Needs, Good and Healthy Working Conditions, and Higher Level
Needs.

Importance of Management
1. Increases Efficiency: The management process of an organisation increases
its efficiency by reducing cost and increasing productivity by utilisation of the
available resources in the best possible and optimum way.

2. Helps in Achieving Group Goals: Effective management process creates

teamwork and builds coordination among the members of an organisation. The
managers provide a common path or direction to their employees for the
accomplishment of the overall objectives of the organisation.

3. Creates a Dynamic Organisation: Every organisation works in a changing

environment. The managers of an organisation have to help their members
adapt to the changing environment, which ultimately helps them ensure the
survival and growth of the organisation. Besides, the management convinces
the employees that the changes brought in the organisation will benefit their
future prospects.
4. Development of Society: Every organisation has various objectives toward
different groups of society. Along with the development of the organisation, its
management has to develop the society too. To do so, the management helps the
organisation produce good quality products, adopt new technologies, and
provide employment opportunities to the weaker sections of society.

5. Helps in Achieving Personal Objectives: Every individual or employee of

an organisation has different objectives or goals they wish to accomplish while
doing their jobs. Management helps these employees in fulfilling their personal
objectives along with the organisational objectives.

Levels of Management - Top, Middle and Lower

The term “Levels of Management” refers to a line of demarcation between
various managerial positions in an organization. The number of levels in
management increases when the size of the business and work force increases
and vice versa. The level of management determines a chain of command, the
amount of authority & status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:

1. Top level/Administrative level:-It consists of board of directors, chief

executive or managing director. The top management is the ultimate source
of authority and it manages goals and policies for an enterprise. It devotes
more time on planning and coordinating functions. The role of the top
management can be summarized as follows -

a) Top management lays down the objectives and broad policies of the
enterprise.
b) It issues necessary instructions for preparation of department budgets,
procedures, schedules etc.
c) It prepares strategic plans & policies for the enterprise.
d) It appoints the executive for middle level i.e. departmental managers.
e) It controls & coordinates the activities of all the departments.
f) It is also responsible for maintaining a contact with the outside world.
g) It provides guidance and direction.
h) The top management is also responsible towards the shareholders for
the performance of the enterprise.
2. Middle level/Executory:-The branch managers and departmental managers
constitute middle level. They are responsible to the top management for the
functioning of their department. They devote more time to organizational
and directional functions. In small organization, there is only one layer of
middle level of management but in big enterprises, there may be senior and
junior middle level management. Their role can be emphasized as -

a) They execute the plans of the organization in accordance with the

policies and directives of the top management.
b) They make plans for the sub-units of the organization.
c) They participate in employment & training of lower level
management.
d) They interpret and explain policies from top level management to
lower level.
e) They are responsible for coordinating the activities within the division
or department.
f) It also sends important reports and other important data to top level
management.
g) They evaluate performance of junior managers.
h) They are also responsible for inspiring lower level managers towards
better performance.

3. Low level/Supervisory/Operative/First-line managers:-Lower level is

also known as supervisory/operative level of management. It consists of
supervisors, foreman, section officers, superintendent etc. According to R.C.
Davis, “Supervisory management refers to those executives whose work has
to be largely with personal oversight and direction of operative employees”.
In other words, they are concerned with direction and controlling function of
management. Their activities include -

a) Assigning of jobs and tasks to various workers.

b) They guide and instruct workers for day to day activities.
c) They are responsible for the quality as well as quantity of production.
d) They are also entrusted with the responsibility of maintaining good
relation in the organization.
e) They communicate workers problems, suggestions, and
recommendatory appeals etc to the higher level and higher level goals
and objectives to the workers.
 f) They help to solve the grievances of the workers.
g) They supervise & guide the sub-ordinates.
h) They are responsible for providing training to the workers.
i) They arrange necessary materials, machines, tools etc for getting the
things done.
j) They prepare periodical reports about the performance of the workers.
k) They ensure discipline in the enterprise.
l) They motivate workers.
m) They are the image builders of the enterprise because they are in
direct contact with the workers.

Management as a Process
As a process, management refers to a series of inter-related functions. It is the
process by which management creates, operates and directs purposive organization
through systematic, coordinated and co-operated human efforts.
According to George R. Terry, “Management is a distinct process consisting of
planning, organizing, actuating and controlling, performed to determine and
accomplish stated objective by the use of human beings and other resources”. As a
process, management consists of three aspects:

1. Management is a social process - Since human factor is most important

among the other factors, therefore management is concerned with
developing relationship among people. It is the duty of management to make
interaction between people - productive and useful for obtaining
organizational goals.
2. Management is an integrating process - Management undertakes the job
of bringing together human physical and financial resources so as to achieve
organizational purpose. Therefore, is an important function to bring harmony
between various factors.
3. Management is a continuous process - It is a never ending process. It is
concerned with constantly identifying the problem and solving them by
taking adequate steps. It is an on-going process.

Management as an Art
Art implies application of knowledge & skill to trying about desired results. An art
may be defined as personalized application of general theoretical principles for
achieving best possible results. Art has the following characters -
1. Practical Knowledge: Every art requires practical knowledge therefore
learning of theory is not sufficient. It is very important to know practical
application of theoretical principles. E.g. to become a good painter, the
person may not only be knowing different colour and brushes but different
designs, dimensions, situations etc to use them appropriately. A manager can
never be successful just by obtaining degree or diploma in management; he
must have also know how to apply various principles in real situations by
functioning in capacity of manager.

2. Personal Skill: Although theoretical base may be same for every artist, but
each one has his own style and approach towards his job. That is why the
level of success and quality of performance differs from one person to
another. E.g. there are several qualified painters but M.F. Hussain is
recognized for his style. Similarly management as an art is also personalized.
Every manager has his own way of managing things based on his
knowledge, experience and personality, that is why some managers are
known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as
bad.

3. Creativity: Every artist has an element of creativity in line. That is why he

aims at producing something that has never existed before which requires
combination of intelligence & imagination. Management is also creative in
nature like any other art. It combines human and non-human resources in
useful way so as to achieve desired results. It tries to produce sweet music
by combining chords in an efficient manner.

4. Perfection through practice: Practice makes a man perfect. Every artist

becomes more and more proficient through constant practice. Similarly
managers learn through an art of trial and error initially but application of
management principles over the years makes them perfect in the job of
managing.

5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete

results. In the same manner, management is also directed towards
accomplishment of pre-determined goals. Managers use various resources
 like men, money, material, machinery & methods to promote growth of an
organization.

Management as a Science
Science is a systematic body of knowledge pertaining to a specific field of study
that contains general facts which explains a phenomenon. It establishes cause and
effect relationship between two or more variables and underlines the principles
governing their relationship. These principles are developed through scientific
method of observation and verification through testing.

Science is characterized by following main features:

1. Universally acceptance principles - Scientific principles represents basic

truth about a particular field of enquiry. These principles may be applied in
all situations, at all time & at all places. E.g. - law of gravitation which can
be applied in all countries irrespective of the time. Management also
contains some fundamental principles which can be applied universally like
the Principle of Unity of Command i.e. one man, one boss. This principle is
applicable to all type of organization - business or non business.

2. Experimentation & Observation - Scientific principles are derived through

scientific investigation & researching i.e. they are based on logic. E.g. the
principle that earth goes round the sun has been scientifically proved.
Management principles are also based on scientific enquiry & observation
and not only on the opinion of Henry Fayol. They have been developed
through experiments & practical experiences of large no. of managers. E.g. it
is observed that fair remuneration to personal helps in creating a satisfied
work force.

Management as a Discipline
Management as a discipline refers to that branch of knowledge which is connected
to study of principles & practices of basic administration. It specifies certain code
of conduct to be followed by the manager & also various methods for managing
resources efficiently.
Management as a discipline specifies certain code of conduct for managers &
indicates various methods of managing an enterprise. Management is a course of
study which is now formally being taught in the institutes and universities after
completing a prescribed course or by obtaining degree or diploma in management,
a person can get employment as a manager. Any branch of knowledge that fulfils
following two requirements is known as discipline:

1. There must be scholars & thinkers who communicate relevant knowledge

through research and publications.

2. The knowledge should be formally imparted by education and training

programmes.

Since management satisfies both these problems, therefore it qualifies to be a

discipline. Though it is comparatively a new discipline but it is growing at a faster
pace.

Management as an Activity
Like various other activities performed by human beings such as writing, playing,
eating, cooking etc, management is also an activity because a manager is one who
accomplishes the objectives by directing the efforts of others. According to
Koontz, “Management is what a manager does”. Management as an activity
includes:

1. Informational activities - In the functioning of business enterprise, the

manager constantly has to receive and give information orally or in written.
A communication link has to be maintained with subordinates as well as
superiors for effective functioning of an enterprise.

2. Decisional activities - Practically all types of managerial activities are based

on one or the other types of decisions. Therefore, managers are continuously
involved in decisions of different kinds since the decision made by one
manager becomes the basis of action to be taken by other managers. (E.g.
Sales Manager is deciding the media & content of advertising).

3. Inter-personal activities - Management involves achieving goals through

people. Therefore, managers have to interact with superiors as well as the
 sub-ordinates. They must maintain good relations with them. The inter-
personal activities include with the sub-ordinates and taking care of the
problem. (E.g. Bonuses to be given to the sub-ordinates).

Management as a Group
Management as a group refers to all those persons who perform the task of
managing an enterprise. When we say that management of ABC & Co. is good, we
are referring to a group of people those who are managing. Thus as a group
technically speaking, management will include all managers from chief executive
to the first - line managers (lower-level managers). But in common practice
management includes only top management i.e. Chief Executive, Chairman,
General Manager, Board of Directors etc.

In other words, those who are concerned with making important decisions, these
persons enjoy the authorities to use resources to accomplish organizational
objectives & also responsibility to for their efficient utilization. Management as a
group may be looked upon in 2 different ways:

1. All managers taken together.

2. Only the top management

The interpretation depends upon the context in which these terms are used. Broadly
speaking, there are 3 types of managers -

1. Patrimonial/Family Manager: Those who have become managers by

virtue of their being owners or relatives of the owners of company.

2. Professional Managers: Those who have been appointed on account of

their specialized knowledge and degree.

3. Political Managers/Civil Servants: Those who manage public sector

undertakings.

Managers have become a part of elite group of society as they enjoy higher
standard of living in the society.
Management as a Profession
Over a large few decades, factors such as growing size of business unit, separation
of ownership from management, growing competition etc have led to an increased
demand for professionally qualified managers. The task of manager has been quite
specialized. As a result of these developments the management has reached a stage
where everything is to be managed professionally.
A profession may be defined as an occupation that requires specialized knowledge
and intensive academic preparations to which entry is regulated by a representative
body. The essentials of a profession are:

1. Specialized Knowledge - A profession must have a systematic body of

knowledge that can be used for development of professionals. Every
professional must make deliberate efforts to acquire expertise in the
principles and techniques. Similarly a manager must have devotion and
involvement to acquire expertise in the science of management.
2. Formal Education & Training - There are no. of institutes and universities
to impart education & training for a profession. No one can practice a
profession without going through a prescribed course. Many institutes of
management have been set up for imparting education and training. For
example, a CA cannot audit the A/C’s unless he has acquired a degree or
diploma for the same but no minimum qualifications and a course of study
has been prescribed for managers by law. For example, MBA may be
preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but professionals
are primarily motivated by the desire to serve the society. Their actions are
influenced by social norms and values. Similarly a manager is responsible
not only to its owners but also to the society and therefore he is expected to
provide quality goods at reasonable prices to the society.
4. Code of Conduct - Members of a profession have to abide by a code of
conduct which contains certain rules and regulations, norms of honesty,
integrity and special ethics. A code of conduct is enforced by a
representative association to ensure self discipline among its members. Any
member violating the code of conduct can be punished and his membership
can be withdrawn. The AIMA has prescribed a code of conduct for
managers but it has no right to take legal action against any manager who
violates it.
 5. Representative Association - For the regulation of profession, existance of
a representative body is a must. For example, an institute of Charted
Accountants of India establishes and administers standards of competence
for the auditors but the AIMA however does not have any statuary powers to
regulate the activities of managers.

FUNCTIONS OF MANAGEMENT
Management has been described as a social process involving responsibility for
economical and effective planning & regulation of operation of an enterprise in the
fulfillment of given purposes. It is a dynamic process consisting of various
elements and activities. These activities are different from operative functions like
marketing, finance, purchase etc. Rather these activities are common to each and
every manger irrespective of his level or status. Different experts have classified
functions of management.

According to George & Jerry, “There are four fundamental functions of

management i.e. planning, organizing, actuating and controlling”.

According to Henry Fayol, “To manage is to forecast and plan, to organize, to

command, & to control”.

Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for
Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination,
R for reporting & B for Budgeting.

But the most widely accepted are functions of management given by KOONTZ
and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of

management but practically these functions are overlapping in nature i.e. they are
highly inseparable. Each function blends into the other & each affects the
performance of others.

1. Planning:-It is the basic function of management. It deals with chalking out

a future course of action & deciding in advance the most appropriate course
of actions for achievement of pre-determined goals.
According to KOONTZ, “Planning is deciding in advance - what to do, when to do
& how to do. It bridges the gap from where we are & where we want to be”.

A plan is a future course of actions. It is an exercise in problem solving &

decision making.

Planning is determination of courses of action to achieve desired goals. Thus,

planning is a systematic thinking about ways & means for accomplishment of pre-
determined goals. Planning is necessary to ensure proper utilization of human &
non-human resources. It is all pervasive, it is an intellectual activity and it also
helps in avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing:-It is the process of bringing together physical, financial and

human resources and developing productive relationship amongst them for
achievement of organizational goals.

According to Henry Fayol, “To organize a business is to provide it with everything

useful or its functioning i.e. raw material, tools, capital and personnel’s”.

To organize a business involves determining & providing human and non-human

resources to the organizational structure. Organizing as a process involves:

o Identification of activities.

o Classification of grouping of activities.

o Assignment of duties.

o Delegation of authority and creation of responsibility.

o Coordinating authority and responsibility relationships.

3. Staffing:-It is the function of manning the organization structure and

keeping it manned. Staffing has assumed greater importance in the recent
years due to advancement of technology, increase in size of business,
complexity of human behavior etc.

The main purpose of staffing is to put right man/woman on right job i.e.
square pegs in square holes and round pegs in round holes.
According to Koontz & O’Donell, “Managerial function of staffing involves
manning the organization structure through proper and effective selection,
appraisal & development of personnel to fill the roles designed un the structure”.
Staffing involves:

o Manpower Planning (estimating man power in terms of searching,

choose the person and giving the right place).

o Recruitment, Selection & Placement.

o Training & Development.

o Remuneration.

o Performance Appraisal.

o Promotions & Transfer.

4. Directing:-It is that part of managerial function which actuates the

organizational methods to work efficiently for achievement of organizational
purposes. It is considered life-spark of the enterprise which sets it in motion
and action of people, because planning, organizing and staffing are the mere
preparations for doing the work. Direction is that inter-personnel aspect of
management which deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational goals.
Direction has following elements:

 Supervision- implies overseeing the work of subordinates by their superiors.

It is the act of watching & directing work & workers.
 Motivation- means inspiring, stimulating or encouraging the sub-ordinates
with zeal to work. Positive, negative, monetary, non-monetary incentives
may be used for this purpose.
 Leadership- may be defined as a process by which manager guides and
influences the work of subordinates in desired direction.
 Communications- is the process of passing information, experience,
opinion etc from one person to another. It is a bridge of understanding.

5. Controlling:-It implies measurement of accomplishment against the

standards and correction of deviation if any to ensure achievement of
 organizational goals. The purpose of controlling is to ensure that everything
occurs in conformities with the standards. An efficient system of control
helps to predict deviations before they actually occur.

According to Theo Haimann, “Controlling is the process of checking whether or

not proper progress is being made towards the objectives and goals and acting if
necessary, to correct any deviation”.

According to Koontz & O’Donell “Controlling is the measurement & correction of

performance activities of subordinates in order to make sure that the enterprise
objectives and plans desired to obtain them as being accomplished”. Therefore
controlling has following steps:

a. Establishment of standard performance.

b. Measurement of actual performance.

c. Comparison of actual performance with the standards and finding out

deviation if any.

d. Corrective action.