CHAPTER – 1

NATURE AND SIGNIFICANCE

OF MANAGEMENT
1. Management is applicable in which of the following areas?
a) Business organizations
b) Government institutions
c) Hospitals and schools
d) All of the above

2. Management is considered an intangible force because:

a) It cannot be seen but its effect can be felt
b) It is a physical activity
c) It is not important in organizations
d) It does not require human effort
3. Which of the following statements is true about management?
a) Management is only required in large organizations
b) Management is only concerned with profit-making
c) Management is necessary for all types of organizations
d) Management has no role in achieving organizational goals

4. Management is said to be multi-dimensional because it involves

managing:
a) People, work, and operations
b) Only business activities
c) Only employees
d) Only financial resources
5. The effectiveness of management is measured by:
a) The number of employees in an organization
b) The ability to achieve organizational goals efficiently
c) The presence of a strong management team
d) The rules and regulations of the company
Meaning of Management:
Management is a process of getting things done with the aim of
achieving goals effectively and efficiently.

Management is said to be a Process;

management is a process because it performs series of functions

to get the things done. These functions are planning, organizing,
staffing, directing and controlling.
Meaning of Effectiveness and Efficiency:
Effectiveness in management is concerned with doing the right tasks,
completing activities, and achieving goals.

Efficiency refers to completing the task with minimum cost and

optimum utilization of resources.
Features / Characteristics of Management:
1. Goal Oriented
2. Pervasive
3. Multi-dimensional
4. Continuous Process
5. Group Activity
6. Dynamic Function
7. Intangible
1)Management is a Goal-oriented Process :

Every organization is established to achieve some goals. Goals are the

basic reason for the existence of the organization. Different
organizations have different goals.

For example : The goal of a retail store may be to increase sales, but the
goal of a school is to impart education to children.

2)Management is Pervasive :

Management is pervasive as it is required in all organizations, in all

departments and at all levels.
3) Management is Multi-dimensional:

a)Management of Work

b)Management of People

c)Management of Operations

4)Management is a Continuous Process :

Management is a continuous or never-ending function. All the

functions of management are performed simultaneously.
5)Management is a Group Activity :

Management consists of several people who work as a group. Efforts of

all the members were directed towards the achievement of common
goals.

6)Management is a Dynamic Function :

Management must make changes in goals, objectives, and other

activities according to changes taking place in the environment.

7)Management is an Intangible Force :

Management function cannot be physically seen but its presence can be

felt.
Objectives of Management:

1)Organizational Objectives

2)Social Objectives

3)Personal Objectives
1)Organizational Objectives :
a)Survival: The basic purpose of every organization is to survive and
exist in the competition market for a long period of time and it is
possible only when it can cover its cost.
b)Profit: The most important objective of every organization is earning
adequate amount of profit. Profit is essential for covering the costs and
risks of the business.
c)Growth: The business organization must grow and expand its
activities. The success of any organization is measured by the growth
rate and growth is measured in terms of sales, number of branches,
number of products, number of employees, etc.
2)Social Objectives :

a)Supply of good quality products at reasonable prices.

c)Generation of economic wealth.

d)Providing employment opportunities to the weaker section of society.

e)Using environmentally friendly methods of production.

f)Organizing educational, health and vocational training programmes.

3)Personal Objectives :

a)Competitive salary;

b)Personal growth and development;

c)Peer recognition (self-respect and respect for colleagues);

d)Social recognition;

e)Good and healthy working conditions.

Importance of Management:

1. Management Helps in Achieving Group Goals

2. Management Improves Efficiency

3. Management Creates a Dynamic Organization

4. Management Helps in Achieving Personal Objectives

5. Management Helps in the Development of Society

1. Management Helps in Achieving Group Goals:

Management directs the efforts of all the individuals in the common

direction of achieving organizational goals.

2. Management Improves Efficiency:

Management insists on efficiency and effectiveness in the work through

planning, organizing, staffing, directing and controlling.

3. Management Creates a Dynamic Organization:

Organizations must survive in a dynamic environment, so managers

keep making changes in the organization to match the environmental
changes.

4.Management Helps in Achieving Personal Objectives:

The manager leads the people in such a manner that along with the
organizational goal, the individual goal of employees is also achieved.
As organizational goals and individual goals are in one direction only.
5.Management Helps in the Development of Society:

Efficient management always has multiple objectives, they give due

importance to social obligations, towards different groups of people
such as employees, customers, suppliers, etc.
Nature of Management:

1. Management as an Art

2. Management as a Science

3. Management as a Profession
1. Management as an Art:

Art can be defined as a systematic body of knowledge which requires

skill, creativity, and practice to get perfection.

The Main Features of Art are

1. Systematic Body of Knowledge / Existence of Theoretical

Knowledge

2. Personalized Application

3. Based on Practice and Creativity

2. Management as a Science:
Science can be defined as a systematic and organized body of

knowledge based on logically observed findings, facts, and events.

Characteristics of Science are :

1. Systematic Body of Knowledge

2. Principles are Based on Experimentation

3. Universal Validity
3. Management as a Profession:

profession can be defined as an occupation backed by specialized

knowledge and training, in which entry is restricted.

Features of a Profession:

1. Well-defined Body of Knowledge

2. Restricted Entry

3. Presence of Professional Association

4. Existence of Ethical Codes

5. Service Motive
Levels of Management:

Top level management.

Middle level management.

Supervisory level management.

Functions of Top Level Management:
 Top-level Managers are responsible for the welfare and survival of
the organization.

 They analyze the business environment and its implication for the
survival of the firm.

 They formulate overall organizational goals and strategies for the

achievement of goals.

 They are responsible for all the activities of the business and their
impact on society.
Functions of Middle Level Management:

 They interpret the policies framed by Top Management to Lower-

level Management.

 They ensure that their department has the necessary personnel.

 They assign necessary duties and responsibilities to them.

 Motivate them to achieve the desired objective.

 Co-operate with other departments for the smooth functioning of

the organization.
Functions of the Lower Level Management:

 They interact with the actual workforce and pass on the

instruction of the middle management to the workers.

 Supervisors directly oversee the efforts of the workforce.

 Through their efforts quality of output is maintained and the

wastage of materials is minimized.

 They ensure that safety standards are maintained.

Functions of Management:

1. Planning

2. Organizing

3. Staffing

4. Directing

5. Controlling
1. Planning:

Planning refers to deciding in advance what to do, how to do when to

do it, and who is going to do it. Planning is the base of all other
functions of management.

2. Organizing:

Organizing is the management function of assigning duties, grouping

tasks, establishing authority, and allocating resources required to carry
out a specific plan.
3. Staffing:
Staffing simply means finding the right people for the right job. A very
important aspect of management is to make sure that the right people
with the right qualification are available at the right places and times
to accomplish the goals of the organization.

4. Directing:
Directing involves leading, influencing, and motivating employees to
perform the tasks assigned to them. This required establishing an
atmosphere that encourages employees to do their best. Directing
includes supervision, motivation, communication and leadership.
5. Controlling:

Controlling is the management function of monitoring organizational

performance towards the attainment of organizational goals. In this
function, the manager tries to match the actual performance with the

planned performance.
Coordination:

Coordination is the process by which a manager synchronizes activities of

different departments in order to achieve organizational goals.

Coordination — The Essence of Management

1)Coordination is Needed to Perform All the Functions of Management.

2)Coordination is Required at Al the Levels.

3)Coordination is the Most Important Function of an Organization.

1.Coordination is Needed to Perform All the Functions of
Management:

The process of coordination begins at the planning stage when top

management plans for the whole organization.

2. Coordination is Required at Al the Levels:

Top-level requires coordination to integrate all the activities of the

organization and lead the efforts of all the individuals in one common
direction.

3. Coordination is the Most Important Function of an Organization:

Any company which fails to coordinate its activities cannot survive and run
successfully for a long period.
Characteristics of Coordination:

1. Coordination Integrates Group Efforts

2. Coordination Ensures Unity of Action

3. Coordination is a Continuous Process

4. Coordination is an All Pervasive Function

5. Coordination is a Deliberate Function

6. Coordination is the Responsibility of All Managers

1. Coordination Integrates Group Efforts:
It gives a common focus to a group effort to ensure that
performance is as it was planned and scheduled.

2. Coordination Ensures Unity of Action:

It acts as the binding force between departments and ensures that
all action is aimed at achieving the goals of the organization.
3. Coordination is a Continuous Process:
It begins at the planning stage and continues till controlling.
4. Coordination is an All Pervasive Function :

Coordination is required at all levels of management due to the

interdependent nature of the activities of various departments.

5. Coordination is a Deliberate Function:

A manager must coordinate the efforts of different people consciously

and deliberately.

6. Coordination is the Responsibility of All Managers:

Coordination is the function of every manager in the organization.

Importance of Coordination:

1. Size of the Organization

2. Functional Differentiation

3. Specialization
1. Size of the Organization:

The need for coordination increases with the increase in the size of the
organization because in large organizations there are a greater number
of people working, and everyone has his own needs and objectives. So,
there is more need to bring together or synchronize the efforts of these
employees towards a common goal.

2. Functional Differentiation:

The functions of an organization are divided into different departments,

sections or divisions and each department work individually by giving
more importance to its objective.
3. Specialization:

In large and modern organizations there is a high degree of

specialization, and the specialists or experts feel that they are the only
qualified people, and they always take the right decision in the right
direction.
Question 1.

Ashutosh Goenka was working in ‘Axe Ltd.’, a company

manufacturing air purifiers. He found that the profits has started
declining from the last six months. Profit has an implication for the
survival of the firm, so he analyzed the business environment to find
out the reasons for this decline.

1. Identify the level of management at which Ashutosh Goenka was

working.

2. 2. State three other functions being performed by Ashutosh

Goenka.
Answer.

Ashutosh Goenka was working at top level of management.

The three functions being performed by him at this level are outlined
below:

1. He is responsible for formulating the overall organizational goals

and strategies.

2. 2. He is responsible for all the business activities and its impact on

society.

3. 3. He has to coordinate the activities of different departments in

pursuit of common goals.
Question 2.

Mega Ltd. manufactured water-heaters. In the first year of its operations, the
revenue earned by the company was just sufficient to meet its costs. To
increase the revenue, the company analyzed the reasons behind the less
revenues. After analysis, the company decided:

1. To reduce the labor costs by shifting the manufacturing unit to a backward

area where labor was available at a very low rate.

2. To start manufacturing solar water-heaters and reduce the production

of electric water heaters slowly. This will not only help in covering the risks
but also help in meeting other objectives.

1. Identify and explain the objectives of management discussed above.

2. State any two values which the company wanted to communicate to society.
Answer.
1. The objectives of management discussed above are:
a) Organizational objectives:
An organization strives to achieve multiple organizational objectives in
the interest of its stakeholders like owners, employees etc. The main
organizational objectives are survival, profit and growth.
b) Social Objectives:
It is the obligation of every organization to undertake such activities
which will benefit the society at large like using eco-friendly methods,
contributing towards weaker sections of the society, generating
employment opportunities, promoting literacy etc.
2. The two values that the company wanted to communicate to the
society are:
a) Rural development
b) Environment sustainability
Question 3:

Mr. Nitin Singhania’s father has a good business of iron and steel. He

wants to go to the USA for his MBA but his father thinks that he should

join the business. On the basis of emerging- trends, do you think that

Mr. Singhania should send his son to the USA? Give any three reasons

in support of your answer.

Answer.
Yes, according to me, Mr. Singhania should send his son to USA for his MBA
because management is being recognized as a profession to a great extent
because of the following reasons:
1. Well defined body of knowledge: Management is considered to be a well-
defined body of knowledge that can be acquired through instructions. As a
separate discipline, it contains a set of theories and principles formulated by
various management experts. Moreover, it is taught in various schools and
colleges all over the world.
2. Ethical code of conduct: Management, in practice, like other professions,
is bound by a code of conduct which guides the behavior of its members.
Therefore, acquiring a degree in management will equip him with the good
managerial,, skills and approach.
3. Service motive: A good management course will provide him an insight
into the multiple goals that an organization should pursue. This knowledge will
help him to serve both the objectives of profit maximization and social welfare
effectively for his company.
Question 4:

The newly appointed Production Manager of Saheb Ltd., a firm manufacturing toys, Mr
Ahrawat noticed that the workers in the factory were not giving their best as the
physical conditions in the factory were not good. He conducted an experiment to see
the effect of improvement in the physical conditions in the factory on the performance
of the workers, by providing adequate ventilation and water facilities. He observed that
the fatigue level of the workers reduced.

The nature of management being highlighted in the above case is:

a) Management as science

b) Management as profession

c) Management as art

d) Both A. and C.

Answer: a) Management as science