Class 12 - Business Studies - Chapter 1 - Nature & Significance of Management

CHAPTER SUMMARY

IMPORTANT TOPICS TO REMEMBER

The entire chapter is divided into 9 segments which are briefly discussed in the below discussion.

Note:
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1. MANAGEMENT

MANAGEMENT is defined to be an ART of getting things DONE FROM OTHERS in a EFFECTIVE & EFFICIENT manner as may be deemed fit for an organization in an ORDERLY MANNER. 

2. EFFECTIVENESS VS EFFICIENCY

Efficiency = cost effective 

Effectiveness = on Time  

An effective as well as efficient person will be more preferred by an organization over just effective or just efficient person. 

3. FEATURES OF MANAGEMENT

Management has the following features:-

1. Goal Oriented - Management works on certain goals and objectives and it is necessary for it to achieve them within the requisite time.
2. All Pervasive - It is required at all times and all levels of management. 
3. Multi-dimensional - It includes three aspects - 1. Management of Work; 2. Management of People; 3. Management of Operations.
4. Continuous Process - Management is a never ending process.
5. Group Activity - A single person cannot handle the complex functions of a management. Hence, a group of people together manages the organization's functions.
6. Dynamic Function - The business environment is constantly changing, but still the organization manages it's way to success only because of it's dynamic function i.e. surviving in all kinds of markets and facing complexities.
7. Intangible - Management cannot be seen or touched, it's presence can only be felt like intangibles. 

4. OBJECTIVES OF MANAGEMENT

An organization broadly has three objectives to fulfill - 

1. Organizational Objective

These are the objectives that refers to the effective and efficient utilization of resources (physical as well as human) available to an organization in order to gain the maximum benefit out of it.

• Profit - It is the most important reward of an organization and is necessary for an organization to grow and survive in the market. Adequate amount of profits at regular intervals is a necessity for a business organization to stay in the market in long run. 
• Survival - A business always aims to stay for long in the market. Hence, taking correct management decisions is a very important part of surviving for long. 
• Growth -  The growth of a business is directly proportionate to the profits. Hence, management should aim at growing the sales, employees, capital, products etc. to ensure a constant growth.

2. Social Objectives

These are the objectives that refers to the fulfillment of the management's obligations towards the society by taking steps for its development. It's very important that management constantly acknowledge the needs of the society and take steps towards fulfilling them.

• Providing better quality of goods,
• Refraining from overcharging from the customers,
• Providing adequate employment opportunities.
• Saving the environment from getting polluted (Recycling the waste, Taking steps in improving air, water, soil quality)
• Contribution in improving the standard of living.

 

3. Personal Objectives

 These are the objectives that refers to the improvement or development of the employees of an organization. It is very important for an organization to keep it's employees happy and satisfied at all time.

• The financial needs of the employees needs to be fulfilled by providing competitive salary and monetary incentives from time to time,
• The social needs of the employees needs to be fulfilled by providing recognition among the peers, providing a safe and happy working environment,
• Other Needs can be fulfilled by providing equal opportunities, being heard.

It's of utmost importance that Management finds out a Correct balance between the personal & organizational goals, so as to grow personally and make the organization grow at large.

5. IMPORTANCE OF MANAGEMENT

 The following importance of Management can be noted - 

1. Management Helps in achieving group goals which are pre-defined by the top level of the management. 
2. Management increases efficiency through optimum utilization of available resources efficiently.
3. Management creates a dynamic organization by taking effective and efficient decisions in the constantly changing business environment.
4. Management helps in achieving personal objectives by providing adequaye remuneration, incentives and growth opportunities form time to time. 
5. Management helps in the development of society by taking responsible decisions that overall governs and develops the society.

6. NATURE OF MANAGEMENT

Various management experts have described the nature of management differently in their time. 

The discussion about nature of management can be categorized among three headings -
1. Management as Art
2. Management as Science
3. Management as Profession

1.  Management as Art 

Art can be defined as the practical application of the available knowledge using the skills.

1. Existence of Theoretical Knowledge - Art is based on the specified theoretical knowledge upon which its base is interpreted. Like art, management is based on certain theoretical knowledge or literature that is available. 
2. Personalized Application - Art is based on using the theoretical knowledge practically and its application differs from person to person. Like art, management is also based on personal and different application of the knowledge and principles.
3. Based on Creativity and Practice - Continuous practice brings perfection in a particular art. Also it also gives a chance to the artist to add its creativity to the art. Like art, in management a manager's creative ideas and his experience plays a very important role. 

Management can be referred to as a PERFECT ART. As it contains and fulfills all the features perfectly.

2. Management as Science

Science can be defined as a systematic body of knowledge which is obtained on the basis of experimentation and universally acceptable.

1.  Systematic Body of Knowledge - Science is a systematic body knowledge which are developed from various principles and techniques. Like science, management is also a developed from principles and techniques. Hence, it is also a systematic body of knowledge. 
2. Principles based on Experiments - Scientific principles are developed from experiments which have been undertaken by verifying facts. Management principles are developed by the management experts after research and analysis.
3. Universal Validity -  Scientific principles are universally acceptable and can be applied every time and anywhere. The management principles are not exact and cannot be applied anytime and anywhere. 

Hence, Management can be referred to as imperfect or inexact or applied science. It can also be referred to as soft science as its principles are not so rigid. 

3. Management as Profession

Profession can be defined as an economic activity which is undertaken by a person having specialised knowledge and skill which is used to serve the society.

1. Well Defined Body of Knowledge - Every profession has an association with a well defined body which imparts specialised knowledge to a person based on expertise and principles defined. Management also has its own specialised body that en builds professional competence in managers based on management principles and techniques. 
2. Restricted Entry - The entry in a profession is restricted by acquiring a degree from a recognised educational institution. In management, no such requirement arise. Anyone can be a part of the management. 
3. Professional Association - A profession is always connected with an association or body that governs the professionals, like Bar Council for Lawyers, Medical Council of India for doctors etc. It is mandatory for the professionals to be associated or registered with such association. Management also have such a professional association named All India Management Association (AIMA) but it is not mandatory to be a member of such association. 
4. Ethical Code of Conduct - All the professional members are bound to follow a code of conduct that is designed by the association. In management, no such code of conduct has been defined, but Managers are expected to fulfill their social and moral objectives. 
5. Service Motive - A professional's main motive should be to serve the society and rather should not run after economic considerations. A management has a clear objective of profit motive. Although they have a social responsibility, but still more stress is given to profit over service. 

Hence, it can be noted that Management fulfills only some of the characteristics of Profession. So, Management as a profession in India is still in its development stage.

7.  LEVELS OF MANAGEMENT

There are broadly three levels/ hierarchy identified in an organisation :-

1. Top Level Management

• It includes Chief Executive Officer, President, Managing Director, Board of Directors etc.
• They coordinates diiferent activities of the organisation for the accomplishment of the common goals,
• Works towards the survival of the organisation,
• Drafts and frames various plans and policies for the survival and growth of the organisation,
• Carries responsibility for all the activities of the organisation.

2. Middle Level Management 

• It includes Departmental Heads, Executive offices, Managers, Function Heads (Like Purachase Manager, Sales Manager etc) etc. 
• They acts as a link between the top management and the workers at the lower level management,
• They interpret and implements the policies and plans formed by the top level executives,
• They assign responsibilities to the workers,
• They have the controlling power of the workers or lower level management.

3. Lower/ Operational Level Management

• They include supervisors, factory foremans etc.
• They act as a direct link between the middle management and the workers,
• They supervises the tasks of the workers
• They ensure that the task are carried out as per the plans and policies,
• They are answerable for the works of the worker. 

8. FUNCTIONS OF MANAGEMENT

There are basic five functions of management. 

1.  Planning -

Planning is all about deciding what is to be done, who is to do it and how it is to be done. This implies that taking all corrective decisions in relation to setting up objectives for management. 

2. Organising

Organising is all about identifying the tasks and the resources required for the execution of the plans—that is, grouping and assigning the tasks to different departments and defining the hierarchical structure.

3. Staffing/ Human Resource Planning Function

Staffing is all about hiring the right kind of people as per the job profiles. The function includes hiring new people and training and developing the employees.

4. Directing

Directing is all about guiding and motivating the personnel so as to help them put in their best.

5. Controlling 

Controlling is all about measuring and comparing the actual work done against the set standards and the plans. This function of management ensures that there is no diversion or errors from the set targets, and that if any deviations or errors exist, then necessary timely steps are taken to rectify them.

 

9. COORDINATION

Coordination is a process through which the activities of various departments and units are

synchronised for the achievement of the organisation’s goals. It is a binding force that unites the individuals’ efforts for the accomplishment of the common organisational goals. It acts as a link between the various functions of management. It is found at every level of management.

10. CHARACTERISTICS AND IMPORTANCE OF COORDINATION

1. Integrates Group Efforts 

Coordination integrates the efforts of the individuals towards the set targets or goals of the organisation. It also creates a balance among the activities of the organisation so as to ensure harmony and a cordial environment.

2. Ensures Unity of Action

It unifies the actions of the individuals and departments to achieve the organisational goals. Properly scheduling the activities in such a way as to ensure that there are no interruptions or delays and there is no duplication of work.

3. Continuous Process 

Coordination is a never-ending and continuous process that ensures that work is performed as per the planned targets.

4. It is an All Pervasive Function

It is performed at all the levels of management.

5. Responsibility of all Managers 

Coordination is an activity that involves the managers at all levels. The top-level managers perform it to ensure the overall welfare of the organisation. The middle-level managers practice it to ensure that the top-level and lower level managers work together in harmony. The operational level managers perform it to ensure that work goes on according to the planned targets.