Module 1: Definition ,Principles and Basics of

Management
Introduction

• A business develops in course of time with

complexities. With the increasing of
complexities, managing the business concern
becomes a difficult one. The need of existence
of management has increased tremendously.
Management is not only essential to business
concerns but also essential to Banks, Schools,
Colleges, Hospitals, Hotels, Religious bodies,
Charitable trusts etc. Every business unit has
objectives of its own.

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• These objectives can be achieved with the co-
operative efforts of several personnel. The work of a
number of persons are properly co-ordinated to
achieve the objectives through the process of
management. According to E. Demock, “the
management is not a matter of pressing a button,
pulling a lever, issuing orders, scanning profit and
loss statements, promulgating rules and regulations.
Rather it is the power to determine what shall happen
to the personalities and happiness of entire people,
the power to shape the destiny of a nation and of all
the nations which make up the world”.

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• Peter F. Drucker has stated in his famous book
“The Practice of Management” that, “the
emergence of management as an essential, a
distinct and leading social institution is a
pivotal event in social history. Rarely has a
new basic institution, a new leading group,
emerged as fast as management since the turn
of this century. Rarely in human history has a
new institution proved indispensable so
quickly and even less often has a new
institution arrived with so little opposition, so
little disturbance and so little controversy”.
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MEANING OF MANAGEMENT

• Management is the art of getting things

done by a group of people with the
effective utilisation of available
resources. An individual cannot be
treated as a managing body running any
organisation. A minimum of two persons
are essential to form a management.
These persons perform the functions in
order to achieve the objectives of an
organisation.
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Definition

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Management Defined
Management is the process of achieving goals and objectives
1 effectively and efficiently through and with the people.

2 "Management is a process of designing and maintaining an

environment in which individuals work together in groups to
effectively and efficiently accomplish selected aims".

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Management Defined Cont’d

Management is the process of achieving organizational goals and

3 objectives effectively and efficiently by using management functions
i.e.
– Planning
– Organizing
– Staffing
– Controlling

Management is a set of activities directed at an organization's

4 resources with the aim of achieving organizational goals in an
efficient and effective manner.

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These definitions when expanded have these
implications:

• Management is thus a continuous effort aimed at shaping an organization and

contributing to its overall growth.

• The functions of managers include planning, organizing, staffing, leading and

controlling.

• These functions are essential to any kind of organization.

• It applies to managers at all hierarchical levels.

• The aim of managers is to increase productivity, effectiveness and efficiency.

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Elements of definition

• Process - represents ongoing functions or primary activities engaged in by

managers

• Efficiency - getting the most output from the least amount of inputs
• “doing things right”
• concerned with means
• Achieving the objectives in time

• Effectiveness - completing activities so that organizational goals are attained

• “doing the right things”
• concerned with ends
• Achieving the objectives on time

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Efficiency and Effectiveness
Means Ends
Efficiency Effectiveness

Goals

Goal Attainment
Resource Usage

Low High
Waste Attainment

FOM 1.9

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FEATURES OR CHARACTERISTICS OF MANAGEMENT

• 1. Art as well as science: Management is both an art and

a science. It is an art in the sense of possessing of
managing skill by a person. In another sense,
management is the science because of developing certain
principles or laws which are applicable in a place where a
group of activities are coordinated.

• 2. Management is an activity: Management is the

process of activity relating to the effective utilisation of
available resources for production. The term ‘resources’
includes men, money, materials and machine in the
organisation.

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• 3. Management is a continuous process: The process of
management mainly consists of planning, organising, directing
and controlling the resources. The resources (men and money)
of an organisation should be used to the best advantages of the
organisation and the objectives to be achieved. The
management function of any one alone cannot produce any
results in the absence of any other basic functions of
Management. So, management is a continuous process.

• 4. Management achieving pre-determined objectives: The

objectives of an organisation are clearly laid down. Every
managerial activity results in the achievement of objectives fixed
well in advance.

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• 5. Organised activities: Management is a group
of organised activities. A group is formed not only
in a public limited company but also in an ordinary
club. All the organisations have their own
objectives. These objectives will be achieved only
by a group of persons. These persons’ activities
should be organised in a systematic way to
achieve the objectives. The objectives cannot be
achieved without any organised activities.

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• 6. Management is a factor of production: The
factors of production includes land, labour, capital
and entrepreneurs. Here, land refers to a place
where production is carried on. Labour refers to
the paid employees of the organisation who are
working in different levels as skilled, unskilled,
semiskilled, manager, supervisor and the like.
Capital refers to the working capital as in the form
of cash, raw materials and finished goods and
fixed capital as in the form of plant facilities and
production facilities.

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• These land, labour and capital could not realise
the organisation’s goals. The organisation goals
are achieved only when these are effectively co-
ordinated by the entrepreneur. An individual can
do such type of job as in the case of small
businesses. In the case of big sized business
units, coordination job is done by the
management. So, management is also treated as
one of the factors of production.

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• 7. Management as a system of activity:
• A system may be defined as a set of component parts
working as a whole.
• Authority may be defined as a right to command others
for getting a particular course of organisational work
done. Individuals are the foundation stones of the
management. An individual has some goals as a
member of the organisation. There may be a conflict
between his own goals and the management’s
expectations from that individual.

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• Such conflict is resolved by the management by
ensuring balance between individual goals and
organisational expectations.

• Authority is vested with many persons to take

decisions and influence the behaviour of the
subordinates. The very purpose of using the
authority is to check and control the behaviour of
the subordinates. The sources of authority rest
with superiors as given in the organisation chart
and social norms. The utilisation of authority is
based on the personality factors of the user and
the behaviour of a person over whom it is used. 18
• 8. Management is a discipline: The boundaries of
management are not exact as those of any other
physical sciences. It may be increased by the
continuous discovery of many more aspects of
business enterprise. So, the management status as a
discipline is also increased in the same manner.
• 9. Management is a purposeful activity:
Management is concerned with achievement of
objectives of an organisation. These objectives are
achieved through the functions of planning, organising,
staffing, directing, controlling and decision-making. The
organisational objectives are clearly defined and
explained to every employee. 19
• 10. Management is a distinct entity:
Management is distinct from its functional
activities. The functions have the nature of
“to do” but the management has the nature
of “how to get things done”. A manager
requires some amount of skill and
knowledge to get work done.

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• 11. Management aims at maximising
profit: The available resources are
properly utilised to get desired results.
The results should be the maximising
profit or increasing profit by the
economic function of a manager.

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• 12. Decision-making: There are a number of
decisions taken by the management everyday.
Decision making arises only when there is
availability of alternative courses of action. If there
is only one course of action, need for decision-
making does not arise. The quality of decision
taken by the manager determines the
organisations’ performance. The success or
failure of an organisation depends upon the
degree of right decision taken by the manager.

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• 13. Management is a profession:
Management is a profession because it
possesses the qualities of a profession. A
fund of knowledge is imparted and
transferred in this profession and the same
is followed by management. The
established principles of management are
applied in practice.

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• 14. Universal application: The principles
and practices of management are
applicable not to any particular industry
alone but applicable to every type of
industry. The practice of management is
different from one organisation to another
according to their nature.

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• 15. Managment is getting thing done: A
manager does not actually perform the work
but he gets things done by others.
According to Knootz and O’Donnel,
“management is the art of getting things
done through and with people in formally
organised groups.”

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• 16. Management as a class or a team: A class
may be defined as a group of people having
homogenous characteristics to achieve common
objectives. Engineers and doctors are grouped as
a class in a society. Each and every doctor has
the same objectives in life. Just like engineers and
doctors, the management people have got similar
aspirations to achieve corporate objectives.

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• 17. Management as a career: Now-a-days,
management is developed as a career focused on
certain specialization. Financial Management, Cash
Management, Portfolio Management, Marketing
Management, Personnel Management, Industrial
Management and Business Management are some of
the specializations of management. Specialists are
appointed in the key posts of top management.

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• 18. Direction and control: A manager can direct
his sub-ordinates in the performance of a work
and control them whenever necessary. If the
available resources are not utilised properly by
him, he fails to achieve the corporate objectives in
the absence of direction and control. Generally,
the direction and control deals with the activities of
human effort.

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• 19. Dynamic: The management is not static. In the fast
developing business world, new techniques are
developed and adopted by the management.
Management is changed according to the social
change. The social change is the result of the changing
business world.

• 20. Management is needed at all levels: The

functions of management are common to all levels of
organisation. The top executives perform the functions
of planning, organising, directing, controlling and
decision-making. The same functions are also
performed by the lower level supervisor. 29
• 21. Leadership quality: Leadership quality is
developed in the persons who are working in the
top level management. According to R.C. Davis,
“Management is the function of executive
leadership everywhere.”

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Management: Science or Art?
Science is a collection of systematic knowledge, collection of truths and
inferences after continuous study and experiments. It has fundamental
principles discovered.

Art uses the known rules and principles and uses the skill, expertise, wisdom,
experience to achieve the desired result.

Management has got two faces like a coin; on one side it is art
and on the other it is science. Management has got scientific
principles which constitute the elements of Science and Skills
and talent which are attributes of Art.

Management is both art and science.

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Principles of Management

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Fayol’s Principles of Management

Henri Fayol (1841-1925)

He has proposed that there are six primary functions

of management and 14 principles of management,
Forecasting, Planning, Organizing, Commanding,
Coordinating, controlling
There are 14 Principles of Management described by
Henri Fayol.

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14 Principles of Henri Fayol

1. Division of Labor
Work of all kinds must be divided & subdivided and allotted to various
persons according to their expertise in a particular area.

2. Authority & Responsibility

Authority refers to the right of superiors to get
exactness from their sub-ordinates.

Responsibility means obligation for the performance of

the job assigned.

Note that responsibility arises wherever authority is

exercised.
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14 Principles of Henri Fayol Cont’d

3. Unity of Command
A sub-ordinate should receive orders and be
accountable to one and only one boss at a time.

He should not receive instructions from more than

one person

4. Unity of Direction
People engaged in the same kind of business or same
kind of activities must have the same objectives in
a single plan.

Without unity of direction, unity of action cannot be

achieved.

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 14 Principles of Henri Fayol Cont’d

5. Equity
Equity means combination of fairness, kindness & justice.

The employees should be treated with kindness & equity if

devotion is expected of them.

6. Order
This principle is concerned with proper &
systematic arrangement of things and
people.

Arrangement of things is called material

order and placement of people is called
social order.
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 14 Principles of Henri Fayol Cont’d
7. Discipline
Discipline means sincerity, obedience, respect of authority &
observance of rules and regulations of the enterprise. Subordinate
should respect their superiors and obey their order. A successful
organization requires the common effort of workers. Penalties
should be applied judiciously to encourage this common effort.

8. Initiative
Initiative means eagerness to initiate actions without
being asked to do so. Management should provide
opportunity to its employees to suggest ideas,
experiences & new method of work.

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14 Principles of Henri Fayol Cont’d
9. Remuneration
Remuneration to be paid to the workers should be fair,
reasonable, satisfactory & rewarding of the efforts.
It should accord satisfaction to both employer and
the employees.

10. Stability of Tenure

Employees should not be moved frequently from one
job position to another i.e. the period of service in a
job should be fixed.

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 14 Principles of Henri Fayol Cont’d
11. Scalar Chain
Managers in hierarchies are part of a chain like
authority scale. Each manager, from the first line
supervisor to the president, possess certain
amounts of authority. The President possesses the
most authority; the first line supervisor the least.
Lower level managers should always keep upper
level managers informed of their work activities. The
existence of a scalar chain and adherence to it are
necessary if the organization is to be successful.

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 12. Sub-ordination of Individual Interest to common goal
• An organization is much bigger than the individual it constitutes
therefore interest of the undertaking should prevail in all
circumstances. The interests of any one employee or group of
employees should not take precedence over the interests of the
organization as a whole.

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 14 Principles of Henri Fayol Cont’d
13. Espirit De’ Corps
It refers to team spirit i.e. harmony in the work groups
and mutual understanding among the members.

Espirit De’ Corps inspires workers to work harder.

14. Centralization
Fayol defined centralization as lowering the importance of
the subordinate role. Decentralization is increasing the
importance. The degree to which centralization or
decentralization should be adopted depends on the
specific organization in which the manager is
working.
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• Theory X and Y Douglas McGregor

Theory X Theory Y
• Average worker is lazy • Workers are not inherently lazy
• Dislikes work • Do not naturally dislike work
• Will try to do as little as possible• If given the opportunity, will do what
• Have little ambition and avoid is good for the organization.
responsibility

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Basics of Management

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Organization
Organizations are groups of people, with ideas and resources, working
toward common goals.
OR
A systematic arrangement of people brought together to accomplish some
specific purpose is called organization.

Characteristics of Organization

Deliberate
Distinct Purpose
Structure

People

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Manager

A manager is someone whose primary responsibility is to carry out the

management process within an organization to achieve the organizational
goals.
Changing nature of organizations and work has blurred the clear lines of
distinction between managers and non-managerial employees

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Managerial skills

Managerial Skills

Primary Skills Secondary Skills

• Conceptual Skill • Design Skill
• Technical Skill • Communication Skill
• Human Skill • Leadership Skill

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Managerial skills Cont’d
Conceptual skills:
• This refers to the ability to think and conceptualize abstract
situations. These abilities are required for making complex
decisions.
In short it is:
• The mental capacity to develop plans, strategies and vision

Human or interpersonal skills:

• This includes the ability to understand other people and interact
effectively with them. The human skills are also important in
creation of an environment in which people feel secure and free to
express their opinions.
In short it is:
• The ability to work with other people in teams

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Managerial skills Cont’d

Technical skills:
• These skills include the knowledge, abilities of and proficiency in
activities involving methods, processes and procedures in the
relevant fields as accounting, engineering, manufacturing etc.
Or in short:
• The ability to use the knowledge or techniques of a particular
discipline to attain ends

Design skills:
• These skills enable a manager to handle and solve any kind of
unforeseen or actual problems, that may crop up in the
organization. Such problems could arise due to internal factors or
external factors and/or both.
In short it is:
• The problem solving skill

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Managerial skills Cont’d
Communication skills:
• The abilities of exchanging ideas and information effectively. To
understand others and let others understand comprehensively.

Leadership skills
• The abilities to influence other people to achieve the common
goal.

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Skill distribution at various management levels

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Mintzberg’s roles of
managers

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• In 1960, Henry Mintzberg conducted a
study to understand about the managerial
roles. He identified 10 managerial roles that
are common to all managers. These 10
managerial roles are grouped under:
Interpersonal, decisional, and informational
roles.

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Roles of manager
Role: a set of expectation for one’s behavior

Roles of Manager

Interpersonal Decisional Informational

• Figurehead • Entrepreneur • Monitor
• Disturbance
• Leader handler
• Disseminator
• Liaison • Spokesperson
• Resource allocator
• Negotiator
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Roles of manager Cont’d

A: Inter-personal Role

1. Figurehead: Represents the company on social

occasions. Attending the flag hosting ceremony,
receiving visitors or taking visitors for dinner etc.

• Perform ceremonial and symbolic duties.

 Signing legal documents, Attending weddings
& funerals.

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2. Leader: In the role of a leader, the manager
motivates, encourages, and builds enthusiasm
among the employees. Training subordinates to
work under pressure, forms part of the
responsibilities of a manager.

• Guide and supervise subordinates.

 Staffing & training , motivating staff.

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3. Liaison: Consists of relating to others outside the group or
organization. Serves as a link between people, groups or
organization. The negotiation of prices with the suppliers
regarding raw materials is an example for the role of
liaison.

• Maintain information links in and beyond the

organization- use phones calls, e-mails and meetings.
 Liaising with overseas business support manager.

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Roles of manager Cont’d

B: Decisional Role:

1. Entrepreneur: Act as an initiator and designer

and encourage changes and innovation, identify
new ideas, delegate idea and responsibility to
others.

• Initiate ideas to bring in innovation &

improvement.
 Upgrade service & review new designs of
restaurant.

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2. Disturbance handler: Take corrective action
during disputes or crises; resolves conflicts
among subordinates; adapt to environmental
crisis.

• Take remedial actions.

 Restaurants remained closed during the riots
for security measures.

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3.Resource allocator: Decides distribution of
resources among various individuals and
groups in the organization.

• Allocation of various resources like

money, material, time, scheduling,
budgeting etc.

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• 4. Negotiator: Negotiates with other partiers like
customers, suppliers and government as well as
subordinates, groups or organizations- both internal and
external. Represents department during negotiation of
union contracts, sales, purchases, budgets; represent
departmental interests .

• Take part in negotiation activities.

 Handle customer complaints.
 Dealing with suppliers for better prices.

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Roles of manager Cont’d

Informational role:

1. Monitor: Emerges as nerve center of

internal and external information about
Information.

• Collect information from internal &

external sources.
Daily stock count, control of cash &
costs.
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2. Disseminator: Transmits information received
from other employees to members of the
organization.
• Share information internally & externally.
 Regular meetings for the exchange of
information, forward information to
subordinates, send memos and reports.

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3. Spokesperson: Transmits information to the
people who are external to the organization, i.e.,
government, media etc. For instance, a manager
addresses a press conference announcing a new
product launch or other major deal

• Represent the Organization in public through

speeches and reports.
• Convey information to stakeholders.
 Accountable to GM.

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Functions of management

1 Planning is the process of setting goals, and charting the best way of action for
Planning achieving the goals. This function also includes, considering the various steps to
be taken to encourage the necessary levels of change and innovation.

2 Organizing is the process of allocating and arranging work, authority and

Organizing resources, to the members of the organization so that they can successfully
execute the plans.

3 A: Staffing is the process of filling the positions in the organization and keeping
them filled.
Staffing B: Staffing is the process of recruiting and selecting the right person for the right
job at the right time in the right place.

4 Leading involves directing, influencing and motivating employees to perform

essential tasks. This function involves display of leadership qualities, different
Leading leadership styles, different influencing powers, with excellent abilities of
communication and motivation.

5 Controlling is the process of devising various checks to ensure that planned

performance is actually achieved. It involves ensuring that actual activities
Controlling conform to the planned activities. Monitoring the financial statements, checking
the cash registers to avoid overdraft etc., form part of this process.

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Levels of management
1. Top Level:
• Top management sets the mission and goals, develops policies, evaluates the
overall performance of various departments, responsible for the business as a
whole and is concerned mainly with long-term planning

2. Middle Level:
• Middle level management develops departmental goals, executes the policies,
plans and strategies determined by top management , develops medium- term
plans and supervises and coordinate lower-level managers’ activities

2. Lower (Supervisory, frontline) Level:

• Lower level management takes charge of day-to-day operations, is involved in
preparing detailed short-range plans, is responsible for smaller segments of
the business, executes plans of middle management , guides staff in their own
subsections and keep close control over their activities

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Levels of management

Top
Management
President, CEO,
Executive
Vice Presidents

Middle Management
Plant Managers, Division Managers,
Department Managers

First-Line Management
Foreman, Supervisors, Office Managers

Non- Managerial Employees

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 Most

Least
Important

Important
Planning
each level

Organizing

Top
Staffing

Managers
Directing
Controlling

Planning
Organizing
Staffing
Middle
Managers
Directing
Controlling

Planning
Organizing
Staffing
Managers
First-Line
Importance of management functions to managers in

Directing
Controlling
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