Nature and Significance of Management Chapter Notes | Business Studies (BST) Class 12 - Commerce PDF Download

Nature and Significance of Management

Management is the process of creating and sustaining an environment where individuals work together in groups to efficiently achieve specific goals.

It is crucial for all organisations, whether large or small, profit or non-profit and highlights the importance of individuals contributing to collective objectives.

Management combines a structured body of knowledge (science) with its practical application (art). It is a dynamic function that must adapt to changing circumstances.

Management is complex and has three main aspects:

• Management of work: Organisations exist to perform certain tasks. For example, a factory makes products, a garment store meets customer needs, and a hospital cares for patients. Management involves solving problems, making decisions, establishing plans, preparing budgets, assigning responsibilities, and delegating authority.
• Management of people: Human resources are the most valuable asset of an organisation. Despite technological advancements, the challenge of "getting work done through people" remains a key responsibility of management.
• Management as a group activity: An organisation is made up of diverse individuals with varying needs. Each member has their own purpose for joining, but they work together towards a common goal, requiring teamwork and coordination.

Efficiency and Effectiveness

Efficiency means doing the task correctly at minimum cost through optimum utilization of resources while Effectiveness is concerned with results means completing the task correctly within a stipulated time. Although efficiency and effectiveness are different, they are interrelated. Management needs to maintain a balance between the two.

Effectiveness V/s Efficiency

Characteristics of Management

(i) Management is a Goal-oriented Process which is undertaken to achieve already specified and desired objectives by proper utilization of available resources.
(ii) Management is All Pervasive and is used in all types of organizations whether economic, social or political irrespective of its size nature and location and at every level.
(iii) Management is Multidimensional: It does not contain one activity. it is a complex activity including three main activities.
(a) Management of work
(b) Management of people
(c) Management of operations
(iv) Management is a Continuous Process: It is a never-ending process. It consists of a series of interrelated functions which perform continuously. The process of management continues until an organization exists to attain its objectives.
Fig: Continuous Loop of Management 

(v) Management is a Group Activity: An organisation is a collection of many individuals, and every individual contributes towards achieving the goal.
(vi) Management is a Dynamic function: It is a dynamic function since it has to adapt according to the needs, time and situation of the changing environment.
Example: McDonald's made major changes in its ‘Menu’ to survive in the Indian market.
(vii) Management is an Intangible Force: It cannot be seen or touched only it can be felt in the way the organisation functions.

Clear all your Commerce doubts with EduRev Join for Free

Join for Free

Objectives of Management

Objectives can be classified into organisational, social or personal  

(i) Organisational Objectives

• Survival: The essential aim of any business is to survive. Management must work to ensure the organisation continues to exist. To do this, it must generate enough income to meet its costs.
• Profit: Just surviving is not adequate for a business. Management must ensure that the organisation is profitable. Profit is crucial for the ongoing success of the enterprise, as it helps cover expenses and risks.
• Growth: The success of an organisation is judged by its growth and expansion. A business needs to enhance its future possibilities; therefore, the business needs to develop. To stay competitive, management must fully utilise the organisation's growth potential.

(ii) Social Objectives

Social objectives focus on benefiting society, such as adopting environmentally friendly practices and creating jobs for underprivileged groups. Companies like TISCO, ITC, and Asian Paints are examples of this.

(iii) Personal Objectives

Organisations consist of individuals with varied personalities, backgrounds, experiences, and aims. Management needs to align personal objectives with organisational objectives to maintain harmony within the organisation.

Importance of Management

(i) Helps in achieving Group Goals: Management creates teamwork and coordination in the group. Managers give common direction to individual efforts in achieving the overall goals of the organization.
(ii) Increases Efficiency: Management increases efficiency by using resources in the best possible manner to reduce cost and increase productivity.
(iii) Management creates a Dynamic organization: Management helps the employees overcome their resistance to change and adapt to changing situations to ensure its survival and growth.
(iv) Management helps in achieving personal objectives: Management helps individuals achieve their personal goals while working towards organizational objectives.
(v) Development of Society: Management helps in the development of society by producing good quality products, creating employment opportunities and adopting new technology.

Management as an Art

Art involves using one's skills and knowledge effectively to achieve specific goals. This skill can be developed through learning, observing, and gaining experience. The field of management has progressed over time alongside modern organisations, shaped by both the experiences of managers and various theoretical frameworks. It has become a dynamic subject with unique characteristics. The main features of art include:

• Existence of theoretical knowledge: Art relies on certain theoretical knowledge. Experts in their fields have established fundamental principles that apply to a specific type of art.
• Personalised application: This fundamental knowledge is applied differently by each individual, making art a highly personal concept.
• Based on practice and creativity: All art is practical. It involves creatively using existing theoretical knowledge. For example, while all music is based on seven basic notes, a musician's unique composition comes from their creative interpretation of these notes.

Management can be viewed as an art because it meets the following criteria:

• A successful manager practices the art of management daily, drawing from study, observation, and experience. There is a wealth of literature in various management areas like marketing, finance, and human resources that managers need to specialise in, highlighting the existence of theoretical knowledge.
• Numerous management theories, put forth by various thinkers, suggest universal principles. A manager must tailor these principles to their specific organisational context. Since management principles are not as precise as scientific principles, their application is not universal and needs to be adjusted according to the situation. Nonetheless, they provide managers with standard techniques applicable in diverse contexts and are also used for training and developing managers.

Management as a Science

Science is a systematized body of knowledge that is based on general truths which can be tested anywhere, anytime. The features of Science are as follows:
(i) Systematized body of knowledge: Science has a systematized body of knowledge based on principles and experiments.
(ii) Principles based on experiments and observation: Scientific principles are developed through experiments and observation.
(iii) Universal validity: Scientific principles have universal validity and application. Management has a systematic body of knowledge and its principles are developed over a period of time based on repeated experiments & observations which are universally applicable but they have to be modified according to a given situation. As the principles of management are not as exact as the principles of pure science, it may be called an inexact science.

Management as Profession

Profession refers to a job that requires special knowledge and skills, with limited access to entry. The main characteristics of a profession include:

• Well-defined body of Knowledge: Every profession is built on a clear set of knowledge that can be learned through training.
• Restricted Entry: Access to each profession is limited by exams or minimum educational requirements. In contrast to fields like medicine or law, where a doctor or lawyer must have valid degrees, there are no restrictions on who can be called a manager in a business.
• Professional Associations: In India, there are associations for managers, such as the AIMA (All India Management Association), which have established a code of conduct to guide their members. However, joining these associations is not compulsory, and they lack legal authority.
• Ethical Code of Conduct: Professions generally follow a code of conduct that directs member behaviour. While not universally required, various professional associations have their own codes.
• Service Motive: The fundamental aim of a profession is to serve its clients by providing dedicated service.

Management does not fully meet the criteria of a profession, but it does share some similar features. Globally, management as a field is rapidly expanding. It is seen as both an art and a science, grounded in a structured body of knowledge that includes well-defined principles applicable to various business situations. This knowledge is available through many colleges and professional institutes, as well as numerous books and journals. Some institutions, like the Indian Institutes of Management (IIMs), are specifically designed to offer management education, with entry typically through an examination.

Download the notes Chapter Notes - Nature and Significance of Management

Download as PDF

Download as PDF

Levels of Management

“Levels of management” means different categories of managers, the lowest to the highest on the basis of their relative responsibilities, authority and status.  

(i) Top Level or Top Management includes the Chairperson, Chief Executive Officer, Chief Operating Officer, and their team. Their main job is to:

• Integrate and coordinate various business activities.
• Frame policies and formulate organisational goals and strategies.
• Analyse the business environment and its implications for the firm's survival.

The role of top management is complex and stressful, requiring long hours and a strong commitment to the organisation.

(ii) Middle Level or Middle Management consists of divisional or departmental heads, plant superintendents, and operation managers. Their key responsibilities include:

• Carrying out plans set by top managers.
• Interpreting policies framed by top management.
• Ensuring their department has the necessary personnel.
• Assigning duties and responsibilities to team members.
• Motivating staff to achieve objectives.
• Cooperating with other departments for smooth operation.

(iii) Lower Level and Supervisory Level or Operational Management include foremen and supervisors. Their main tasks are to:

• Ensure actual implementation of policies as directed.
• Address workers’ grievances with management.
• Maintain discipline among workers.

Supervisory management plays a crucial role in the organisation as they interact with the workforce and convey instructions from middle management to the workers.

Functions of Management

• Planning: It refers to deciding in advance what to do, how to do and developing a way of achieving goals efficiently and effectively.
• Organising: It refers to the assigning of duties, grouping tasks, establishing authority and allocating of resources required to carry out a specific plan.
• Staffing: It implies the right people for the right job.
• Directing: It involves leading, influencing, and motivating employees to perform the task assigned to them.
• Controlling: It refers to the performance measurement and follow-up actions that keep the actual performance on the path of the plan.

Coordination (the Essence of Management)

Coordination is the force which synchronizes all the functions of management and activities of different departments. Lack of coordination results in overlapping, duplication, delays and chaos. It is concerned with all the three levels of management as if all the levels of management are looked at together, they become a group and as in the case of every group, they also require coordination among themselves. So, it is not a separate function of management, rather it is the essence of management.  

Take a Practice Test Test yourself on topics from Commerce exam

Practice Now

Practice Now

Characteristics of Coordination

(i) Coordination integrates group efforts: It integrates diverse business activities into purposeful group activity ensuring that all people work in one direction to achieve organizational goals.
(ii) Coordination ensures unity of action: It directs the activities of different departments and employees towards the achievement of common goals and brings unity to individual efforts.
(iii) Coordination is a continuous process: It is not a specific activity matter it is required at all levels, in all departments till the organization continues its operations.
(iv) Coordination is all pervasive function: It is universal in nature. It synchronizes the activities of all levels and departments as they are interdependent to maintain organizational balance.
(v) Coordination is the responsibility of all managers: It is equally important at all three levels of management. Thus it is the responsibility of all managers that they make efforts to establish coordination.
(vi) Coordination is a deliberate function: Coordination is never established by itself rather it is a conscious effort on the part of every manager. Cooperation is the voluntary effort of employees to help one another. Effective coordination cannot be achieved without the cooperation of group members.

Importance of Coordination

(i) Growth in Size: When there is a growth in size, the number of people employed by the organisation also increases. Thus to integrate the efforts co-ordination is needed.
(ii) Functional Differentiation: In an organisation, there are separate departments and different goals. The process of linking those activities is achieved by co-ordination.
(iii) Specialisation: Modern organisation is characterized by a high degree of specialisation. Coordination is required among different specialists because of their different approaches, judgement etc.