NCERT Textbook - Nature and Significance of Management Commerce Notes | EduRev

Business Studies (BST) Class 12

Created by: Nipuns Institute

Commerce : NCERT Textbook - Nature and Significance of Management Commerce Notes | EduRev

 Page 1


After studying this 
chapter, you should 
be able to:
n Describe the 
characteristics of 
management and 
its importance in 
an organisation;
n Explain the nature 
of management 
as an art, science 
and profession;
n Explain the 
functions of 
management; and
n Appreciate 
the nature and 
importance of  
coordination.
NATURE AND SIGNIFICANCE  
OF MANAGEMENT
LEARNING 
OBJECTIVES
At a time when India had a total of 250 computers, Shiv Nadar 
led a young team which passionately believed in the growth 
of the indigenous IT industry. That vision in 1976, born out of 
a Delhi ‘barsaati’, has resulted three decades later in creating a 
US $ 3.5 billion global enterprise. HCL is today a leader in the 
IT industry, employing 41,000 professionals and having a global 
presence in 16 countries spanning locations in the US, Europe, 
Japan, ASEAN and the Pacific Rim. HCL’s business today spans 
IT hardware manufacturing and distribution, system integration, 
technology and software services, business process outsourcing, 
and infrastructure management. HCL Enterprises is a leader in 
global technology and IT services. 
HCL ’s basic plan of developing an indigenous microcomputer 
bore fruit in 1978 at the same time as Apple and three years 
before IBM. This was considered by many industry observers 
as the birth of the Indian computer industry. Under the able 
direction of its founding fathers it commenced global operations 
in the US in 1988. Shiv Nadar’s risk-taking ability is legendary 
and he has often made daring forays based on his conviction of 
the future. At a time when hardware was the name of the game, 
Nadar foresaw the huge potential in the area of IT education and 
learning from which NIIT was born. Yet again when software 
development was still in the nascent stages, Shiv Nadar took 
the lead and today HCL is a force to reckon with in the global 
markets. The organisation structure of HCL Enterprises consists 
of two listed companies in India – HCL T echnologies and HCL 
Infosystems.
Shiv Nadar, Chairman and CEO, attributes the success of 
the group to its management team and their entrepreneurial 
spirit, which together have enabled it to handle rapid changes 
in environments and technologies, and to transform threats 
into opportunities. Fundamental to the process has been the 
development of new paradigms for the unprecedented situations 
into which the group ventures. These include guidelines for 
organisation restructuring, market creation, technology leveraging 
1
Management at HCL Management at HCL 
CHAPTER
2015-16(21/01/2015)
Page 2


After studying this 
chapter, you should 
be able to:
n Describe the 
characteristics of 
management and 
its importance in 
an organisation;
n Explain the nature 
of management 
as an art, science 
and profession;
n Explain the 
functions of 
management; and
n Appreciate 
the nature and 
importance of  
coordination.
NATURE AND SIGNIFICANCE  
OF MANAGEMENT
LEARNING 
OBJECTIVES
At a time when India had a total of 250 computers, Shiv Nadar 
led a young team which passionately believed in the growth 
of the indigenous IT industry. That vision in 1976, born out of 
a Delhi ‘barsaati’, has resulted three decades later in creating a 
US $ 3.5 billion global enterprise. HCL is today a leader in the 
IT industry, employing 41,000 professionals and having a global 
presence in 16 countries spanning locations in the US, Europe, 
Japan, ASEAN and the Pacific Rim. HCL’s business today spans 
IT hardware manufacturing and distribution, system integration, 
technology and software services, business process outsourcing, 
and infrastructure management. HCL Enterprises is a leader in 
global technology and IT services. 
HCL ’s basic plan of developing an indigenous microcomputer 
bore fruit in 1978 at the same time as Apple and three years 
before IBM. This was considered by many industry observers 
as the birth of the Indian computer industry. Under the able 
direction of its founding fathers it commenced global operations 
in the US in 1988. Shiv Nadar’s risk-taking ability is legendary 
and he has often made daring forays based on his conviction of 
the future. At a time when hardware was the name of the game, 
Nadar foresaw the huge potential in the area of IT education and 
learning from which NIIT was born. Yet again when software 
development was still in the nascent stages, Shiv Nadar took 
the lead and today HCL is a force to reckon with in the global 
markets. The organisation structure of HCL Enterprises consists 
of two listed companies in India – HCL T echnologies and HCL 
Infosystems.
Shiv Nadar, Chairman and CEO, attributes the success of 
the group to its management team and their entrepreneurial 
spirit, which together have enabled it to handle rapid changes 
in environments and technologies, and to transform threats 
into opportunities. Fundamental to the process has been the 
development of new paradigms for the unprecedented situations 
into which the group ventures. These include guidelines for 
organisation restructuring, market creation, technology leveraging 
1
Management at HCL Management at HCL 
CHAPTER
2015-16(21/01/2015)
2 Business Studies
and business up-scaling. Like any other business enterprise profits are 
important for the survival and growth of HCL as an enterprise. 
At HCL the management believes that a satisfied employee creates 
a satisfied customer, who in turn creates profits that lead to satisfied 
shareholders. 
HCL has a strong sense of social responsibility. It has set up 
educational institutions in the fields of management, engineering and 
computer education, in which one-third of the students are girls.
According to Shiv Nadar , the future belongs to the global enterprise which 
is able to transform itself according to the challenges of global economy.
Source: www.hcl.in
IntroductIon 
The above case is an example of 
a successful organisation which 
is amongst the top companies in 
India. It has risen to the top because 
of its quality of management. 
Management is required in all kinds  
of organisations whether they are 
manufacturing computers or hand-
looms, trading in consumer goods 
or providing hairstyling services and 
even in non-business organisations. 
Let us take another example. 
Suhasini is the branch manager 
of Fabmart, an organisation that 
promotes the sales of Indian 
handloom and handicraft products 
while providing equitable employment 
to traditional artisans. Fabmart 
sources its products from over 7500 
craft persons and artisans across 
India. Planning the products is a 
difficult task that is done by a team 
of marketing and design experts to 
ensure that whatever is produced is 
according to market demand. These 
plans are then communicated by 
Suhasini to the rural artisans who 
actually implement them. 
Fabmart is a private limited 
company with several branches all 
over the country. It has a complex 
organisation structure in which 
actual production is in the hands of 
several skilled artisans and marketing 
is done by staff at branches such as 
the one managed by Suhasini. This 
means constantly providing direction 
and motivation to her employees. She 
also has to ensure that production 
is carried out according to plans in 
order to ensure regular sales. 
A typical day in Suhasini’s life 
consists of a series of interrelated 
and continuous functions. She has 
to plan a special festive collection 
for Diwali and Christmas. This 
means organising more funds and 
recruiting more artisans. She also 
has to regularly communicate with 
her suppliers to ensure that deadlines 
regarding delivery of goods are met. 
In the course of the day she meets 
customers for a general feedback 
2015-16(21/01/2015)
Page 3


After studying this 
chapter, you should 
be able to:
n Describe the 
characteristics of 
management and 
its importance in 
an organisation;
n Explain the nature 
of management 
as an art, science 
and profession;
n Explain the 
functions of 
management; and
n Appreciate 
the nature and 
importance of  
coordination.
NATURE AND SIGNIFICANCE  
OF MANAGEMENT
LEARNING 
OBJECTIVES
At a time when India had a total of 250 computers, Shiv Nadar 
led a young team which passionately believed in the growth 
of the indigenous IT industry. That vision in 1976, born out of 
a Delhi ‘barsaati’, has resulted three decades later in creating a 
US $ 3.5 billion global enterprise. HCL is today a leader in the 
IT industry, employing 41,000 professionals and having a global 
presence in 16 countries spanning locations in the US, Europe, 
Japan, ASEAN and the Pacific Rim. HCL’s business today spans 
IT hardware manufacturing and distribution, system integration, 
technology and software services, business process outsourcing, 
and infrastructure management. HCL Enterprises is a leader in 
global technology and IT services. 
HCL ’s basic plan of developing an indigenous microcomputer 
bore fruit in 1978 at the same time as Apple and three years 
before IBM. This was considered by many industry observers 
as the birth of the Indian computer industry. Under the able 
direction of its founding fathers it commenced global operations 
in the US in 1988. Shiv Nadar’s risk-taking ability is legendary 
and he has often made daring forays based on his conviction of 
the future. At a time when hardware was the name of the game, 
Nadar foresaw the huge potential in the area of IT education and 
learning from which NIIT was born. Yet again when software 
development was still in the nascent stages, Shiv Nadar took 
the lead and today HCL is a force to reckon with in the global 
markets. The organisation structure of HCL Enterprises consists 
of two listed companies in India – HCL T echnologies and HCL 
Infosystems.
Shiv Nadar, Chairman and CEO, attributes the success of 
the group to its management team and their entrepreneurial 
spirit, which together have enabled it to handle rapid changes 
in environments and technologies, and to transform threats 
into opportunities. Fundamental to the process has been the 
development of new paradigms for the unprecedented situations 
into which the group ventures. These include guidelines for 
organisation restructuring, market creation, technology leveraging 
1
Management at HCL Management at HCL 
CHAPTER
2015-16(21/01/2015)
2 Business Studies
and business up-scaling. Like any other business enterprise profits are 
important for the survival and growth of HCL as an enterprise. 
At HCL the management believes that a satisfied employee creates 
a satisfied customer, who in turn creates profits that lead to satisfied 
shareholders. 
HCL has a strong sense of social responsibility. It has set up 
educational institutions in the fields of management, engineering and 
computer education, in which one-third of the students are girls.
According to Shiv Nadar , the future belongs to the global enterprise which 
is able to transform itself according to the challenges of global economy.
Source: www.hcl.in
IntroductIon 
The above case is an example of 
a successful organisation which 
is amongst the top companies in 
India. It has risen to the top because 
of its quality of management. 
Management is required in all kinds  
of organisations whether they are 
manufacturing computers or hand-
looms, trading in consumer goods 
or providing hairstyling services and 
even in non-business organisations. 
Let us take another example. 
Suhasini is the branch manager 
of Fabmart, an organisation that 
promotes the sales of Indian 
handloom and handicraft products 
while providing equitable employment 
to traditional artisans. Fabmart 
sources its products from over 7500 
craft persons and artisans across 
India. Planning the products is a 
difficult task that is done by a team 
of marketing and design experts to 
ensure that whatever is produced is 
according to market demand. These 
plans are then communicated by 
Suhasini to the rural artisans who 
actually implement them. 
Fabmart is a private limited 
company with several branches all 
over the country. It has a complex 
organisation structure in which 
actual production is in the hands of 
several skilled artisans and marketing 
is done by staff at branches such as 
the one managed by Suhasini. This 
means constantly providing direction 
and motivation to her employees. She 
also has to ensure that production 
is carried out according to plans in 
order to ensure regular sales. 
A typical day in Suhasini’s life 
consists of a series of interrelated 
and continuous functions. She has 
to plan a special festive collection 
for Diwali and Christmas. This 
means organising more funds and 
recruiting more artisans. She also 
has to regularly communicate with 
her suppliers to ensure that deadlines 
regarding delivery of goods are met. 
In the course of the day she meets 
customers for a general feedback 
2015-16(21/01/2015)
Nature and Significance of Management 3
and any suggestions that they  
may have. 
Suhasini is the manager of 
Fabmart. So is Nusli Wadia of Bombay 
Dyeing, Bill Gates of Microsoft, Shiv 
Nadar of HCL Enterprises, Indra 
Nooyi of Pepsico and the Principal 
of your school. They all manage 
organisations. Schools, hospitals, 
shops and large corporations are all 
organisations with diverse goals that 
are aimed at achieving something. 
No matter what the organisation is or 
what its goals might be, they all have 
something in common – management 
and managers.
You have observed that Suhasini’s 
work as a manager consists of 
a series of different activities or 
functions aimed at achieving the 
goals of the organisation. These 
interconnected and interdependent 
functions are part of management. 
Successful organisations do not 
achieve their goals by chance but  
by following a deliberate process 
called ‘management’.
Management is essential for all 
organisations big or small, profit or 
non-profit, services or manufacturing. 
Management is necessary so that 
individuals make their best contri-
bution towards group objectives. 
Management consists of a series 
of interrelated functions that are 
performed by all managers. Shiv 
Nadar, the CEO of HCL Enterprises 
performs all these functions and so 
does Suhasini at Fabmart. Later in 
this chapter you will understand that 
although both of them are managers, 
they function at different levels in 
the organisation. The time spent 
by managers in different functions 
however is different. Managers at the 
top level spend more time in planning 
and organising than managers at 
lower levels of the organisation. 
c oncept Management is a very popular term 
and has been used extensively for 
all types of activities and mainly for 
taking charge of different activities in 
Definitions of Management
“Management is the process of designing and maintaining an environment in which 
individuals, working together in groups, efficiently accomplish selected aims.”
 Harold Koontz and Heinz Weihrich
“Management is defined as t he 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.” 
Robert L. T rewelly and M. Gene Newport
“Management is the process of working with and through others to effectively achieve 
organisational objectives by efficiently using limited resources in the changing environment.”
Kreitner
Definitions of Management
2015-16(21/01/2015)
Page 4


After studying this 
chapter, you should 
be able to:
n Describe the 
characteristics of 
management and 
its importance in 
an organisation;
n Explain the nature 
of management 
as an art, science 
and profession;
n Explain the 
functions of 
management; and
n Appreciate 
the nature and 
importance of  
coordination.
NATURE AND SIGNIFICANCE  
OF MANAGEMENT
LEARNING 
OBJECTIVES
At a time when India had a total of 250 computers, Shiv Nadar 
led a young team which passionately believed in the growth 
of the indigenous IT industry. That vision in 1976, born out of 
a Delhi ‘barsaati’, has resulted three decades later in creating a 
US $ 3.5 billion global enterprise. HCL is today a leader in the 
IT industry, employing 41,000 professionals and having a global 
presence in 16 countries spanning locations in the US, Europe, 
Japan, ASEAN and the Pacific Rim. HCL’s business today spans 
IT hardware manufacturing and distribution, system integration, 
technology and software services, business process outsourcing, 
and infrastructure management. HCL Enterprises is a leader in 
global technology and IT services. 
HCL ’s basic plan of developing an indigenous microcomputer 
bore fruit in 1978 at the same time as Apple and three years 
before IBM. This was considered by many industry observers 
as the birth of the Indian computer industry. Under the able 
direction of its founding fathers it commenced global operations 
in the US in 1988. Shiv Nadar’s risk-taking ability is legendary 
and he has often made daring forays based on his conviction of 
the future. At a time when hardware was the name of the game, 
Nadar foresaw the huge potential in the area of IT education and 
learning from which NIIT was born. Yet again when software 
development was still in the nascent stages, Shiv Nadar took 
the lead and today HCL is a force to reckon with in the global 
markets. The organisation structure of HCL Enterprises consists 
of two listed companies in India – HCL T echnologies and HCL 
Infosystems.
Shiv Nadar, Chairman and CEO, attributes the success of 
the group to its management team and their entrepreneurial 
spirit, which together have enabled it to handle rapid changes 
in environments and technologies, and to transform threats 
into opportunities. Fundamental to the process has been the 
development of new paradigms for the unprecedented situations 
into which the group ventures. These include guidelines for 
organisation restructuring, market creation, technology leveraging 
1
Management at HCL Management at HCL 
CHAPTER
2015-16(21/01/2015)
2 Business Studies
and business up-scaling. Like any other business enterprise profits are 
important for the survival and growth of HCL as an enterprise. 
At HCL the management believes that a satisfied employee creates 
a satisfied customer, who in turn creates profits that lead to satisfied 
shareholders. 
HCL has a strong sense of social responsibility. It has set up 
educational institutions in the fields of management, engineering and 
computer education, in which one-third of the students are girls.
According to Shiv Nadar , the future belongs to the global enterprise which 
is able to transform itself according to the challenges of global economy.
Source: www.hcl.in
IntroductIon 
The above case is an example of 
a successful organisation which 
is amongst the top companies in 
India. It has risen to the top because 
of its quality of management. 
Management is required in all kinds  
of organisations whether they are 
manufacturing computers or hand-
looms, trading in consumer goods 
or providing hairstyling services and 
even in non-business organisations. 
Let us take another example. 
Suhasini is the branch manager 
of Fabmart, an organisation that 
promotes the sales of Indian 
handloom and handicraft products 
while providing equitable employment 
to traditional artisans. Fabmart 
sources its products from over 7500 
craft persons and artisans across 
India. Planning the products is a 
difficult task that is done by a team 
of marketing and design experts to 
ensure that whatever is produced is 
according to market demand. These 
plans are then communicated by 
Suhasini to the rural artisans who 
actually implement them. 
Fabmart is a private limited 
company with several branches all 
over the country. It has a complex 
organisation structure in which 
actual production is in the hands of 
several skilled artisans and marketing 
is done by staff at branches such as 
the one managed by Suhasini. This 
means constantly providing direction 
and motivation to her employees. She 
also has to ensure that production 
is carried out according to plans in 
order to ensure regular sales. 
A typical day in Suhasini’s life 
consists of a series of interrelated 
and continuous functions. She has 
to plan a special festive collection 
for Diwali and Christmas. This 
means organising more funds and 
recruiting more artisans. She also 
has to regularly communicate with 
her suppliers to ensure that deadlines 
regarding delivery of goods are met. 
In the course of the day she meets 
customers for a general feedback 
2015-16(21/01/2015)
Nature and Significance of Management 3
and any suggestions that they  
may have. 
Suhasini is the manager of 
Fabmart. So is Nusli Wadia of Bombay 
Dyeing, Bill Gates of Microsoft, Shiv 
Nadar of HCL Enterprises, Indra 
Nooyi of Pepsico and the Principal 
of your school. They all manage 
organisations. Schools, hospitals, 
shops and large corporations are all 
organisations with diverse goals that 
are aimed at achieving something. 
No matter what the organisation is or 
what its goals might be, they all have 
something in common – management 
and managers.
You have observed that Suhasini’s 
work as a manager consists of 
a series of different activities or 
functions aimed at achieving the 
goals of the organisation. These 
interconnected and interdependent 
functions are part of management. 
Successful organisations do not 
achieve their goals by chance but  
by following a deliberate process 
called ‘management’.
Management is essential for all 
organisations big or small, profit or 
non-profit, services or manufacturing. 
Management is necessary so that 
individuals make their best contri-
bution towards group objectives. 
Management consists of a series 
of interrelated functions that are 
performed by all managers. Shiv 
Nadar, the CEO of HCL Enterprises 
performs all these functions and so 
does Suhasini at Fabmart. Later in 
this chapter you will understand that 
although both of them are managers, 
they function at different levels in 
the organisation. The time spent 
by managers in different functions 
however is different. Managers at the 
top level spend more time in planning 
and organising than managers at 
lower levels of the organisation. 
c oncept Management is a very popular term 
and has been used extensively for 
all types of activities and mainly for 
taking charge of different activities in 
Definitions of Management
“Management is the process of designing and maintaining an environment in which 
individuals, working together in groups, efficiently accomplish selected aims.”
 Harold Koontz and Heinz Weihrich
“Management is defined as t he 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.” 
Robert L. T rewelly and M. Gene Newport
“Management is the process of working with and through others to effectively achieve 
organisational objectives by efficiently using limited resources in the changing environment.”
Kreitner
Definitions of Management
2015-16(21/01/2015)
4 Business Studies
any enterprise. As you have seen from 
the above example and case study 
that management is an activity which 
is necessary wherever there is a group 
of people working in an organisation. 
People in organisations are performing 
diverse tasks but they are all working 
towards the same goal. Management 
aims at guiding their efforts towards 
achieving a common objective — a 
goal. Thus, management has to see 
that tasks are completed and goals 
are achieved (i.e., effectiveness) with 
the least amount of resources at a 
minimum cost (i.e., efficiency).
Management, has therefore, been 
defined as a process of getting things 
done with the aim of achieving goals 
effectively and efficiently. We need 
to analyse this definition. There 
are certain terms which require 
elaboration. These are (a) process, (b) 
effectively, and (c) efficiently.
Process in the definition means the 
primary functions or activities that 
management performs to get things 
done. These functions are planning, 
organising, staffing, directing and 
controlling which we will discuss later  
in the chapter and the book.
Being effective or doing work 
effectively basically means finishing 
the given task. Effectiveness in 
management is concerned with doing 
the right task, completing activities 
and achieving goals. In other words, it 
is concerned with the end result.
But it is not enough to just complete 
the tasks. There is another aspect 
also, i.e., being efficient or as we say 
doing work efficiently.
Efficiency means doing the task 
correctly and with minimum cost. 
There is a kind of cost-benefit  
analysis involved and the relationship 
between inputs and outputs. If 
by using less resources (i.e., the 
inputs) more benefits are derived 
(i.e., the outputs) then efficiency has 
increased. Efficiency is also increased 
when for the same benefit or outputs, 
fewer resources are used and less 
costs are incurred. Input resources 
are money, materials, equipment and 
persons required to do a particular 
task. Obviously, management is 
concerned with the efficient use 
of these resources, because they  
reduce costs and ultimately lead to 
higher profits.
Effectiveness versus 
Efficiency
These two terms are different but they 
are interrelated. For management, 
it is important to be both effective 
and efficient. Effectiveness and 
efficiency are two sides of the same 
coin. But these two aspects need 
to be balanced and management 
at times, has to compromise with 
efficiency. For example, it is easier 
to be effective and ignore efficiency  
i.e., complete the given task but at a 
high cost. Suppose, a company’s target 
production is 5000 units in a year. To 
achieve this target the manager has to 
operate on double shifts due to power 
2015-16(21/01/2015)
Page 5


After studying this 
chapter, you should 
be able to:
n Describe the 
characteristics of 
management and 
its importance in 
an organisation;
n Explain the nature 
of management 
as an art, science 
and profession;
n Explain the 
functions of 
management; and
n Appreciate 
the nature and 
importance of  
coordination.
NATURE AND SIGNIFICANCE  
OF MANAGEMENT
LEARNING 
OBJECTIVES
At a time when India had a total of 250 computers, Shiv Nadar 
led a young team which passionately believed in the growth 
of the indigenous IT industry. That vision in 1976, born out of 
a Delhi ‘barsaati’, has resulted three decades later in creating a 
US $ 3.5 billion global enterprise. HCL is today a leader in the 
IT industry, employing 41,000 professionals and having a global 
presence in 16 countries spanning locations in the US, Europe, 
Japan, ASEAN and the Pacific Rim. HCL’s business today spans 
IT hardware manufacturing and distribution, system integration, 
technology and software services, business process outsourcing, 
and infrastructure management. HCL Enterprises is a leader in 
global technology and IT services. 
HCL ’s basic plan of developing an indigenous microcomputer 
bore fruit in 1978 at the same time as Apple and three years 
before IBM. This was considered by many industry observers 
as the birth of the Indian computer industry. Under the able 
direction of its founding fathers it commenced global operations 
in the US in 1988. Shiv Nadar’s risk-taking ability is legendary 
and he has often made daring forays based on his conviction of 
the future. At a time when hardware was the name of the game, 
Nadar foresaw the huge potential in the area of IT education and 
learning from which NIIT was born. Yet again when software 
development was still in the nascent stages, Shiv Nadar took 
the lead and today HCL is a force to reckon with in the global 
markets. The organisation structure of HCL Enterprises consists 
of two listed companies in India – HCL T echnologies and HCL 
Infosystems.
Shiv Nadar, Chairman and CEO, attributes the success of 
the group to its management team and their entrepreneurial 
spirit, which together have enabled it to handle rapid changes 
in environments and technologies, and to transform threats 
into opportunities. Fundamental to the process has been the 
development of new paradigms for the unprecedented situations 
into which the group ventures. These include guidelines for 
organisation restructuring, market creation, technology leveraging 
1
Management at HCL Management at HCL 
CHAPTER
2015-16(21/01/2015)
2 Business Studies
and business up-scaling. Like any other business enterprise profits are 
important for the survival and growth of HCL as an enterprise. 
At HCL the management believes that a satisfied employee creates 
a satisfied customer, who in turn creates profits that lead to satisfied 
shareholders. 
HCL has a strong sense of social responsibility. It has set up 
educational institutions in the fields of management, engineering and 
computer education, in which one-third of the students are girls.
According to Shiv Nadar , the future belongs to the global enterprise which 
is able to transform itself according to the challenges of global economy.
Source: www.hcl.in
IntroductIon 
The above case is an example of 
a successful organisation which 
is amongst the top companies in 
India. It has risen to the top because 
of its quality of management. 
Management is required in all kinds  
of organisations whether they are 
manufacturing computers or hand-
looms, trading in consumer goods 
or providing hairstyling services and 
even in non-business organisations. 
Let us take another example. 
Suhasini is the branch manager 
of Fabmart, an organisation that 
promotes the sales of Indian 
handloom and handicraft products 
while providing equitable employment 
to traditional artisans. Fabmart 
sources its products from over 7500 
craft persons and artisans across 
India. Planning the products is a 
difficult task that is done by a team 
of marketing and design experts to 
ensure that whatever is produced is 
according to market demand. These 
plans are then communicated by 
Suhasini to the rural artisans who 
actually implement them. 
Fabmart is a private limited 
company with several branches all 
over the country. It has a complex 
organisation structure in which 
actual production is in the hands of 
several skilled artisans and marketing 
is done by staff at branches such as 
the one managed by Suhasini. This 
means constantly providing direction 
and motivation to her employees. She 
also has to ensure that production 
is carried out according to plans in 
order to ensure regular sales. 
A typical day in Suhasini’s life 
consists of a series of interrelated 
and continuous functions. She has 
to plan a special festive collection 
for Diwali and Christmas. This 
means organising more funds and 
recruiting more artisans. She also 
has to regularly communicate with 
her suppliers to ensure that deadlines 
regarding delivery of goods are met. 
In the course of the day she meets 
customers for a general feedback 
2015-16(21/01/2015)
Nature and Significance of Management 3
and any suggestions that they  
may have. 
Suhasini is the manager of 
Fabmart. So is Nusli Wadia of Bombay 
Dyeing, Bill Gates of Microsoft, Shiv 
Nadar of HCL Enterprises, Indra 
Nooyi of Pepsico and the Principal 
of your school. They all manage 
organisations. Schools, hospitals, 
shops and large corporations are all 
organisations with diverse goals that 
are aimed at achieving something. 
No matter what the organisation is or 
what its goals might be, they all have 
something in common – management 
and managers.
You have observed that Suhasini’s 
work as a manager consists of 
a series of different activities or 
functions aimed at achieving the 
goals of the organisation. These 
interconnected and interdependent 
functions are part of management. 
Successful organisations do not 
achieve their goals by chance but  
by following a deliberate process 
called ‘management’.
Management is essential for all 
organisations big or small, profit or 
non-profit, services or manufacturing. 
Management is necessary so that 
individuals make their best contri-
bution towards group objectives. 
Management consists of a series 
of interrelated functions that are 
performed by all managers. Shiv 
Nadar, the CEO of HCL Enterprises 
performs all these functions and so 
does Suhasini at Fabmart. Later in 
this chapter you will understand that 
although both of them are managers, 
they function at different levels in 
the organisation. The time spent 
by managers in different functions 
however is different. Managers at the 
top level spend more time in planning 
and organising than managers at 
lower levels of the organisation. 
c oncept Management is a very popular term 
and has been used extensively for 
all types of activities and mainly for 
taking charge of different activities in 
Definitions of Management
“Management is the process of designing and maintaining an environment in which 
individuals, working together in groups, efficiently accomplish selected aims.”
 Harold Koontz and Heinz Weihrich
“Management is defined as t he 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.” 
Robert L. T rewelly and M. Gene Newport
“Management is the process of working with and through others to effectively achieve 
organisational objectives by efficiently using limited resources in the changing environment.”
Kreitner
Definitions of Management
2015-16(21/01/2015)
4 Business Studies
any enterprise. As you have seen from 
the above example and case study 
that management is an activity which 
is necessary wherever there is a group 
of people working in an organisation. 
People in organisations are performing 
diverse tasks but they are all working 
towards the same goal. Management 
aims at guiding their efforts towards 
achieving a common objective — a 
goal. Thus, management has to see 
that tasks are completed and goals 
are achieved (i.e., effectiveness) with 
the least amount of resources at a 
minimum cost (i.e., efficiency).
Management, has therefore, been 
defined as a process of getting things 
done with the aim of achieving goals 
effectively and efficiently. We need 
to analyse this definition. There 
are certain terms which require 
elaboration. These are (a) process, (b) 
effectively, and (c) efficiently.
Process in the definition means the 
primary functions or activities that 
management performs to get things 
done. These functions are planning, 
organising, staffing, directing and 
controlling which we will discuss later  
in the chapter and the book.
Being effective or doing work 
effectively basically means finishing 
the given task. Effectiveness in 
management is concerned with doing 
the right task, completing activities 
and achieving goals. In other words, it 
is concerned with the end result.
But it is not enough to just complete 
the tasks. There is another aspect 
also, i.e., being efficient or as we say 
doing work efficiently.
Efficiency means doing the task 
correctly and with minimum cost. 
There is a kind of cost-benefit  
analysis involved and the relationship 
between inputs and outputs. If 
by using less resources (i.e., the 
inputs) more benefits are derived 
(i.e., the outputs) then efficiency has 
increased. Efficiency is also increased 
when for the same benefit or outputs, 
fewer resources are used and less 
costs are incurred. Input resources 
are money, materials, equipment and 
persons required to do a particular 
task. Obviously, management is 
concerned with the efficient use 
of these resources, because they  
reduce costs and ultimately lead to 
higher profits.
Effectiveness versus 
Efficiency
These two terms are different but they 
are interrelated. For management, 
it is important to be both effective 
and efficient. Effectiveness and 
efficiency are two sides of the same 
coin. But these two aspects need 
to be balanced and management 
at times, has to compromise with 
efficiency. For example, it is easier 
to be effective and ignore efficiency  
i.e., complete the given task but at a 
high cost. Suppose, a company’s target 
production is 5000 units in a year. To 
achieve this target the manager has to 
operate on double shifts due to power 
2015-16(21/01/2015)
Nature and Significance of Management 5
failure most of the time. The manager 
is able to produce 5000 units but at a 
higher production cost. In this case, 
the manager was effective but not so 
efficient, since for the same output, 
more inputs (labour cost, electricity 
costs) were used.
At times, a business may con-
centrate more on producing goods 
with fewer resources i.e., cutting 
down cost but not achieving the 
target production. Consequently, the 
goods do not reach the market and 
hence the demand for them declines 
and competitors enter the market. 
This is a case of being efficient but 
not effective since the goods did not 
reach the market.
Therefore, it is important for 
management to achieve goals 
(effectiveness) with minimum 
resources i.e., as efficiently as possible 
while maintaining a balance between 
effectiveness and efficiency. Usually 
high efficiency is associated with  
high effectiveness which is the aim of  
all managers. But undue emphasis  
on high efficiency without being 
effective is also not desirable. Poor  
management is due to both ineffi-
ciency and ineffectiveness. 
c haracterIstIcs of 
ManageMent After going through some of the 
definitions we find some elements 
that may be called the basic 
characteristics of management:
 (i) Management is a goal-oriented 
process: An organisation has a  
set of basic goals which are the 
basic reason for its existence. 
These should be simple and  
clearly stated. Different organ-
isations have different goals. For 
example, the goal of a retail store 
may be to increase sales, but the 
goal of The Spastics Society of 
India is to impart education to  
children with special needs. 
Management unites the efforts 
of different individuals in the 
organisation towards achieving 
these goals.
 (ii) Management is all pervasive: 
The activities involved in managing 
an enterprise are common to all 
organisations whether economic, 
social or political. A petrol pump 
needs to be managed as much 
as a hospital or a school. What 
managers do in India, the USA, 
Germany or Japan is the same. 
How they do it may be quite 
different. This difference is due 
to the differences in culture, 
tradition and history.
 (iii) Management is multidimen-
sional: Management is a complex 
activity that has three main 
dimensions. These are:
(a) Management of work: All 
organisations exist for the 
performance of some work. In 
a factory, a product is 
manufactured, in a garment 
2015-16(21/01/2015)
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