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

Nature and Significance of Management

Management can be defined as, the process of getting things done with the aim of  achieving organizational goals effectively and efficiently.

Efficiency and Effectiveness

Efficiency means doing the task correctly at minimum cost through optimum utilization of resources while Effectiveness is concerned with end result means completing the task correctly within stipulated time. Although efficiency and effectiveness are different yet they are interrelated. It is important for management 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 series of interrelated functions which performs continuously. The process of management continues until an organization exists for attaining its objectives.
Fig: Continuous Loop of Management 

(v) Management is a Group Activity: Organisation is a collection of many individuals, 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 need, 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.

Objectives of Management

Objectives can be classified into organisational, social or personal  
(i) Organisational Objectives 

• Survival: It exists for a long time in the competition market.
• Profit: It provides a vital incentive for the continued successful operations.
• Growth: Success of an organisation is measured by growth and expansion of activities.

(ii) Social objectives of giving benefits to society like using environmental friendly practices and giving employment to disadvantaged sections of society etc. Example: TISCO, ITC, and Asian Paints.
(iii) Personal Objectives because diverse personal objectives of people working in the organization have to be reconciled with organizational objectives.

Importance of Management

(i) Helps in achieving Group Goals: Management creates team work 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 as per changing situation to ensure its survival and growth.
(iv) Management helps in achieving personal objectives: Management helps the 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 refers to skillful and personal application of existing knowledge to achieve desired results. It can be acquired through study, observation and experience. The features of art as follows:
(i) Existence of theoretical knowledge: In every art systematic and organized study material should be available compulsorily to acquire theoretical knowledge.
(ii) Personalized application: The use of basic knowledge differs from person to person and thus, art is a very personalized concept.
(iii) Based on practice and creativity: Art involves the creative practice of existing theoretical knowledge. In management also a huge volume of literature and books are available on different aspects of management. Every manager has his own unique style of managing things and people. He uses his creativity in applying management techniques and his skills improve with regular application Since all the features of art are present in management so it can called an art.

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 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 given situation. As the principles of management are not as exact as the principles of pure science, so it may be called-an inexact science.

Management as Profession

Profession means an occupation for which specialized knowledge and skills are required and entry is restricted. The main features of profession are as follows:
(i) Well-defined body of Knowledge: All the professions are based on well-defined body of knowledge.
(ii) Restricted Entry: The entry in every profession is restricted through examination or through some minimum educational qualification.
(iii) Professional Associations: All professions are affiliated to a professional association which regulates entry and frames code of conduct relating to the profession.
(iv) Ethical Code of Conduct: All professions are bound by a code of conduct which guides the behaviour of its members.
(v) Service Motive: The main aim of a profession is to serve its clients. Management does not fulfill all the features of a profession and thus it is not a full-fledged profession because anybody can proclaim to be a manager; prescribed compulsory educational degree or license is required. Besides there are not any formal ethical codes which are required to be observed.

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 consists of Chairperson, Chief Executive Officer, Chief Operating Officer or equivalent and their team. Chief task is to integrate and to coordinate the various activities of the business, framing policies, formulating organizational goals & strategies.
(ii) Middle Level or Middle Management consists of Divisional or Departmental heads, Plant Superintendents and Operation Managers etc.
Their main task is to carry out the plans formulated by the top managers. For this they need to interpret the policies of the top management to ensure the availability of resources to implement policies, to coordinate all activities, ensure availability of necessary personnel & assign duties and responsibilities to them.
(iii) Lower Level and Supervisory Level or Operational Management consists of Foremen and supervisor etc. Main task is to ensure actual implementation of the policies as per directions, bring workers’ grievances before the management & maintain discipline among the workers.

Functions of Management

• Planning: It refers to deciding in advance what to do, how to do and developing a way of achieving goal 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 right people for the right job.
• Directing: It involves leading, influencing, 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 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.  

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 achievement of common goals and brings unity in 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 the three-top, middle and lower 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 voluntary effort of employees to help one another. Effective coordination cannot be achieved without cooperation of group members.

Importance of Co-ordination

(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 department 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.