Management and

Entrepreneurship

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Chapter – 1
Management

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 Objectives
• To expose the students to a number of important
concepts of management
• To throw light on the complex set of roles
performed by the managers
• To understand the skills required to perform
various management roles
• To provide an overview of several influential
approaches that have shaped managerial
thinking during the past century.

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 Meaning
• “Management is the • “Management is the
art of getting things
process of planning,
done through and
organising, actuating and
with the people in
formally organised controlling to determine
groups”…..Koontz H. and accomplish the
objectives by the use of
people and
resources”…..Terry G.

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 Nature & Characteristics of
Management
• Critical element in the economic growth of the
country.
• Essential in all organized effort, be it a business
or any other activity.
• Dynamic and life giving element in every
organization.
• A process, discipline, activity.
• Intangible, goal oriented & universal.
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 Scope of Management
• The scope is very wide.
• According to Herbison & Myers, it refers to three
distinct ideas.
i) as an economic resource
ii) as a system of authority
iii) as a class or elite.

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 Importance of Management
• Optimum use of resources
• Effective leadership and motivation
• Establishes sound industrial relations
• Achievement of goals
• Change and growth
• Improve standard of living.

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 Functions of Management
• No consensus on the classification
• No similar terminology amongst the experts
• Newman & Summer:
– Organizing, planning, leading & controlling

• Henry Fayol:
– Planning, organizing, commanding, coordinating &
controlling

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 Functions of Management
• Luther Gullick: POSDCORB
P : planning
O : organizing
S : staffing
D : directing
CO: coordinating
R : reporting
B : budgeting
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 Functions of Management

Planning

– The process of establishing goals and a

suitable course of action for achieving

those goals.

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 Functions of Management
Organizing
– The process of engaging two or more
people in working together in a structured
way to achieve a specific goal or set of
goals.

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 Functions of Management

Staffing
– Selecting and training the individuals for
specific job functions & charging them with
the associated responsibilities.

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 Functions of Management
Directing
– It is the process of influencing and
motivating employees to perform essential
tasks in a n organization.

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 Functions of Management
CO: coordinating
– The integration of the activities of the
separate parts of an organization to
accomplish organizational goals.

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 Functions of Management
Reporting
– Process of executives keeping the
superiors and subordinates informed
about what is going on through records,
research and inspection.

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 Functions of Management

Budgeting
– Formal quantitative statement of resources
allocated for planned activities over
stipulated periods of time.

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Functional areas of Management
• Production
• Marketing
• Finance
• Human Resources
• Research & Development
• Industrial Engineering
• MIS
• Maintenance
• Quality Engineering
• Materials
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 Management :Science or Art ?
 Elements of Science  Elements of Art

• Systematic body of • Application of

knowledge Knowledge

• Scientific inquiry and • Doing things creatively

Observation
• Personalized skill
• Experimentation
• Perfection through
• Universal truths practice
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 Management as Science
• Distinct discipline
• Offers principles & guidelines
• Social science
• An inexact science
• Scientific & systematic.

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 Management as Art
• Uses the practical knowledge acquired in
tackling problems.
• Combines human & nonhuman resources in a
creative way to achieve results.
• A personalized activity
• Constant practice leads to good management

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 Management: Science as well
as Art
• Art of management is as old as civilization.

• Science of management is young and

developing

• Both are complementary & mutually supportive

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 Management: Science as well
as Art
• According to Peter Drucker:
“Every organization has the same resources to
work with. It is the quality of management that
spells the difference between success and
failure”.

• Ability to solve problems requires sound

knowledge & constant practice

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 Management as a Profession

 Essential features of profession:

– Well defined body of knowledge

– Formal education and training

– Minimum qualification

– Representative body

– Service above self

– Ethical code of conduct

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 Management as a Profession
• Management has well defined body of
knowledge, tools and techniques, research &
consultancy
• Acquiring management education through formal
training is possible
• No representative body unlike for doctors,
lawyers, etc
• No universal code of conduct.
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Management as a Profession
• No regulatory body and code of conduct leads to
neglection of service motto.
• Not a recognized profession ,but moving in that
direction .
• Some initiatives are: separation of ownership
from management, state regulation of business
activities, proliferation of management
institutions, etc.
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 Management & Administration
• Controversy over the meaning of the terms
Management and Administration.
• Three schools of Thought- administration is
broader than management, administration is part of
management, management and administration are
identical.
• American School of thought: Administrators think,
managers act; administration is a top level activity,
management is a lower level function. Proponents-
Ordway Tead, Oliver Sheldon, W.Spriegel.
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 Management & Administration
• English School of thought: Management is rule
making and rule enforcing body, Administration is
just an implementing agency. Proponents-
E.F.L.Brech, Henry Fayol, Kimball and Kimball.
• Newman, Harold Koontz, McFarland , Ernst Dale
maintain that management and administration are
identical.

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 Roles of Management
• Management roles refers to specific categories
of managerial behavior.
• Mintzberg identifies ten management roles
grouped under three major heads namely
– interpersonal roles( roles that involve people and
other duties that are ceremonial and symbolic in
nature),
– informational roles( roles that involve receiving ,
collecting and disseminating information)
– decisional roles( roles that revolve around making
choices).
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 Roles of Management
• Interpersonal roles include: Figure head, Leader,
Liaison
• Informational roles include: Monitor,
Disseminator, Spokesperson
• Decisional roles include Entrepreneur,
Disturbance handler, Resource allocator,
Negotiator
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 Roles of Management
• According to Robert Katz, the following skills are
required for managers job:
– Technical skills( knowledge and proficiency in a specialized
field),
– Human skills( ability to work well with other people individually
and in a group),
– Conceptual skills( ability to think and to conceptualize about
abstract and complex situations).

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 Levels of Management
• Three levels exist in Management –
– first line managers( responsible for the overall
direction and operations of an organization),
– middle managers( translate the broad
strategies into specific goals for
implementation)
– top line managers( responsible for the
production of goods and services).
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 Levels of Management
• First line managers: foremen, white collar
supervisors, Section heads.
• Second line managers : Functional heads and
immediate subordinates.
• Top line managers : CEO, President, Chairman,
MD, COO, CIO .

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 Relative Skills Needed for Effective
Performance at different levels of
Management

Top
CONCEPTUAL
Management

Middle
Management HUMAN

First-line
TECHNICAL
Management

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Development of Management
thought
Modern
management
approaches

Early management
approaches

Industrial Revolution

Adam Smith division

of labor

Venetian business
enterprises and their
management practices

1400 1700 1800 1900- 1950 Post 1950

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 Key Management Theories – An Overview
In search of Excellence
becomes bestseller (Mid-1980s)
“Muckrakers” begn The Great Depression Deming lectures on
exposes of business Begins quality in Japan Apple Corp. Baldrige Award
(1902) Formed (1977) initiated (1987)

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

Labour Protest AT & T

World War I World War II IBM PC
Shortage Movemenets Introduced divestiture
(1914-1918) (1941-1945)
(1960s to early (1981) takes effect
1970s) (Jan 1, 1984)

Scientific Management School Classical Organizational Theory School

The Behavioral School

Management Science

The System Approach

The Contingency
Approach
Source: Management by Stoner
Dynamic Engagement Approach
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 Development of Management
thought
• Management is as old as human civilization. Ex:
Egyptian pyramids, Great Wall of China.
• During 1400’s: Venetian business enterprises and
their management practices
• During 1776: Adam Smith described the advantages
of division of labor and specialization.
• Beginning of 18th century: Industrial Revolution
resulted in the advent of machine power , mass
production and efficient transportation.
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 Development of Management
thought
• Evolution of management thought can be studied in
two broad categories:
• Early management approaches (Scientific
management, administrative management theory
and human relations movement)
• Modern management approaches (behavioral,
quantitative, systems and contingency approaches)
.

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 Scientific Management
• Fredrick W.Taylor (1856-1915) – father of
scientific management
• An approach that emphasizes the scientific
study of work in order to improve worker
efficiency.
• Contributions by Taylor: Scientific task
planning, Time and Motion study,
Standardization, Differential Payment ,
functional foremanship.
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 Scientific Management
• Basics of Scientific Management ( 4
principles)
 Each task must be scientifically designed so
that it can replace the old, rule of thumb
methods.
 Workers must be scientifically selected and
trained so that they can be more productive .
 Bring the scientifically designed jobs and
workers together so that there will be a match
between them.
 Division of labor and cooperation between
management & workers.
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 Scientific Management
Taylor summed up his approach in these words:
i. Science, not rule of thumb
ii. Harmony, not discord
iii. Cooperation , not individualism
iv. Maximum output in place of restricted output
v. Development of each man to his greatest
efficiency
vi. Equitable division of work

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 Scientific Management
Limitations:
i. Exploitative device
ii.Depersonalized work
iii.Unpsychological
iv.Undemocratic
v.Antisocial
vi.Unrealistic

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 Administrative Management
Theory
• Henry Fayol(1841-1925) developed this theory.
• Focuses on principles that can be used by
managers to coordinate the internal activities of
organizations.
• Explains the process of managing an
organization from the top managerial perspective.
• Five functions to be performed by managers:
planning, organizing, Commanding, Coordination,
Controlling.

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 Administrative Management
Theory
• Managers should apply 14 principles at
the operational level:
Division of work
Authority and Responsibility
Discipline
Unity of Command
Unity of direction
Subordination of individual interest to the common
good
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 Administrative Management
Theory
 Remuneration of Personnel
 Order
 Centralization
 Scalar Chain
 Equity
 Stability of tenure
 Initiative
 Espirit de Corps

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 Administrative Management
Theory
Limitations:
 Lack of empirical evidence
 Neglect of human factors
 False assumptions
 Pro-management bias
 Historical significance

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 Human Relations Theory
• Elton Mayo(1880-1949) contributed to this
theory.
• It is a movement in management thinking
and practice that emphasized satisfaction of
employees’ basic needs as the key to
increased worker productivity.
• Compensated the deficiencies in scientific
management and administrative
management.
• Gained popularity after studies of human
behavior at work situations during 1924-33.
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 Human Relations Theory
• Hawthorne Studies: A group of studies
conducted at the Hawthorne plant of
Western Electric company whose results
ultimately led to the human relations view of
management.
• Illumination Experiment: Test group Vs
Control group, Illumination Vs Productivity.

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 Human Relations Theory
• Hawthorne Effect: The possibility that
individuals singled out for a study may
improve their performance simply because
of the added attention they receive from the
researchers, rather than because of any
specific factors being tested.
• Bank wiring Experiment: Group norms
influencing individual behavior Vs Economic
incentives.

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 Human Relations Theory
• Key Concepts:
 The individual-not only motivated by economic
factors but also by social & psychological factors.
 The work group-workers find satisfaction in the
member ship of social groups.
 Work environment-to be conducive for both
organizational and personal growth.
 The leader-should provide participative climate.

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The Human Relations Movement
Pyramid

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 Human Relations Theory
Criticisms:
 Philosophy preaches collaboration not
competition-cow psychology
 Concerned only with operative employees
 Over concern on happiness – productivity link
 Anti individualistic
 Not a scientifically designed experiment.

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 Behavioral Approach
• Developed as a natural evolution to
Hawthorne Experiments.
• Hawthorne studies stressed on
emotional elements to explain human
behavior and performance.
• Behavioral approach emphasizes on
scientific research as the basis for
developing theories about human
behavior in the organizations that can
be used to develop practical
guidelines for managers.
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 Behavioral Approach
• Contributors: Abraham Maslow, Chris Argyris,etc
• Also called as Human Resources approach.
• Contributions:
 Individual motivation, group behavior
 Foundation to HRM
 Job enrichment
 MBO
 Positive reinforcement

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 Behavioral Approach

• Limitations:

Self actualizing view

Compatibility of individual & organization

Discounted the non human aspects of

organization
Best of managing is humanizing organizations

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 Quantitative Approach
• Features
 Offers quantitative aids to decision making,
develops quantitative tools to assist in providing
products and services.
 Managerial Choices depend on criteria such as
costs, revenues, ROI, etc
 Emphasis on computers and their assistance in
decision making alternatives.
 Promotes holistic view of factors influencing
decision making

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 Quantitative Approach
Eliminates subjective thinking in decision
making
Minimizes bias in decision making
Aids in objective rational decision making.
• Limitations:
All variables influencing decision can’t be
identified.
Less importance to human relationships
Decision quality depends on the data inputted
to the computer.
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 Systems Approach
• Integrated approach to management
problem solving and decision making
• Advocates: Chester Barnard, George
Homans
• Key Concepts of this approach:
System is a set of interdependent parts
Concept of holism
System can be open or closed
System has a boundary
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 Systems Approach
• Tries to solve problems by diagnosing
them with in a frame work of inputs,
transformation processes, outputs and
feed back
• Good balance between the needs of
various functional parts of the
enterprise and goals of the firm as a
whole.
• Conceptual frame work to understand
organization is too abstract.
• Does not identify situational
differences and factors
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 Environment

D
B
E

Sub-systems

System Approach
Environment

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 Contingency Approach
• Also termed as Situational approach
• Based on the premise that situations dictate
managerial action
• Advocates: Selznic, Woodward, James
Thompson
• Appropriate managerial action depends on the
particular parameters of the situation
• Spells out the relationship of the organization to
its environment
• Concerned with structural adaptations of
organizations to its task environment.
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 Contingency Approach
• More pragmatic and action oriented. Integrates
theory and practice in a systems framework
• Advocates the managers to develop skills for
situational analysis
• Limitations:
– Paucity of literature & Complex
– Defies empirical testing
– Reactive
– Not holistic in nature
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 References
• Principles of Management-P C Tripathi, P N Reddy; 3rd Edn.,TMH
• Management-Stephen Robbins; 8th Edn.,PHI
• Management-VSP Rao, V H Krishna; Excel
• Essentials of Management-Koontz,Weihrich;5th Edn.,TMH
• Management – James A F Stoner, R Edward Freeman, Daniel R
Gilbert;6th Edn., PHI
• Principles of management: a modern approach-Henry Albers, 4th
Edn,,John Wiley & sons
• Fundamentals of management-Donnelly, Gibson,Ivancevich ,10th
Edn,.Irwin Mc Graw

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 Web References
• www.12manage.com
• www.cliffsnotes.com
• www.swlearning.com
• www.gutenburg.org
• www.cheathouse.com
• en.wikipedia.org
• www.business.com
• www.businessmanagement.suite101.com
• www.greatmanagement.org
• unpan1.un.org
• www.harehall.co.uk

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Question Bank

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Case Study

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