CHAPTER 1:

NATURE &
SCOPE OF
MANAGEMENT
PRINCIPLES OF MGT
FYBBA SEMESTER 1: PRINCIPLES OF MANAGEMENT-1

MILIND H PAREKH
2015-16
 CHAPTER 1:
NATURE & SCOPE OF MANAGEMENT

Topics to be covered:

Topic 1: Concept / Meaning of Management

Topic 2: Four Definitions of Management

Topic 3: Features / Characteristics of Management

Topic 4: Management as a Science or Art or Both?

Topic 5: Management as a Profession

Topic 6: Universality of Management

Topic 7: Various Approaches to Study Management

7a. Social Systems Approach

7b. Decision Theory Approach

7c. Human Behaviour Approach

7d. Systems Approach

7e. Contingency Approach

Topic 8: Code of Conduct suggested by All India Management Association (AIMA)

Topic 9: Functions / Process of Management (POSDCORB Classification)

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Topic 1: Concept of Management / Introduction to Management

 Management is a discipline which makes the use of various other disciplines like
economics, sociology, psychology, anthropology, statistics etc. so giving precise and
exact meaning or definition is very difficult because the term management is used in
variety of ways.
 For example economists have used the term Management as a factor of production,
sociologists have treated management term as group of people and some others
have defined Management as process composed of various functions in it. So,

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 together by taking viewpoint of all into consideration, we can give a brief idea of
management in the following ways.
1. Management as a discipline
2. Management as a group of people
3. Management as a process

Management as a discipline

 Discipline refers to the study of knowledge having well defined concepts and
principles, rules, regulations, definitions, laws etc.
 Management is a discipline because it is also having relevant concepts, laws, rules
and principles which can be helpful in managing an organisation.

Management as a group of people

 Management can also be considered as a group of people in which we include all

those people who are involved in performing the managerial functions in an
organisation and not those people who do actual work in the organisation.
 For example, when we talk about a manager and a worker who is working in an
organisation, we refer to two distinct classes of people.
 Firstly, those people who are responsible for performing managerial tasks
(managers) and secondly, those who are engaged in doing non-managerial (actual)
work in a company (employees and workers).

Management as a Process

 Management can also be considered as a process consisting of different steps like

Planning, Organising, Staffing, Directing, Coordinating, Motivating, Supervising and
Controlling.
 Management is a very complex and dynamic process, rather than a static one facing
changes from External Environmental factors. Along with that Management is a
process of performing various activities and sub-activities.

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Topic 2: Four Definitions of Management

Louis Allan defined Management as “Management is what managers do.”This was the
simplest approach to define the management but this limitation was suffering from two
limitations.

1. One cannot say who can be considered as Managers on the basis of above
mentioned definition.
2. If one could still know about who are the managers, then it would be difficult to say
what they do on the basis of this definition.

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In order to overcome the above limitations we can divide the total activities of the
organizations into two parts. Firstly, we talk about those activities which are of operative in
nature through which we can achieve the actual work of an organisation. Like handling
machines by workers, putting materials in the machines, going in to the market to make a
sales call etc. Secondly, we talk about those activities which are done to get the work done
by others. Like motivating employees to achieve the target, instructing the worker to
perform his work, train the executive how to complete a sales call etc.

Broadly, management can be defined in various approaches by the following ways.

A. Production/Productivity/Efficiency Oriented
B. Decision Making Oriented
C. People Oriented
D. Functions Oriented

Production/Productivity/Efficiency Oriented Definition of Management

“Management is an art of knowing what you want to do and then seeing that it is done in
the best & cheapest way.” - Fredrick Winslow Taylor

Decision Making Oriented Definition of Management

“Management is simply the process of Decision Making and control over the actions of
human beings for the expressed purpose of attaining pre-determined goals.”

 Stanley Vance
People Oriented Definition of Management

“Management is an art of getting things done through and with people in formally
organised group.” - Harold Koontz

“Management is the accomplishment of results through the efforts of other people.”

 Lawrence Appley
Functions Oriented Definition of Management

“Management is a process involving planning, organising, staffing, directing and controlling

human efforts to achieve the stated objectives in an organisation.”

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Topic 3: Characteristics / Features of Management*
*(Students are requested not to confuse this answer with “Features of Management as a System”, as both are different
answers)

Management has Objectives

 Every Organisation is a deliberate and purposive creation and therefore they must have
some objectives.
 The objectives are the desired state of affairs which an organisation attempts to achieve.
 Every activity in an organisation is done to achieve some objectives because without
objectives, it becomes very difficult to define direction where organised group activities
would lead to.
 Objectives in an organisation may be to earn maximum revenue, to achieve efficiency in
production, to make good brand image in market, to get maximum ROI (Return on
Investment)

Management is working with & through the people

 Management process involves working with people and getting organizational

objectives achieved through them.
 Working through the people means assigning the activities to subordinates and getting
the work done. By this superior-subordinates relationship will created.
 Working with people involves doing managerial work for and with employees including
planning, organising, staffing, directing, co-coordinating and controlling.

Management involves decision making

 Decision making means selecting the best alternative among the several available
alternatives.
 A manager needs to take numerous amounts of decisions throughout the life of an
organisation and the quality of decision determines the success or the failure of an
organisation. Even success or failure of managers can also be judged by the quality of
decisions they make.

In Management, there are organised activities

 Management is a process of organised activities. Without organised activities, two

groups of people cannot be involved in the performance of activities.
 Management comes into existence when groups of people are working towards
achieving the common objectives.

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Management includes interrelationship among resources

 Resources include Man, Machine, Material, Method, Money and Market. All these
resources are given to those who manage the activities in an organisation.
 These people would apply their knowledge, expertise, and experience for getting the
desired results using all these resources.
 But the major concern is to integrate these resources i.e. what resource should be used
at what time, in what quantity and should be delegated to whom. Workers or
employees do their work by using these resources but the main thing is to utilize and
allocate these resources in a way to get maximum output from them.

Management is a Dynamic Process

 An organisation is affected by two types of environment; Internal and External.

 Internal Environment and External environment both are subject to change. They cannot
remain stable.
 Hence, management practices also should not remain static. The process and practices
of management will also change as and when internal and external environment
changes.

Management is Multi-Disciplinary

 Management takes the knowledge and concepts of several other disciplines; makes use
of them and apply them to explain many concepts of Management itself.
 Management makes use of psychology, sociology, economics, mathematics, accounting,
statistics, econometrics, anthropology, ecology, operation research etc. to explain the
concepts of management.
 Management integrates the ideas from these disciplines and suggests new knowledge
which can be put into practice for managing an organisation.

Management is Science as well as an Art too

 Management in itself uses various rules, laws, principles and theories to explain its
concepts. In this regards it is considered to be as a systematic body of knowledge. And
hence we can consider it as a science.
 But, it would be completely immaterial to know these principles of management unless
and until they are applied in real life in a better way.
 So management is not only dealing with what and why of a phenomena but along with
that it deals with how of a phenomena too.
 Hence, we can say that Applied Knowledge is power.

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Management is Universal

 The fundamentals & theories of management are universally applicable but its
techniques and practices are not universally applicable.

Management is Profession

 Management can be regarded as a semi-profession / emerging profession too, because

it includes specialized knowledge, ethical code of conduct, service motive and
professional association like AIMA (All India Management Association).

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Topic 4: Management: Science, Art or Both

 Introduction:
 When we study the nature of management, deciding about management as a
science or an art is highly debatable issue. It is very difficult to say whether
management is perfectly a science or it is an art.
 This controversy is very important based on the fact that earlier managers used to
manage their organisations very brilliantly even if they were not professionals.
 They did not know science of the management but they used to manage the
organisations by using intuitions, commonsense and their prior experience and
they proved to be best managers. E.g. Mr. Dhirubhai Ambani had not taken the
formal knowledge of management and still they managed his organisation in the
most effective and efficient way.
 So, it is really a debatable question whether to consider management as a science
or an art.
 Management as a Science
“Science is a systematized body of knowledge accumulated and accepted with reference to
the understanding of general truths concerning a particular phenomenon, subject or object
of the study.”

Management is said to be a branch of social sciences and the process of developing

scientific theory and process of developing management theory is different. So we can not
regard Management as a pure of perfect science like natural or physical science but rather
we can consider management as a Pseudo Science (Inexact Science). This will become
clearer from the following discussions.

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 Arguments which say that Management is NOT a Pure / Perfect Science

1. Management lacks (missing) internal consistency in rules, laws, theories and

hypotheses as compared to Science
 Science as a structure includes physics, chemistry, biology, mathematics and many
others; which includes and gives their own rules, laws, theories, principles and
hypotheses and they are internally consistent.
 Here Internal consistency means they are consistent throughout the world but this is
not so with management.
 Management also includes various rules, regulations, laws and principles &
hypotheses but all these lack internal consistency. That means they don’t remain
constant / same at every time and at every place.

2. Ambiguity (Confusion) in various terms of Management

 In Science like physics or chemistry or mathematics, one is always clear about the
terms and words which are being talked about, because in such sciences, majorly
each and every word provides same meaning and used in only a single way. E.g.
Gravity, Calculus, H2O, Hydrogen are such words which have same meaning
throughout the world.
 So there is no chance of confusion.
 But management is such discipline in which different terms gives more than one
meaning or used differently in different context. E.g. Management has been defined
by various authors from different perspective; Perception in marketing and
perception in behavioral science have different meanings. So this may create
ambiguity (confusion); Even Plan and Planning carry different meanings altogether.

3. Management principles gives different results at different places and after

repetition too
 The experiments and theories of science are empirically tested and provide same
result at every place, at every time and with repetition too.
 E.g. Law of Gravity is applied in same way at USA and at India. Likewise H 2O gives
pure water at India as well as at USA too even after any number of repetitions.
 Such type of empirical confirmation cannot be found in case of management. The
reason for this is that the theories and principles of management do not give same
kind of result at each and every place, time and under repetition.
 E.g. Japanese Management practice differs than that of the American Management
Practice. Likewise, motivational style to be applied for American workers and
motivational style for Indian Workers tend to differ.

From the above arguments we can say that Management is not as perfect science as
physics, chemistry, biology or mathematics.

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 Arguments which say that Management is partly a Science / Pseudo
Science

However from the above discussion, it is clear that management is not a pure science. But,
nowadays efforts are made to take management towards pure science. This will be clearer
from the following points.

1. Science gives rules, facts, figures, laws, theories, hypotheses, principles and models
to explain various contents which are there in science. As a same way management
also uses all such things to explain its various concepts and methodology.

2. Cause & Effect Relationship

 In management, to understand some phenomenon, we need to identify cause and
effect relationship like it is used in science.
 E.g. giving bonus and incentive increases the motivational level of an employee. So
here increased motivational level is effect of the cause of extra incentives.

3. More and more use of Mathematics and Statistics

 Mathematics and Statistics are the branches of science in which everything is
proved and tested.
 Management also makes the use of mathematics to explain its concept. Like
Transportation Problems and assignment problems can be solved through Linear
Programming Problems, Forecasting can be done with the help of regression and
time series analysis.
 So, from this we can say that Management is half / imperfect / pseudo science.

 Management as an Art
 Management is regarded as an art also.
 An Art is related with bringing desired results through application of skills or
knowledge.
 To manage effectively one must have the knowledge (Science) of management as
well as the skills and art to manage it well.
 Science comes through knowledge and art comes through practice.
 Science deals with ‘what’ and ‘why’ of a phenomenon whereas Art deals with
‘how’ of a phenomenon.

Relationship of Management with Art

 Knowing the science (Rules, Laws, Principles, Hypotheses) of management is very

much necessary but the one who applies this knowledge differently or skillfully
ultimately wins.

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  E.g. Sachin Tendulkar knows the science of cricket and the same knowledge is there
with other cricketers, but he has a unique art of playing cricket than other cricketers.
 Lata Mangeshkar knows the science of singing and the same knowledge is there with
singers, but she has a unique art of singing very beautifully.
 By reading a book on swimming, one cannot know swimming; as a same way just by
having knowledge of management will not be enough for managing an organising. It
needs more of creativity, practice, intuition and experience. So management is more
of art than science.
 Management as an Art can be seen from the following facts:
o The process of management involves the use of know-how and skills like any
other art such as music, painting, singing etc.
o Management demands creativity like any other art
o Management is based upon the fact that “there is no one best way of
managing the things”. Every person has his own art of managing the things.
o Management involves getting the desired result / objectives like any other
art.

 Conclusion (Applied Knowledge is Power)

Science and Art both are complementary in nature. Without science, one can not apply
anything and without art, just by having the knowledge, it is of no use. Same is the case with
management. Just having the knowledge of management is not enough but along with that
one must know the art of managing. We should conclude that management is both science
as well as an art. We should say “Applied Knowledge is power” rather than just “knowledge
is power”.

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Topic 5: Management as a Profession /Characteristics of Management as a

Profession

Management can also be considered as a profession but although it does not contain all the
features of profession.

Meaning of Profession

Profession is an occupation for which specialised knowledge, skills and training is required
and the use of these skills is not meant for self satisfaction but for serving to the larger
portion of the society than just earning money alone.

There are different features of profession but as we earlier said all of them do not applied to
management. So let us see which of them are applied and which are not.

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1. Existence of Specialized Knowledge
 For considering any discipline as a profession there must be an existence of
specialized knowledge.
 Management there exists a large amount of specialised knowledge / distinct body of
knowledge. This specialised knowledge has emerged from the need of managing
highly diversified and complex organisations.
 So in this regard, management can be considered as a profession.

2. Acquiring the Knowledge

 An individual can enter into the profession only after acquiring a particular
knowledge. E.g. Only LLB student can become lawyer, only MBBS student can
practice a profession of doctor, only a Chartered Accountant can audit the books of
account.
 In other words, to practice a profession, one must acquire the knowledge of that
particular field.
 However, this is not the case with management. To practice management or to
become a manager, it is not necessary that one must acquire formal knowledge of
management or and must have MBA degree to become a manager. In any
organisation, entry in managerial cadre need not require formal degree of
management.
 So in this regard, management cannot be considered to be a profession.

3. Professional Association
 Any occupation, which claims to be a profession, must have a professional
association with it.
 An association regulates and controls the behavior of professionals, takes
disciplinary actions if necessary and prescribe the criteria for individuals who want to
enter the profession.
 A person, who wants to practice a profession, must enter / register with a respective
professional association of their field. E.g. A students of Chartered Accountancy must
be a member of Institute of Chartered Accountants of India, A medical student must
be a member of Indian Medical Association, and a law graduate must be a member
of Bar Council of India.
 In Management also there is an association called All India Management Association
(AIMA) in India and some associations are prevailing outside India too. But it is not
mandatory to be associated with AIMA to practice management.
 In this regards Management cannot be considered to be a profession.

4. Service Motive
 This concept suggests that professionals should keep social interest in their mind
while charging fees for their professional services.

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  The service motive concept further lays that the success of any profession is
measured not in terms of money it earns but by the amount of social service it
provides.
 This important contribution of management can’t be measured in terms of
money alone because without integrating effort of management, resources
worth millions of rupees may be useless.
 And in management also there is service motive, so in that regard management
can be considered as a profession.

5. Ethical Codes
 For every profession, some ethical standard are provided and every individual of
the profession is expected to maintain conformity with these standards.
 The need for ethical codes arises because of the fact that occupations whose
practitioners have mastery over an area of knowledge have a degree of power by
virtue of their expertise and this power can be used for the benefit of the
professionals at the cost of the society.

Conclusion: Management is an emerging Profession

From the above discussion shows that management possesses certain characteristics of
profession while others are missing. Therefore, it can’t be said to be a profession, though it
is an “Emerging Profession” i.e., emerging as a profession.

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Topic 6: Universality of Management / “Theories & Fundamentals of

Management are Universal but its Techniques & Practices are not”

Introduction:

“Is the knowledge of Management Universal?”; “Are the principles of management

universal?” these are again controversial questions. Whether the knowledge of
management is universally applicable or not is again a debatable issue. Any knowledge can
be made universal through transfer of that particular knowledge. Before seeing the
universality of management, first we shall see how the knowledge of management can be
transferred from one place to another place. Management knowledge can be transferred
from one place / country to another place / country in one of the following ways.

Transfer of the Knowledge of Management:

1. By managers of an industrially developed country (like USA), who work in developing

country (like India)

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 2. By people / By students from a developing country (like India), coming to study and
work in Industrially developed country (like USA) and they return back to their own
country
3. By Training and Development by the managers of Industrially developed countries
for Industrially developing country

The knowledge of management can be transferred from one person to another, from one
company to another and from one country to another country but this transferability of
knowledge of management can be meaningful only when that knowledge can be applied
universally or it has universal application. There are two views prevailing for this: Some say
the knowledge of Management has no universal applicability and some authors say it has
universal applicability. Let us see arguments for both, and we shall then decide whether the
knowledge of management is universally applicable or not?

ARGUMENTS FOR UNIVERSALITY

Many authors & experts in management like Harbinson, Ghisselli, Porter and Richman,
through their research (in various countries & from various managers of different countries)
on universality of management have come to common conclusion that fundamentals and
basics of management are universally applicable.

1. Management as a Process
 Management as a process is universally applicable
 Management as a process can be found in all organised activities whatever the
country, culture or size it may be.
 Management as a process includes steps like planning, organising, staffing, directing,
coordinating and controlling are universally applicable in all organisations and as a
manager one must possess the knowledge of all these function. However, intensity
of a particular function differs company to company.

2. Difference between Management fundamentals and Techniques

 Management fundamentals are the basic principles & theories but management
techniques are the tools for performing management functions.
 Management fundamentals and theories will remain same they do not change from
country to country. But techniques of managing an organisation do not remain same
in all the countries and they change country to country.
 So, management fundamentals are universal but techniques are not.

3. Difference between Management Fundamentals and Practices

 Universality of Management also says that management fundamentals remain same
universally but practices differ. The reason behind this is management is both
science and art.

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  Art of managing includes use of / application of the theory and fundamentals of
management, which will differ country to country. The fundamentals will remain
same but its practice is subject to variations under different situations and
conditions.
 E.g. Koontz & O’Donnell has exemplified this phenomenon as automobile to be used
in desert area and automobile to be used in super highways are obviously not going
to be the same even if physical science of automobile engineering tends to be the
same.
 E.g. American Management Practice and Japanese Management practice tend to
differ

ARGUMENTS AGAINST UNIVERSALITY

Arguments against universality suggest that there are certain factors which affect the
application of a principle or a set of principles of management.

1. Cultural Characteristics
 The applicability of management principles throughout the world is based on the
culture of different countries.
 “Culture is a set of beliefs, attitudes and values that are shared commonly by the
members of the society.”
 Culture affects people’s behavior very significantly and management being a people
oriented process is highly affected by the culture. It is obvious that culture of
different countries is not going to be the same, so people’s behavior is not going to
be the same and as a result management is not going to remain the same
throughout the world.

2. Management Philosophy
 Philosophy of management means philosophy of founders or philosophy of top
managers of the organisations.
 Every organisation has its own philosophy (way of thinking) of managing an
organisation like an individual. And this philosophy is not going to be the same
organisation by organisation. E.g Some organisations believe in profit maximization,
while some may believe in service to society. So when philosophy changes,
management practices will also change.
 E.g. Family Based Organizations’ Philosophy will totally differ from that of the
professionally Managed Organisations.

3. Organisational Objectives
 The type of management will depend the organizational objectives. For different
types of objectives the approach of managing an organisation shall differ.

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  E.g. If Stability is the objective of organisation, management will be different and if
the Growth is the objective, then management will totally differ from earlier.
 E.g. Profit oriented organisations manage very differently as compared to those
which are Service Oriented / NPOs (Non-Profit Organisations) organisations.

CONCLUSION

Theories & Fundamentals of Management are Universal but its Techniques & Practices are
not.

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Topic 7: Various Approaches to Study Management

7A. SOCIAL SYSTEMS APPROACH

 The social systems approach was introduced by Vilfredo Pareto, a sociologist. But
further development to his approach was made by Chester Bernard.
 As per this approach, an organisation is a cultural system made up of people who
work in cooperation. To achieve organisational objectives, a cooperative system
can be developed by understanding the behaviour of people in the groups.

Features of Social Systems Approach:

1. Organisation is a social system, a system of cultural relationships.

2. Relationship exists among the external as well as internal environment of the
organisation.
3. Cooperation among group members is necessary for the achievement of
organizational objectives.
4. For effective management, efforts should be made for establishing harmony
between the goals of the organisation and the various groups therein.

Contribution of Barnard:

1. Concept of Organisation
2. Formal and Informal Organisation
3. Elements of Organisation
4. Authority
5. Functions of the executive
6. Motivation
7. Executive Effectiveness
8. Organisational Equilibrium

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7B. DECISION THEORY APPROACH

 Major contributions in this approach were given by Herbert Simon.

 Decision theory approach deals with the basic problem of management that is
decision making. Decision making involves selection of a suitable course of action out
of the available alternatives.
 This approach mainly emphasises that decision making is the job of every manager.
The manager is a decision maker and organisation is a decision making unit.
Therefore, the basic problem in managing is to make rational decision.
 From this point of view, decision theory approach has following features:
o Management is essentially decision making.
o The members of the organisation are decision makers and problem solvers.
o Quality of decision affects the organisational effectiveness.
o All factors affecting decision making are the subject-matter of management.
 CONTRIBUTION OF HERBERT SIMON IN DECISION THEORY APPROACH
o Concept of organisation
o Decision Making
o Bounded Rationality
o Administrative Man
o Managerial Communication

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7C. HUMAN BEHAVIOUR APPROACH

 Management means getting things done by people, so the study of management

must revolve around human behaviour.
 This approach is also known as ‘Leadership’, ‘Behavioural Science’ or ‘Human
Resource’ approach.
 Human behaviour approach puts emphasis on Human Resources more as compared
to Physical or Financial Resources. It studies Individual Behaviour as well as Group
Behaviour.

Contributions in Human Behaviour Approach:

 Need Hierarchy Theory (A.H. Malsow)

 Two Factor Theory (Herzberg)
 Theory X and Theory Y (Douglas McGregor)
 Blake & Mounton (Managerial Grid Model of Leadership)
 ERG Theory (Elderfer)
 Contingency Model (Fiedler) etc.

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Topic 8: Code of Conduct suggested by All India Management

Association (AIMA)
Introduction:

 All India Management Association is a professional body for development of

management profession and regulation of management profession. A professional
manager can be a member of AIMA and can be in touch with latest happenings in
management field. AIMA is currently situated at New Delhi.
 AIMA has suggested some code of conducts for managers same way like other
professional associations (like ICAI, ICSI, Indian Medical Association etc.) have given.
These code of conducts act as a guiding principle for managers.
 Code of conducts given by AIMA can be broadly divided into 2 parts:
o The Basic Code
o Guide to Good Management Practice

A. THE BASIC CODE

A member of AIMA shall……..

 Try his best to organize the resources available to him with a view to optimize their
use to achieve objectives of the organisation.
 Comply (Follow) with the Indian laws relating to the management of his organisation
and do his best to operate within the spirit of these laws.
 Try to maintain and enhance the reputation of professional management.
 Follow the guide to good management practice suggested by AIMA time-to-time.

B. GUIDE TO GOOD MANAGEMENT PRACTICE

Guide to good management practice says that a manager is primarily responsible to his
organisation and then he is responsible to fulfil the expectations of his Stakeholders:

Stakeholders:

Stakeholders of business are those parties or institutions who are interested in the
operations of the business and day to day happenings of the business. Moreover they have
some expectation in return from the business itself.

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 Shareholders

Society / Govern-
Public ment

Business
Stakeholders
Employees /
Suppliers
Workers

Financial
Customers
Institution

1. Shareholders
 A manager should ensure that dividend should is fairly divided amongst all investors
of the organisation.
 A manager should ensure that they are being given full and correct information
regarding financial performance of the organisation.

2. Employees
 A manager should pay properly regard to his safety and well being of the personnel
for whom he is responsible.
 A manager should set an example for his subordinate through his own work
capability and performance.
 A manager should train people to become qualified for higher duties.

3. Customers
 A manager should ensure that customers are getting good products and services at
fair prices.
 A manager is responsible for satisfaction or dissatisfaction of his customers.

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 4. Suppliers
 A manager should ensure that all the terms and conditions of contract with suppliers
are written clearly and unambiguously.
 A manager should ensure timely payment to his suppliers and healthy relations with
the suppliers.

5. Government
 A manager should comply with all the taxes to the government.
 A manager should conform to the national interest as expressed in government
policy.

6. Society
 A manager should make the most effective use of all natural resources.
 A manager should be ready to help the society.
 A manager should ensure that the working of an organisation should be such which
doesn’t harm the society.

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Topic 9: Process of Management / Functions of Management

1. Planning

It is the basic function of management. It deals with chalking out a future course of action &
deciding in advance the most appropriate course of actions for achievement of pre-
determined goals. According to KOONTZ, “Planning is deciding in advance - what to do,
when to do & how to do. It bridges the gap from where we are & where we want to be”. A
plan is a future course of actions. It is an exercise in problem solving & decision making.
Planning is determination of courses of action to achieve desired goals. Thus, planning is a

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systematic thinking about ways & means for accomplishment of pre-determined goals.
Planning is necessary to ensure proper utilization of human & non-human resources. It is all
pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties,
risks, wastages etc.

2. Organizing

It is the process of bringing together physical, financial and human resources and developing
productive relationship amongst them for achievement of organizational goals. According to
Henry Fayol, “To organize a business is to provide it with everything useful or its functioning
i.e. raw material, tools, capital and personnel’s”. To organize a business involves
determining & providing human and non-human resources to the organizational structure.
Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

3. Staffing

It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behaviour etc. The main purpose o staffing
is to put right man on right job i.e. square pegs in square holes and round pegs in round
holes. According to Koontz & O’Donnell, “Managerial function of staffing involves manning
the organization structure through proper and effective selection; appraisal & development
of personnel to fill the roles designed in the structure”. Staffing involves:

 Manpower Planning (estimating man power in terms of searching, choose the

person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.

4. Directing

It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and

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staffing are the mere preparations for doing the work. Direction is that inert-personnel
aspect of management which deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational goals. Direction has following
elements:

 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of
watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to

work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work
of subordinates in desired direction.

Communication- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of

deviation if any to ensure achievement of organizational goals. The purpose of controlling is
to ensure that everything occurs in conformities with the standards. An efficient system of
control helps to predict deviations before they actually occur. According to Theo Haimann,
“Controlling is the process of checking whether or not proper progress is being made
towards the objectives and goals and acting if necessary, to correct any deviation”.
According to Koontz & O’Donnell “Controlling is the measurement & correction of
performance activities of subordinates in order to make sure that the enterprise objectives
and plans desired to obtain them as being accomplished”. Therefore controlling has
following steps:

 Establishment of standard performance.

 Measurement of actual performance.
 Comparison of actual performance with the standards and finding out deviation if
any.
 Corrective action.

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