PRINCIPLES OF

MANAGEMENT

UNIT 1

Management

Management refers to the tasks and activities

involved in directing an organization or one of
its units: planning, organizing, leading, and
controlling.

The process of reaching organizational goals by

working with and through people and other
organizational resources.

Management
Organization
Two or more people who work together in a structured
way to achieve a specific goal or set of goals.
Goals
Purpose that an organization strives to achieve;
organizations often have more than one goals, goals are
fundamental elements of organization.
The Role of Management
To guide the organizations towards goal
accomplishment

Basic Levels of Management

(adapted from Figure 1.3)

Top
Top
Managers
Managers
MiddleManagers
Managers
Middle
First-LineManagers
Managers
First-Line
Nonmanagers
Nonmanagers

Levels of Management

First-line Managers: have direct responsibility for

producing goods or services Foreman, supervisors,
clerical supervisors

Middle Managers:
Coordinate employee activities
Determine which goods or services to provide
Decide how to market goods or services to customers
Assistant Manager, Manager (Section Head)
Top Managers: provide the overall direction of an
organization Chief Executive Officer, President, Vice
President

Top Managers
Responsible for providing the overall direction of an
organization
Develop goals and strategies for entire organization
Spend most of their time planning and leading
Communicate with key stakeholdersstockholders,
unions, governmental agencies, etc., company
policies
Use of multicultural and strategic action
competencies to lead firm is crucial

Middle Managers
Responsible for setting objectives that are consistent with
top managements goals and translating them into specific
goals and plans for first-line managers to implement
Responsible for coordinating activities of first-line
managers
Establish target dates for products/services to be delivered
Need to coordinate with others for resources
Ability to develop others is important
Rely on communication, teamwork, and planning and
administration competencies to achieve goals

First-line Managers
Directly responsible for production of goods or services
Employees who report to first-line managers do the
organizations work
Spend little time with top managers in large organizations
Technical expertise is important
Rely on planning and administration, self-management,
teamwork, and communication competencies to get work
done

- People responsible for

directing the efforts aimed
at helping organizations
achieve their goals.
- A person who plans,
organizes, directs and
controls the allocation of
human, material, financial,
and information resources
in pursuit of the
organizations goals.

A Model of Managerial
Competencies
(adapted from Figure 1.1)
Communication
Competency
Teamwork
Competency

Planning and
Administration
Competency

Global
Awareness
Competency

Strategic
Action
Competency

Self-Management
Competency

Management Level and Skills

Six Core Managerial Competencies:

What It Takes to Be a Great Manager
Communication Competency
Planning and Administration Competency
Teamwork Competency
Strategic Action Competency
Multicultural Competency
Self-Management Competency

 Function: A classification referring to a group

of similar activities in an organization like
marketing or operations.

Functional Managers: A manager responsible

for just one organizational activity such as
accounting, human resources, sales, finance,
marketing, or production
Focus on technical areas of expertise
Use communication, planning and
administration, teamwork and selfmanagement competencies to get work
done

(contd)

General Managers: responsible for the operations

of more complex unitsfor example, a company or
division
Oversee work of functional managers
Responsible for all the activities of the unit
Need to acquire strategic and multicultural
competencies to guide organization

Many Other types of managers

Basic Managerial Functions

(adapted from Figure 1.2)

Organizing

Leading

Planning

Controlling

Management Process and Goal

Attainment

Management and
Organizational Resources

Planning involves tasks

that must be performed to
attain organizational goals,
outlining how the tasks
must be performed, and
indicating when they
should be performed.

Planning
Determining organizational goals and
means to reach them
Managers plan for three reasons
1. Establish an overall direction for the
organizations future
2. Identify and commit resources to achieving
goals
3. Decide which tasks must be done to reach
those goals

Discussed in depth in Chapter 7 & 8

Organizing means assigning the planned tasks to

various individuals or groups within the
organization and cresting a mechanism to put plans
into action.

Organizing

Process of deciding where decisions will be made, who

will perform what jobs and tasks, and who will report
to whom in the company
Includes creating departments and job descriptions

Leading (Influencing) means guiding the activities

of the organization members in appropriate
directions. Objective is to improve productivity.

Leading

Getting others to perform the

necessary tasks by motivating them to
achieve the organizations goals
Crucial element in all functions
Discussed throughout the book and in
depth in Chapter 15Dynamics of
Leadership

1. Gather information that measures recent performance

2. Compare present performance to pre-established standards
3. Determine modifications to meet pre-established standards

Controlling
Process by which a person,
group, or organization
consciously monitors
performance and takes
corrective action

Introductory Concepts: What Are

Managerial Competencies?

Competency a combination of knowledge,

skills, behaviors, and attitudes that contribute to
personal effectiveness
Managerial Competencies sets of knowledge,
skill, behaviors, and attitudes that a person
needs to be effective in a wide range of positions
and various types of organizations

Communication Competency
Ability to effectively transfer and exchange information
that leads to understanding between yourself and others
Informal Communication
Used to build social networks and good
interpersonal relations

Formal Communication
Used to announce major events/decisions/
activities and keep individuals up to date
Negotiation
Used to settle disputes, obtain resources,
and exercise influence

 Deciding what tasks need to be done, determining

how they can be done, allocating resources to enable
them to be done, and then monitoring progress to
ensure that they are done
Information gathering, analysis, and problem solving
from employees and customers
Planning and organizing projects with agreed
upon completion dates
Time management
Budgeting and financial management

Introductory Concepts: What Are

Managerial Competencies?

Competency a combination of knowledge,

skills, behaviors, and attitudes that contribute to
personal effectiveness
Managerial Competencies sets of knowledge,
skill, behaviors, and attitudes that a person
needs to be effective in a wide range of positions
and various types of organizations

Recent developments in
Management Theory
1. The system approach
2. The contingency approach

1. The system approach to

Management
Like a human organism an
organization is a system. In an
organization also people, tasks and
the management are interdependent.

Key concept
Subsystem
While an organisation as a whole
is a system, the various
components or parts within it are
called the system
Closed System
A system that does not interact
with its environment. A closed
system has fixed boundaries, its
operation is relatively independent

Open System

A system that interacts with its

environment. Thus an open system is
one which constantly comes into
contact with the environment

Synergy

Synergy means that departments that

interact cooperatively are more
productive than they would be if they
operated in isolation

Open system model of an

organisation
External
environment
Inputs
Human
Machines
Money
Technologies

Outputs

Transformatio
n
Goods
services

Informatio
n
Feedback

2. The Contingency approach

to Management

In contingency approach theory managers

identify which is suitable technique for a
particular situation, particular environment
of the organisation at a specific time.

Management & Society

The term business means many things
to many people.
The terms business refers to any type
of enterprise that is trading for the purpose
of giving satisfaction to the consumer.

Management as a SCIENCE or an ART

SCIENCE

The existence of a systematic body of knowledge

with array of principles
Based on scientific enquiry
Principle should be verifiable
Reliable basis for predicting future events

ART

Management process involves the use of practical

knowledge and personal skill
Management is creative
Application of practical knowledge and certain skills
helps to achieve concrete results

F.W.Taylors scientific
management
Fredrick Winslow Taylors is called ` FATHER

OF SCIENTIFIC MANAGEMENT`
FOUR BASIC PRINCIPLES
1. Observation & measurement used in the
Organisations
2. Employees should be scientifically selected
& trained
3. Selection & training of employee has the
opportunity of earning a high rate of pay
4. A mental revolution in employer &
employee

PRINCIPLES OF SCIENTIFIC
MANAGEMENT
1. Separation of planning & doing
1. Separation of planning & doing
2. Functional foremanship
3. Job analysis
a) Time study
b) Motion study
c) Fatigue study
4. Standardization
5. Scientific selection & training
6. Financial incentives
7. Economy
8. Mental Revolution

Henry Fayol`s Contribution

I- PART
Total industrial activities
1. Technical (Production, Manufacturing)
2. Commercial (Buying, selling, Exchange)
3. Financial (Search for & optimum use of
capital)
4. Security (Protection of property & persons)
5. Accounting (Balance sheets, Cost
statistics)
6. Management (Planning, organising,
Coordinating, Directing, Controlling)

II Part
Concerned with the 14
Principles of management
1. Division of work
2. Authority & Responsibility
3. Discipline
4. Unity of command
5. Unity of Direction
6. Subordination of individual interest to
general interest
7. Remuneration of personnel
8. Centralisation

9. Scalar chain
10. Order
11. Equity
12. Stability of tenure of personnel
13. Initiative
14. Esprit de corps

Managerial Roles
Interpersonal roles
2. Informational roles
3. Decisional roles
1.

1.

Interpersonal roles
a) Figure head role
In this role a manager persons symbolic
duties required by the status of this
office
b) Leader
Responsible for the motivation and
activation of subordinates
c) Liaison
It describes a manager`s relationship
with
the outsiders

2. Informational roles
a)monitor.
Amanager scans the environment and
collects internal and external information.
B) disseminator:
Manager distributes the information to his
subordinated in order to achieve
organizational objectives.
C) spokes person.
Transmits the informations to the outside
of the organisation

3) decision roll:
a) Entrepreneur
Initiates and supervises design of
organizational improvement projects.
b) Disturbance handler:
Responsible for corrective action when
organisation faces on expected problems.
c)Resource allocator:
Manager responsible to allocation of human
monetary and material resources.
d)negotiator: As a manager bargains with
suppliers dealers. Trade union agents etc.

BUSINESS ORGANISATION
Business means `State of being
busy`throughout.Those human
activities which involve production of
wealth.
Organisation is used to mean
bringing together various elements
of business with the object
establishing harmonious relationship
& adjustment in their functioning.

TYPES OF BUSINESS ORGANISATION

BUSINESS ORGANISATION
Individualistic institutions

Government institutions

1. Sole trades
2. Joint Hindu family
partnership
3. Joint stock company
4.Co-operative
5. Multinational companies

1.Departmental Undertaking
2. Public Corporation
3. Government Company
4. Board Organization

Sole Trading

Business unit which is owned & controlled by

a single individual is known as a sole trading
concern
Characteristics of sole proprietorship
1.
2.
3.
4.
5.
6.

One man ownership & control

Unlimited liability
Enjoyment of entire profit
No separate legal entity
Simplicity
Self employment 7. Secrecy

Advantages of sole trading

1. It is easy to form & close the business
2. It is easy for decision making
3. Full control of business activities
4. It is easy to maintain healthy relations with
employee
Disadvantages of sole trading
1. Limited resources
2. Short life
3. Lack of consultation
4. Risk of entire loss

PARTNERSHIP
Is an association of two or more persons to
carry
on business and to share its profits and
losses.
FEATURES OF PATNERSHIP
1. Agreement
2. Multiplicity of person
3. Lawful business
4. Sharing of profits
5. Contractual relations

6. Mutual agency
7. Unlimited liability
8. Registration
9. Common management
10. Utmost good faith

Kind of partners
1.
2.
3.
4.
5.
6.
7.
8.

Active partner
Sleeping partner
Normal partner
Partner in profit only
Partner by estoppel
Sub partner
Secret partner
Minor as a partner

RIGHTS OF PARRNER
1.
2.
3.
4.
5.

6.

Right to express his option

Right of participation
Right of access to books
Right to share profits
Right to get interest on the
capital
Right of indemnity

Advantages of
partnership

1.
2.
3.
4.
5.

6.

It is easy to formation
Registration is not compulsory
Larger financial resources
Greater managerial talent
Promptness in decision
making
The risk of business is shared
by more persons

Disadvantages of
partnership

1.
2.

3.

4.
5.
6.

Unlimited liability increases of firm

Lack of harmony among the
partners
Difficulties in expiation &
modernization
Lack of public faith
limited resources
Limited on transfer of share.

JOINT STOCK COMPANY

Joint stock company is
association of many persons who
contribute
money
worth
to
common stock and employing
source trade and also share the
profit and losses.

Advantages of joint
stock company

1.
2.
3.

4.
5.
6.
7.

Limited liability.
It is more stable.
The shares of a joint stock company are
freely transferable.
Company can easily expand.
Democratic setup in this company.
Democratic setup in this company.
Possible for large financial resources.

Disadvantages of joint
stock company
1.

2.
3.
4.
5.

Time consuming legal formalities

are exiting.
Lack of motivation.
It is difficuly to maintain secrets.
Promotion of frauds.
Delayed decision and action.

It is a voluntary association of persons for mutual

benefits and its aims are accomplished through self
help & collective effort consumers co-operative
societies.
Types of co-operative societies
1. Consumers co- operative societies
2. Producer co-operative societies.
3. Co-operative marketing societies.
4. credit societies.
5. Co-operative farming societies.
6. Co-operative housing societies.

COOPERATIVEORGANISATION

1.

Characteristics of cooperatives
Voluntary association.

Equal voting rights.

3. Service motive.
4. Separate legal activity.
5. Open membership.
6. State control.
7. Liability.
8. No share transfer.
9. Statutory audit
10. Cash trading
2.

PUBLIC ENTERPRISES
or STATE ENTERPRISES

State enterprise is an undertaking owned

& controlled by the local or state of
central government
Characteristics of public enterprises
1. Financed by government
2. Government management
3. Public services
4. Legislative control
5. Monopoly enterprises

PUBLIC CORPORATION

A public corporation is an autonomous

body corporate created by a special
statute of a state or central government.
MERITS
1. Finance from government
2. Free from government interference
3. Protect public welfare
4. Service to society
5. Flexibility

DEMERITS
1.
2.
3.
4.
5.

Limited autonomy
Misuse of power
Inefficient operation
Lack of interest
Government control

Government company
1.
2.
3.
4.
5.

Easy to form
Flexibility in management
Freedom of action
Run on commercial lines
Helpful in developing
neglected sectors

1.

Demerits of Government
company
lack of interest

Minority interest neglected

3. Political inference
STATE ENTERPRISES
1. DEPARTMENT UNDERTAKING
Posts
Railways
Telegraphs
Radio & television
Power stations
2.

2.PUBLIC
CORPORATION

LIC
IDBI
RBI
Industrial Finance corporation

3. GOVERNMENT CAMPANIES
Coal mines
Steel authority of India Ltd
Tamilnadu state transport corporation

Difference between
partnership & sole
traders
Basis of
Partnership
Sole trader

SI
no differences
1.

Specific act

The partnership firm is There is no

governed by the India separate act
partnership act 1932
for sole
trader
business

2.

Number of
members

Minimum 2 maximum
10 for banking
business

Only one
person

3.

Registration

Optional

Need not be
registered

4.

Manageme All partners can

nt
participate in the
management

It is managed by
the person

5.

Liability

Joint and several

liability

Unlimited

6.

Division of
profit or
loss

Partners share profit

or loss

The profit or
losses borne by
the sole trader

7.

Secrecy

Secrecy cannot
maintain

Secrecy
maintained

8.

Economic
strength

More strong

Economically
weak

9.

Decision
Delay
making
10 Agreemen Agreement essential
.
t

Very quick
No agreement is
necessary

UNIT- II
PLANNING
Planning is the process of selecting the objectives
and determining the course of action required to
achieve these objectives
NATURE OF PLANNING
1. Planning a primary function
2. Planning a dynamic process
3. Planning based on objectives and policies
4. Planning a selective process
5. Pervasiveness of planning
6. Planning an intellectual process

7.Planning is directed towards efficiency

8. Planning Focus with future activities
9. Flexibility of planning
10. Planning is based on facts
Purpose of planning or Objectives of
planning
Planning has great importance in all type
of Organization.
Organizations often fail not because of
lack of resources, but because of poor
planning

Necessary to plan due to the following

reasons
1. Primary of planning
2. To achieve objectives
Why am I making this plan
What am I trying to accomplish
What resources do I need to execute the plan
3. To cope with uncertainty & changes
4. To facilitate control
5. To help in coordination
6. To increase organizational effectiveness
7. To guide decision making

STEPS INVOLVED IN
PLANNING
Identification of opportunities
Establishment of objectives
Developing planning premises
Identification of alternatives
Evaluation of alternatives

Selecting an alternative
Formulating derivative plans
Establishing sequence of activities