UNIT 4

INTRODUCTION TO
MANAGEMENT
By Kanchan Tolani
 MEANING
Management is the process of designing and maintaining an
environment in which individuals, working together in
groups, efficiently accomplish selected aims.
 This basic definition needs to be expanded:
 As mangers, people carry out the managerial functions of
planning, organizing, staffing, leading and controlling.
 Management applies to any kind of organization.
 It applies to managers at all organizational levels.
 The aim of all managers is the same: to create a surplus.
 Managing is concerned with productivity, which implies
effectiveness and efficiency.
 DEFINITION

 ‘Management is the art of getting things done through and with the
people in formally organized groups’.
Mary parker Follet
NATURE OF MANAGEMENT
1. Multi-disciplinary
2. Dynamic nature of principles
3. Relative, not absolute principles
4. Management: art or science
5. Management as profession
6. Universality of management
Scope of Management
PRODUCTION
-Purchasing
-Material Management
-Research and development
MARKETING
-Advertising
-Marketing research
-Sales Management
FINANCE AND ACCOUNTING
-Financial Accounting
-Management Accounting
-Costing
-Investment Management

HUMAN RESOURCE
-Recruiting and selection
-Training and development
-Wage and Salary administration
- Industrial Relations
 Management is a science or an art?
 Management as a Science
 Systematized body of knowledge
 Principles based on experimentation
 Verifiable principles
 Universal application

Management is not true science therefore it is

called as in 'exact science'
 Management as an Art
 Practical knowledge
 Personalized application of knowledge
 Improvement through continuous practice
 Situational application
 Emphasis on creativity

Thus Management is an art

FUNCTIONS OF MANAGEMENT
 Planning

 Organizing

 Directing

 Controlling
 Unit 2 Planning and Decision
Making
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By
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Kanchan Tolani
 Introduction
Two terms Plan and Planning
Plan is commitment to a particular course of action
believed necessary to achieve specific result
Planning in its self is a an activity
Planning is basically a process which involves the
determination of future course of action.
 Planning generates these questions
What should be done?
Why is action necessary?
Where shall it be done?
Who will do it?
How will it be done?
What physical resources will be required?
 Definitions…
Selecting from among alternatives for future course of
actions for the enterprise as whole and each department
within it. Koontz and O’Donnell
Simple Definition of planning

the act or process of making a plan to achieve or do

something
A plan should always be
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 Characteristics
Base for all management functions
Focus on Objectives
Forward looking
Pervasive function
Selection of alternative
Limited factors
Flexibility
Importance of Planning
Primacy of Planning
Offsets uncertainty and change
Focuses on objectives
Helps in Coordination
Helps in Control
Increase organizational effectiveness
 Steps involved in planning

1) Establishing objectives
2) Planning premises( External and Internal)
3) Identification of alternatives
4) Evaluation of alternatives
5) Choice of alternative
6) Formulation of supporting plans
7) Establishing sequence of activities
 
Types of plans
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1) Operation plans
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Single use plan(Discounts, sale, newspaper
ad)
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Ongoing plan(Improved service)
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2) Tactical plans
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3) Strategic plans
Types of Planning

Dimensions Types of planning

1) Coverage of activities Corporate planning and functional

planning

2) Importance of contents Strategic planning and

tactical/operational planning

3) Time period involved Long term and short term planning

4) Approach adopted Proactive planning and reactive

planning

5) Degree of formalization Formal planning and informal

planning
ORGANIZING
By Kanchan Tolani
Meaning
■ The word organization originated from the term organism which denotes
structural framework which is divided into parts that are mutually
coordinated, integrated, related, synchronized & linked together.

■ Organizing involves analysis of activities to be performed for achieving

organizational objectives, grouping these activities into various divisions,
departments, and sections so that these can be assigned to various
individuals and delegating them appropriate authority so that they are
able to carry on their work effectively
Definition

“Organizing is the establishing of effective authority

relationships among selected work, persons & work places
in order for the group to work together efficiently.”
By George Terry
Concept of Organizing
 Departmentation

 Linking Departments

 Define Authority and Responsibility

 Prescribing Authority Relationships

Departmentation
The real task in designing an organization structure is the identification of
activities and to group them properly. The process of grouping is commonly
known as Departmentation
Bases of Departmentation
 Function
- Basic Function
- Secondary Function
- Supporting function
 Product
 Territory
 Process
 Customers
 Time
 Alpha-numerical
Organization Structure
Forms of Organization Structure
 Line organization structure
-pure line
-departmental line
 Line and staff organization structure
 Functional organization structure
 Divisional organization structure
 Project organization structure
 Matrix organization structure
Pure Line organization structure
Departmental Line organization
Pure Line organization structure

Merits Demerits

■ Simplicity ■ Lack of specialization

■ Discipline ■ Autocratic approach
■ Easy Supervision ■ Lack of ground work for
subordinates training
■ Economical
Line and staff organization structure
Line and staff organization structure

Merits Demerits

■ Planned specialization ■ Lack of well defined Authority

■ Quality decisions ■ Line and staff conflict
■ Training ground for Personnel
Functional organization structure
Divisional organization structure
Basis of divisionalization
■ Product
■ Territory
■ Strategic Business Unit
Project organization structure
Matrix organization structure
Formal & Informal
Organization
 Formal Organization

“A formal organization is a system of well defined

jobs, each bearing a measure of authority,
responsibility & accountability.”
By Louis Allen
Formal organization comes into existence
When the people are able communicate with the one
another.
They are willing to act.
They share a common goal or purpose.
Characteristics of formal organization

■ Establishment of official relationships.

■ Structured duties & responsibilities.
■ Specified objectives of the enterprise.
■ Delegation of authority, fixation of responsibility & accountability.
■ Superior-subordinate relationships & leadership facilitation.
■ Vertical flow of authority from top to bottom.
■ Division of work, departmentation, job designing, places right man
at right place & proper control mechanism.
Informal Organization
“An informal organization is any human group interaction that occurs
spontaneously & in a natural course over a period of time.”
By Joseph Massie
■ The informal organization is the network, unrelated to the firm's formal
authority structure, of social interactions among its employees. The informal
organizations can pressure group members to conform to the expectations of the
informal group that conflict with those of the formal organization. This can
result in the generation of false information or rumors and resistance to change
desired by management.
Span of control
■ The grouping of activities to create various departments presents
another problem, how many individuals should be placed under
one superior.
■ Span of control is used to denote the number of subordinates put
under one superior.
■ It is influential in determining the complexity of individual
manger’s job
■ It determines the shape or configuration of the organization.
■ Two types: Narrow and Wide
 Wide span of control : THIS MEANS A SINGLE MANAGERS OR
SUPERVISOR OVERSEES A LARGE NUMBER OF SUBORDINATES. Leads
to generation of a flat structure

Merits Demerits

-Encourages the manager to be more democratic and
delegate more authority
to the subordinates, which can be motivating
-Fewer layers of hierarchy needed- therefore
improves vertical
communication.
-Fewer promotional opportunities so can be de-
motivating.
-Harder for manager to supervise and co-ordinate the
exact work of
subordinates and ensure they are working towards
same common goal.

-Creates a more entrepreneurial culture as workers -Increase the risk of wrong decision being made as
can take responsibility for subordinates may be less
jobs. well trained or lack experience
 Narrow span of control: THIS MEANS A SINGLE
MANAGERS OR SUPERVISOR OVERSEES FEW
SUBORDINATES. THIS GIVES A RISE TO A tall organization
structure

Merits Demerits

■ Leadership ■ More number of managers required

■ Focus ■ Leads to formation of a tall structure
■ Communication ■ Lack of flexibility
Delegation of authority
 A manager alone cannot perform all the tasks assigned to him. In order to meet the targets,
the manager should delegate authority. Delegation of Authority means division of
authority and powers downwards to the subordinate. Delegation is about entrusting
someone else to do parts of your job. Delegation of authority can be defined as
subdivision and sub-allocation of powers to the subordinates in order to achieve effective
results.
Elements of Delegation
 Authority - in context of a business organization, authority can be defined as the power
and right of a person to use and allocate the resources efficiently, to take decisions and to
give orders so as to achieve the organizational objectives. Authority must be well-
defined. All people who have the authority should know what is the scope of their
authority is and they shouldn’t miss utilize it. Authority is the right to give commands,
orders and get the things done.
 Responsibility - is the duty of the person to complete the task assigned to him. A person
who is given the responsibility should ensure that he accomplishes the tasks assigned to
him. Responsibility without adequate authority leads to discontent and dissatisfaction
among the person.
 Accountability - means giving explanations for any variance in the actual performance
from the expectations set. Accountability can not be delegated. For example, if ’A’ is
given a task with sufficient authority, and ’A’ delegates this task to B and asks him to
ensure that task is done well, responsibility rest with ’B’, but accountability still rest with
’A’. The top level management is most accountable.
Principles of delegation
■ Delegation by results expected
■ Functional definition
■ Clarity of lines of authority
■ Level of authority
■ Absoluteness of responsibility
■ Parity of Authority and Responsibility
Centralization
and
Decentralization
Centralization: Organisations where important decisions are taken at the centre and then passed out
to the various departments / locations

Merits Demerits

– Control ■ Slow decisions

– Decisions made by senior ■ Lack of motivation to lower levels
management
■ Autocratic
– Helps decisions to be consistent
across the business
– Avoids repetition of functions
Decentralization: Organisations where authority is delegated to managers in other departments /
locations

Merits Demerits

– Increased motivation of – Managers may lack experience

managers – Local decisions may be
– Encourages local initiatives inconsistent with the overall
– Decisions based on more up-to- business aims and objectives
date information – Duplication of functions and
– Decisions made quicker costs
Authority relationships: life and staff authority

Line Authority Staff Authority

■ As a chain of command ■ Advisory staff authority

■ As a channel of communication ■ Concurring staff authority
■ As a carrier of Responsibility ■ Control staff authority
■ Functional staff authority
 DIRECTION
INTRODUCTION
•Direction is a managerial function performed by the top level
officers of management.
•Direction is necessary in order to achieve proper implementation
of direction.
•Every manager gives direction to his subordinates and every
subordinate gets direction from his respective manager.
DEFINITIONS:
DIRECTION
•Haimann, “Directing consists of the process and
techniques utilized in issuing instructions and
making certain that operations are carried on as
originally planned.”
•Koontz and O’Donnel, “ Direction is the
interpersonal aspect of managing by which
subordinates are led to understand and contribute
effectively to the attainment of enterprise objective.”
NATURE:
DIRECTION
1. Direction is the important managerial function
performed at all levels of management by all
managers.
2. The manager have to direct their subordinates
and staff continuously. It goes on till the work is
in progress.
3. Direction has dual objectives to attain.
a. Work done on time
b. Solve their problems at earliest.
 DIRECTION
PRINCIPLES OF DIRECTION:
1.Harmony of objectives
2.Maximum individual contribution
3.Unit of direction or command
4.Efficiency
5.Direct supervision
6.Feedback information
 DIRECTION
PRINCIPLES OF DIRECTION:
7.Effective communication
8.Appropriateness of direction techniques.
9.Efficient control
10.Comprehension
11.Follow through.
 DIRECTION
FEATURES OF DIRECTION:
1.One of the managerial function
2.Management initiates action through direction
3.It is continuous
4.Starts from top level
5.Creates link between preparatory functions and
control function of management.
 DIRECTION
IMPORTANCE OF DIRECTION:
1.It initiates action
2.It co-ordinates the group efforts
3.It ensures maximum individual contribution
4.It reduces the reluctance to put up with changes in the organization
5.It provides stability and balance in the organization
6.It helps to achieve the objectives of an organization.
 DIRECTION
TECHNIQUES OF DIRECTION:
1.Consultative direction
2.Free-rein direction
3.Autocratic direction.
 CONTOLLING
INTRODUCTION
• Control is the last function of management.
• The controlling function will be unnecessary to the management if
other functions of management are performed properly.
• This function ensures desired results.
• Planning identifies the activities and controlling regulates the
activities.
 CONTOLLING
DEFINITIONS
• Billy E. Goetz, “Management control seeks to
compel events to conform to plans.”

• Robert N. Anthony, “Management control is the

process by which managers assure that resources
are obtained and used effectively and efficiently in
the accomplishment of an organization's
objectives.”
 CONTOLLING
NEED OF CONTROL
1.To measure progress
2.To discover deviation
a. Change
b. Delegation
c. Complexity
d. Mistakes
3.To indicate corrective action
CONTOLLING
SCOPE OF CONTROL
•Control over the policies of the concern
•Control over organization
•Control over personnel employed in an
organization.
•Control over capital available to the concern
•Control over capital expenditure.
•Control over wages and salaries paid to the
employees.
CONTOLLING
SCOPE OF CONTROL
•Control over public relations.
•Control over research and development
•Control over tools and equipments.
•Overall control.
•Control over production
•Control over cost of production
CONTOLLING
STEPS IN CONTROL PROCESS
•Establishing standards.
•Measuring performance
•Comparison of actual with standards
•Taking corrective action
 CONTOLLING
REQUIREMENTS OF EFFECTIVE CONTROL SYSTEM
1.Feedback
2.Objective
3.Suitability
4.Prompt reporting
5.Forward looking
6.Pointing out exceptions
 CONTOLLING
REQUIREMENTS OF EFFECTIVE CONTROL SYSTEM
7.Flexible
8.Economy
9.Intelligble
10.Suggest remedial action
11.Motivation
 CONTOLLING
TECHNIQUES OF CONTROL
1.Statistical control reports
2.Personal observation
3.Cost accounting and const control
4.Break-even analysis
5.Special control reports
6.Management audit
 CONTOLLING
ADVANTAGES OF CONTROL
1.Adjustments in operation
2.Verification of policy
3.Managerial accountability
4.Psychological pressure
5.Maintaining morality
6.Co-ordination
7.Efficiency
 CONTOLLING
LIMITATIONS OF CONTROL

1.Absence of perfect standards

2.Uncontrollable factors
3.Difficulty in fixing responsibility
4.Expensive process.