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Importance of Management in modern business organization.

B-Com Part 2 Management Notes

 

Importance of Management in modern business organization.



Q.1. What is Management? Discuss the importance of Management in modern business organization.OR 
"Management is the art of setting things done through and with the people in formally organized groups" Explain this statement. 
Introduction

Modern age is an era of management resolution. There was a time when economic development depended mainly on scientific and mechanical inventions. However, in the modern world good management is necessary for efficient and effective working of organization, along with technological advancements. 


Meaning of Management

Management is a wide term carrying several meanings, depending in the context in which it is used. Usually, the term management assumes three meanings, when it is used in three different senses as follows: 

1. Management as a Noun 
When used as a noun, management refers to managerial personnel, i.e. all those persons are concerned with getting things alone, through other people. Such persons are charged with some responsibility and are given some authority - responsibility of executing the policies and programmes of an organization, and authority in order to discharge their responsibilities. In this sense, management include the Board of Directions, Chairman and Managing Director, Functional Directors like Marketing Director and Finance Director, General Managers, and First Line Supervisors. The task of such business management is executory and supervisory in nature. 

2. Management as a Process 
When used as a process, management refers to what the management body or management committee or management council or managers do, or what a manager does. In other words, in this sense, management means the set of functions performed by the managers. These managerial functions broadly include - Planning organizing staffing, directing and controlling. Such functions are performed in order to get things done, through and with other people in an effective and efficient manner. This is why that management has been said to be the ordering and coordinating of functions and of the men fulfilling these functions in order to achieve a given purpose. Henry L. Sisk has also said. Management is the coordination of all resources through the process of planning, organizing, directing and controlling in order to attain stated objectives. 

3. Management as a Discipline (i.e. Subject) 
When used in the sense of a discipline or subject, it refers to a branch or body of knowledge and practice is other words, here management means the set of principles, concepts theories and practices as a subject of study for those who intend to be good managers in various areas. Here, the management also denotes a code of conduct for managers and does prescribe the techniques and methods of managing things. 
It may be noted that management has also been analyses as an economic resourcea factor of productiona system of authoritya technique of leadership and a means of coordination or decision making
Simply stated management means getting things done through and with the individuals and groups by effective and efficient use of available resources.

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Introduction to Management

B-Com Part 2 Management Notes


Introduction to Management

Chapter 1 - Various definitions of Management
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Q.1. Describe the various definitions of Management?
Definition of Management

It is very difficult to give a precise definition of the term management. Different management authors have viewed management from their own angles moreover, during the evolutionary process of management different thinkers laid emphasis on different expects. For example, F.W. Taylor emphasized engineering aspects, Elton Mayo laid emphasis on human relations aspects, E.F.L, Brech, George R. Terry emphasis on, decision making aspect, Ralph Davis stresses leadership aspect and some other like Barry Richman etc. emphasized integration or coordination aspect.


Some Important Definition of Management

1. Harold Koontz

Management is the art of getting things done through and with people in formally organized groups.


2. George R. Terry

Management is a disconnect process consisting of planning organizing activating and controlling performed to determine and accomplish the objectives by the use of people and resources.


3. Donald J. Cough

Management is the art and science of decision making and leadership.


4. Mary Cushing Nile

Good Management, or scientific management, achieves a social objective with the best use of human and material energy and time, and with satisfaction for the participants and the public.


5. Henry Fayol

To manage is to forecast, to plan, to organize, to command, to coordinate, and to control.


6. Theo Haimann and William Scott

Management is a social and technical process which utilizes, resources, influences, human action and facilitates changes in order to accomplish organizatinal goals.


Thus, the above definitions bring out that

* Management us a social and technical process 

* It consists of planning, organizing staffing, leading decision making coordinating and controlling. 

* It is concerned with getting done i.e. accomplished pre-determined objective by the use of people and resources. 

* It helps in the creation, direction, maintenance and operation of organization. 

* It secures maximum benefits for the employer, the employees, and the community. 


Management

Management simply means a specific process of planning, organizing, staffing directing and controlling the efforts of the people who are engaged in activities in business organization in order to attain predetermined objective of such organizations.

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Importance of Management in modern business organization.



Q.1. What is Management? Discuss the importance of Management in modern business organization.OR 
"Management is the art of setting things done through and with the people in formally organized groups" Explain this statement. 
Introduction

Modern age is an era of management resolution. There was a time when economic development depended mainly on scientific and mechanical inventions. However, in the modern world good management is necessary for efficient and effective working of organization, along with technological advancements. 


Meaning of Management

Management is a wide term carrying several meanings, depending in the context in which it is used. Usually, the term management assumes three meanings, when it is used in three different senses as follows: 

1. Management as a Noun 
When used as a noun, management refers to managerial personnel, i.e. all those persons are concerned with getting things alone, through other people. Such persons are charged with some responsibility and are given some authority - responsibility of executing the policies and programmes of an organization, and authority in order to discharge their responsibilities. In this sense, management include the Board of Directions, Chairman and Managing Director, Functional Directors like Marketing Director and Finance Director, General Managers, and First Line Supervisors. The task of such business management is executory and supervisory in nature. 

2. Management as a Process 
When used as a process, management refers to what the management body or management committee or management council or managers do, or what a manager does. In other words, in this sense, management means the set of functions performed by the managers. These managerial functions broadly include - Planning organizing staffing, directing and controlling. Such functions are performed in order to get things done, through and with other people in an effective and efficient manner. This is why that management has been said to be the ordering and coordinating of functions and of the men fulfilling these functions in order to achieve a given purpose. Henry L. Sisk has also said. Management is the coordination of all resources through the process of planning, organizing, directing and controlling in order to attain stated objectives. 

3. Management as a Discipline (i.e. Subject) 
When used in the sense of a discipline or subject, it refers to a branch or body of knowledge and practice is other words, here management means the set of principles, concepts theories and practices as a subject of study for those who intend to be good managers in various areas. Here, the management also denotes a code of conduct for managers and does prescribe the techniques and methods of managing things. 
It may be noted that management has also been analyses as an economic resourcea factor of productiona system of authoritya technique of leadership and a means of coordination or decision making
Simply stated management means getting things done through and with the individuals and groups by effective and efficient use of available resources.

Importance of Management in modern business organization.

importance of management in modern business organization
discuss the importance of management in modern business organizations
importance of modern management accounting practices in modern business organizations
importance of organizational behaviour studies in modern business management

Q.3. What are the different levels of management? Also describe the functions of managers at different levels. 
Levels of Management

A level of management means the positions of managers in the organizational hierarchy. The number of level is question, which is related to several important elements, such as costs, status, working styles, etc. It depends on such factors as organization's size, technology and degree of diversity in its work activities. 
Three levels have been generally recognized in organizational hierarchy as follows: 

1. Top Management 
It includes the top managers or management committees, such as board of directors, management council, chairman, general managers etc. 

2. Middle Management 
It includes departmental heads and sectional heads, which are below top managers, out above lower managers. 

3. Supervisory Management 
It is also known as lower management and includes managers, such as foreman, salesman, assistants, head clerk and supervisors. 


Functions of Managers at Different Levels

At different levels in the management hierarchy, the managers perform different functions as follows. 

1. Top Management 
Top managers functions relate mainly to designing of plans, policies and organization structure. They deal with environmental process and provide leadership to the organization. 

2. Middle Management 
In many cases the job of the middle manager is that of intermediary between top management and supervisory or operating management. They coordinate inputs production and outputs. They are responsible for executing the plans and policies framed by the top managers. 

3. Supervisory Management 
At this level, managers get down to the most specific and detailed aspects of the organizational task. They are responsible for getting the technical guidance, help and solve the obstacles, doubts and inconveniences of the workers and remove their dissatisfaction. They make recommendations for providing proper working conditions etc. 


Managerial Skills and Levels of Management

These are four types of managerial skills, which are required in different degrees of importance at various managerial levels as follows: 

1. Technical Skill 
It is the ability to use tools, procedures or techniques of a specialized field. It is relatively more important and required at supervisory level then its importance goes on reducing at middle and top levels. For example, a supervisor must have full knowledge as to how the plastic molding machine works. However, the President of a company does not need to know much of the technical details of drilling for oil or how to refine the oil. 

2. Human Skill 
It is the ability to work with understand and motivate other people. This skill is essential at every level of management because all managers whether at high or at low level have to deal with their subordinates. 

3. Conceptual Unit 
It is the mental ability to coordinate the organization's interests and activities and to see the organization in its enlarged form as one whole system. This type of skill is primarily required at the top level and then at the middle and lower levels, its importance keeps on diminishing. 

4. Design of Problem Solving Skill 
It is the ability to see a problem and then also to workout a solution to it. This skill is required at all levels because every manager without reference to this level makes decision strategic, or routine ones. However, its significance lies more at higher levels.


Q.4. Discuss the nature and characteristics of management. Is management a science, an art or a production?
Nature or Characteristics of Management

Management has a dynamic nature. It means that management is an organizing and unceasing element or concept. Management does not occur by rigid formula or fixed pattern. It is ever-present reality of organizational life. Management does not carry out the work himself, but the managers get the work done through other people by pioneering, leading, motivating and controlling their activities, efforts and behaviour. The following important characteristics of features of management clearly indicate toward its nature.


1. Management is a Complex and Continuous Social Process

Management deals with human phenomenon about which too little is known. The structure and behaviour of groups of people are very complex. It is a process because its comprises a series of actions that lead to achievement of objectives. It is a social process because these actions are primarily concerned with relations between people. It is a continuous process because new problems crop up as the old ones are solved.


2. Management is an Independent Skill

Management has emerged as an essential, a distinct and a leading independent institution, which is a central event in the social history. It is a new basic and dominant institution or social group.


3. Management is a Science

Science is a systemized knowledge about a phenomenon ascertained by observation and experiment. It means that under science, general truths are discovered and critically tested, and then underlying principles are established. As science, management has developed and provides a body of principles, theories, laws, techniques and practices, which are capable of universal application. It has developed certain generalizations, which are applicable to any group activity.


Management is growing as science due to the following reasons:

(a) Quantitative Tools under the name and style of Operations Research have been introduced in the field of managerial decision-making.


(b) Researches have been conducted which have provided better insight into the nature and behaviour of man.


(c) Certain Principles theories and practices have been identified to the name and style of International Management or Contemporary Management or Global Management.


(d) Different Case Studies undertaken in various countries unfold the correct and the same results. Thus, the degree of predictability is being properly identified and ascertained.


4. Management is an Art

Art is the answer to the query how it tells about the way to accomplish the desired results. It is behavioral knowledge. Art is the applied science i.e. application of knowledge for the solution of organizational problems. The meaning of art is the bringing about of a desired result through the application of skill. Management, in this sense is an art. It provides to the enterprise the ability to compromise with the least of undesired consequences - which is the essence of art. Management leads, motivates and influences the people to be on the right, desired track by effecting various kinds of adjustments and how compromises through artful handling of conflicts and dissentions. It tells as to how to solve various problems in the field of production marketing, finances, personal technology, research and development, human resource development, competition etc.


5. Management is a System of Authority

Management is the system of authority which is represented by vertical and horizontal dispersal of authority positions resulting in what is properly known as management hierarchy or chain of command. Under the authority system well defined lines of command and delegation of suitable positional powers along with specified responsibilities at all levels, are established. System of authority creates discipline and order and avoids chaos.


6. Management is Universal

Managers perform the same functions regardless of their place in the organization, structure of the type of enterprise in which they are engaged. Acting in their managerial capacity, presidents / chairmen, directors, department heads, supervisors/foremen, college principles, bishops and heads of governmental agencies all do the same thing i.e. perform the same functions. They are all engaged in setting things done through and with people. As managers each must at one time or another perform all the duties. Characteristics of managers irrespective of their level in the organization or their place or ratio of working, this is the principle of universality of managerial functions or management.


7. Managerial knowledge and experience are transferable

By implication of the principle of universality of management, managerial knowledge and experience are transferable from department to department, from enterprise to enterprise, and from nation to nation. Executives can employ their skill as well in one occupation as in another, to the extent that their tasks are managerial and not technical, and with the proper motivation and orientation to environment of managing.


8. Management is a Profession

Profession is defined in many ways. Any occupation by which a person earns livelihood is called profession. It is also in restricted sense, and then it includes certain specified occupation only. All occupations are not included in professions. Thus, clear definition of profession is not possible.


9. Management is an Integrating Force

Management is a force that is well recognized the integrating human and physical resources through its proper direction, designing of organization structure, job positions, delegation and decentralization of authority and responsibility, consultative and participative processes and influencing. It establishes congruence (i.e., balance) between organizational interests and goals on one hand and the individual interest and goals on the other hand.


10. Management is Intangible

Managements intangible in that

* The process of management cannot be seen, and 

* The principles, theories, techniques, concepts and practices of management are also invisible. Management is said to be good or bad on the basis of results. However, when management is referred to manageerial personnel, it can be seen. 


11. Management Utilities Multi-Disciplinary Approach

Management relies for its vast body of knowledge on various other fields, such as economics, anthropology, sociology, psychology, mathematics, engineering etc.


Chapter 2 - Scientific Management

B-Com Part 2 Management Notes


Chapter 2 - Scientific Management


* Main elements of Scientific Management 

* Various techniques of Scientific Management 

* Basic Philosophy of Scientific Management

Q.1. What is Scientific Management? Discuss the main elements of Scientific Management. 
OR 
Discuss the contribution of Frederick W. Taylor to the theory of Management. 


Definition of Scientific Management

Frederick Taylor 
Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and the cheapest way. 

Kimball and Kimball 
An attitude that aims to replace (I think with I know). It points out the method of intelligently directing the construction and arrangement of factory buildings, the character of methods and processes, the organizations of departments, the elimination of wastes and increase of efficiency in all phases of industrial administration where experience and date are applicable. 

Peter F. Drucker 
The operational study of work, the analysis of work into its simplest elements and the systematic improvement of worker's performance of each element. 
In a nutshell, scientific management represents a body of knowledge that is concerned primarily with the discovery of casual relationships (i.e. cause and effect relationships) i.e. cause and effect relationship between the efforts expended for a given objective, and the results of these efforts, with special emphasis on the discovery of the best method in the light of the available man-power, materials, and technology. 


Frederick W. Taylor

Taylor started his career as an apprentice (labourer) in a small machine shop in Philadelphia in 1876. Owing to his sincerity of purpose and devotion to duty, he joined the Midvale Steel Works in 1878 as a machinist and then became a foreman and later rose to the position of the chief engineer. He wrote five books and four papers Shop Management is his important book. In the later part of his career, he worked as management consultant of a steel company. 


Principles of Scientific Management

Taylor's concept of scientific management consisted especially of a scientific approach to management. Its primary objective was to replace methods based on trail and error and rule of thumb (i.e., practical sense and experience rather than exact rules or calculations). The principles of scientific management may be listed as follows. 

1. Development of a true science for each element of a man's job to replace the old rule of thumb method. 
2. The scientific selection, education, training and development of workers for every job. 
3. An almost equal distribution or work and responsibility between management and workmen, management entrusted with the planning of work and workmen to look after the execution of plans. 
4. Intimate, friendly cooperation between management and workers to ensure that work is done in accordance with the principles of the science which have been developed in accordance with the planned jobs and tasks. 

The aims of concepts of scientific management may be summed up as follows: 

  • Science, not rule of thumb (i.e., not methods based no practical sense and experience rather than exact rulers or calculations).
  • Harmony, not discord.
  • Cooperation, not individualism.
  • Maximum output in place of restricted output.
  • Development of each individual to his greatest efficiency and prosperity.



Q.2. Describe the various techniques or elements of scientific management? 
Techniques or Elements of Scientific Management

In addition to the above principles and concepts. Taylor developed several techniques or elements, which provide the mechanism for implementing his principles. Some important of these techniques or elements may be listed as follows: 

1. Time Study 
Time study or work measurement is designed to establish the standard time required to carry out a job under specified conditions. It involves analysis of a job into its constituent elements and recording the time in performing each element. Taylor suggested the use of time study to lay down a fair day's work so as to avoid guesswork and uncertainty in the effort and productivity expected of each worker. 

2. Motion Study 
It is systematic and critical study of the movements of both the worker and the machine so as to identify and eliminate unnecessary and wasteful movements, and decide on the best way of doing the job. 

3. Standardization and Simplification 
Under scientific management the third element of technique is to lay down the predetermined standards regarding the task, materials, equipments, method, time, quality and cost and working conditions standardization helps to simply work, ensure interchangeability to parts to ensure uniformity of operations and facilitate comparisons of efficiency. 

4. Scientific Task Planning 
It is the technique of forecasting and designing ahead or in advance every step in a long series of separate operations. Each step is to be taken in the right place of the right degree and at the right time. Each operation is to be performed at the optimum efficiency. Scientific task planning provides answer to the questions like what work is to be done, how is to be done, where it is to be done and when it is to be done. More efficient routing systems and works scheduling were developed for effective planning of work. 

5. Functional Foremanship 
According to Taylor one supervisor cannot be an expert in all aspects of work supervision. He suggested the system of functional foremanship in which eight supervisors supervise a worker's job. Four of them i.e., route clerk, instruction card clerk, time and cost clerk and shop disciplinarian, are concerned with the planning of work in the factory office. And the other four, i.e., gang boss, speed boss, repair boss and inspector are involved in the execution of work at the shop flour. 

6. Incentive, Wage Plan with Differential Piece Rate System 
Taylor emphasized the need for scientific determination of remuneration for workers. For this purpose, he suggested that a direct link should be created between remuneration and productivity for motivating workers. In this connection, he developed the differential piece rate system of wage payment. Under this system, two piece rates are laid down - one, low rate for those who fail to achieve the standard output and the second higher rate for those who achieve or exceed the standard output. 

7. Adoption of Exception Principle 
Taylor recommended adoption of exception principles which means that the management reports should be condensed into comparative summaries giving in detail only the exception to the past standards or average - both the especially good and the especially had exceptions.

Q.3. Describe the basic philosophy of scientific management? 
Basic Philosophy of Scientific Management - Mental Revolution

Taylor testifies that in order for the principles of scientific management to succeed, a complete mental revolution on the part of the management and workers was required. 

The basic philosophy of Taylor's scientific management lies in the need for a fundamental change of attitudes on the part of both managers themselves as partners in the joint endeavor rather than adversaries. Rather than quarrel over profits, they should try to increase production. He believed that the management and labour had a common interest in increasing productivity - which he called mutuality of interest
Taylor pleaded for double mental revolution. He writes that in its essence, scientific management involves a complete mental revolution on the part of the workingmen engaged in any particular establishment or industry. Such a revolution should be brought about concerning their duties towards their work, toward their fellowmen and toward their employers. 
He pleaded for equal mental revolution on the part of management - the owner of the business and the board of directors. Such a revolution should be brought about concerning their duties toward their fellow workers in the management toward their workmen and toward all of their daily probelems. 
Taylor believes that without this complete mental revolution on both sides scientific management does not exist. Scientific management exist when the management cares for the interest and goals of the workers and on the other hand, the workers trust the managers and cares for the interests and goals of the organisation. 
Taylor says that the great revolution that takes place in the mental attitude of the two parties under scientific management is that both sides take their eyes off i.e., away from the division of the surplus as the all-important matter and they together turn their attention towards increasing the size of the surplus. 


Critical Evaluation

Taylor's scientific management may be critically examined as follows: 

(a) Contribution to Management Thought 
Taylor was the first person to develop a systematic and scientific study of management. Hence he is known as the father of scientific management. He presented his ideas as a systematic body of thought. His main contribution to management practices included the following aspects. 

  • To emphasize the importance of applying scientific methods of enquiry, observation, experimentation and inferences to the problems of the management. He exhorted against the use of trial and error approach to industrial problems.
  • Stressing the separation of planning of work from its execution so as to enable workers to perform at his best and earn accordingly.
  • Emphasizing the aim of management to the maximum prosperity of the employer along with the maximum welfare of each employee.
  • Laying emphasis on the necessity of a complete mental revolution on the part of the both workmen and management in order to derive the benefits of scientific management through harmony and cooperation rather then individualism and discord.


The primary benefit of scientific management was criticized and proper use of energy ounce of energy. Moreover, specialization and division of labour or work have bought about the second industrial revolution. It has also facilitated professionalisation of management. 

(b) Criticism Or Limiatation 
Inspite of its great contributions, the scientific management approach has been criticized for its various limitations as follows: 
1. It is mechanistic approach ignoring human element in the organisation - it is concerned with the efficiency of workers in the technical sense emphasizing production only and attaching no importance to the social and psychological need of the workers. In this context it has called unfair and undemocratic. 

2. Trade unions have opposed scientific management on the ground that it leads to autocratic management and also raises the workload of workers with a corresponding adverse impact on employment of men. 

3. It assumes that workers are inherently lazy and they require strict supervision and exercise of authority by management. It is also its wrong assumption that workers are motivated by material gains, i.e. money only. 

4. It has been called by some critics as narrow, impracticable and titled toward exploitation of workers. 

5. It is said that this approach is primarily concerned with problems at operating level only and it hardly emphasizes the managerial organization and processes. 

6 Some say that there is no one best way of doing a job as pleaded by Taylor, because what is the best way, it shall depend on different circumstances of each case. 


Conclusion

Despite all criticism of Taylor's scientific management, his techniques continue in the name of work study in India and elsewhere.


Chapter 3 - Modern Theories of Management

B-Com Part 2 Management Notes

Chapter 3 - Modern Theories of Management

* System Approach to Management 


Q.1. Write an explanatory note on systems approach to Management.

OR

What is systems approach to Management? Explain salient characteristics of the system.

OR

Explain the systems approach to Management. Discuss with example how does it provide feedback mechanism to continue the whole cycle. 



Systems Approach to Management

Classical and neo-classical theories of management considered only partial aspects of an organisation for paying special attention on the individual aspect or part. Classical theorists emphasized work and technical aspects, whereas neo-classical theorists laid stress on worker aspect or human element in the organisation. In this sense, these theories were incomplete or insufficient for managers to guide them in the management of organisation. Hence there was felt a need for some more exact and comprehensive theory of management.


Defining Systems

In simple words, a system may be defined as a set a interrelated and interdependent parts forming an organized unit or entity. These parts are known as sub-systems which interact with each other and are subject to change. They are interrelated as well as interdependent. Hence, changes in any sub-system lead to changes in others.


Any working organisation may be said to have three sub-systems as follows:

1. Technical Sub-System

It represents the formal relationships among the members of an organisation.


2. Social Sub-System

It provides social satisfaction to members through informal group relations.


3. Power Sub-System

It reflects the exercise of power or influence by individuals and groups.


The whole or total system emerges as a result of interaction between and among the various sub-systems. It is important to note that the system and its sub-systems also interact with the environment, which may influence or be influenced by the system or sub-systems. (Environment is the sun total of the factors and forces outside an organisation, such as customers, competitors, suppliers, investors, regulatory government agencies etc)


Features or Concepts of Systems Approach

Ludwig Van Bertalanffy and Kenneth E. Boulding has been the pioneer of systems approach. Katz and Kahn, Stafford Beer, Foresster, Hertz, Norbert Wiener, McCloskey and Morse, etc have also contributed to this story.

Drawing on the work from many fields including biology, the systems approach analysis the functions of the total enterprises in terms of systems - inputs, processing, and outputs - with a view to improving their operations.


The significant features or concepts of systems approach may be outlined as follows:


1. Sub-Systems

They are the parts that make up the whole. Each system may also be a sub-system of still larger whole. For example an electronic goods company is a system, but it becomes a sub-system of the electronic goods industry, which is a larger whole.


2. Interrelatedness of Sub Systems

It is probably the distinguishing characteristics of a system, which means that a manager cannot change on sub-system without affecting the rest because the sub-systems interact with each other and therefore are dependent on each other. For example, the solution to a problem of the Production Department (a subsystem) will have an impact on other departments (subsystems) such as Marketing and Finance - say, if it is decided to increase the production by 50% of the present output, then marketing efforts will have to be further geared to sell the enhanced production and more finances will have to be arranged for additional production.


3. Synergy

It means that the whole is greater than the sum of its part. In other words, systems approach results in synergic effect which means that 2 + 2 - More than 4.

4. Open System

Open system means that which interacts which its environment and closed system is that which does not interact with its environment being self-sustained. The emphasis of systems approach is an open system. It believes that most of the organizations are open systems because they depend for their inputs (i.e., money, materials, men, information etc.) on the society. In addition, the organisation sells their outputs (i.e. goods and services) to the customers in the society. Thus, if an organisation wishes to survive, it must respond to its environment - customers and suppliers.


5. System Boundary

Each system has its boundary that separates it from the environment.


6. Environment

All systems operate, within an environment, which, for an organisation, might include customers or clients, competitors, suppliers, investors, government and regulatory government agencies, unions etc. Environment includes things that are significant to the organisation, but are largely beyond its control.


7. Flows

A system has flows of information, methods and energy including human energy. These enter the system as inputs, undergo transformation process and exit as outputs.


8. Feedback

It is the assessment of work done, identification of deviations and taking of corrective action.


9. Central Functions or Purpose

There is always a central function or purpose of a system against which the efforts of the organisation and its subsystem can be evaluated or measured.


In a nutshell, systems approach attempts to view organisation as a unified, purposeful system composed of interrelated parts. It gives manager a way of looking at the organization as a whole and as a part of the larger, external environment. The organizations are viewed as procuring and transforming inputs into outputs. The organizations are also viewed as extremely complex entities subject to changes from within and outside. In order to meet the various needs of such as organizations, a balanced and integrated approach to management is required.


At the heart of the system approach lays the following:

* Management information system (MIS) 

* Communicating network for collection, analysis and flow of information and quantitative data so as to facilitate planning and control. 

* Decision making system as the primary means of balancing the different parts of the organization. 

* Integration of activities and departments with a view to making the best use of scare resources. 

* Sub-System of management - the managers should try to adapt and cope with environmental changes. 


Critical Evaluation

The systems approach may be critically evaluation as follows:


(A) Contributions (Advantages)

Systems theory has made the following contributions.

1. It provides a manager a way of thinking about the job of managing and unfolds an opportunity to him for looking it the organization as a whole and for achieving overall effectiveness.

2. It provides a unified focus to organizational efforts - a direction towards which people should strive.

3. It draws attention of managers to an important factor and that is the environment in which an organization works. The interaction with the environment is dynamic.

4. It includes within it focus both micro and macro aspects of the organizations. Hence it serves a multi-level and multi-dimensional approach.

5. It implies that the modern manager should have analytical orientation should be expert in motivating to achieve goals and open mandate to receive and respect new ideas, i.e. creativity and innovation.

6. It also implies that management education must seek to develop the ability to work with and motivate others.

7. The feed back mechanism provides and opportunity to rearrange organizations part according to the change in the environment.


(B) Limitations

The system theories have been criticized on the following grounds.

1. Systems theory is not a complete explanation of the whole organizational system. It does not explain how the sub-system of the specific organization is uniquely related in a given environment.

2. The conceptional framework for understanding organization provided by system theory is too abstract.

3. It does not really offer any new thing. Managers do understand interrelationship between different parts and the influence of environment on organization and it sub-systems. What is necessary for a manager to know as to how the sub-system of a specific organization are uniquely related in a given environment and thus how best to deal with a particular problem? This is not answered by the system approach.


Conclusion

Though facing several criticisms, the system theory provides a framework for integrating much, if not all, of knowledge of management thought. It provides a unified focus to the organizational efforts. Its major contribution results from its strong emphasis on the interrelatedness are mutuality of the part of an organization. It has really opened new vistas for managers of today's world.


Chapter 4 - Administrative Theory of Management/Principles of Management

B-Com Part 2 Management Notes



Chapter 4 - Administrative Theory of Management/Principles of Management


* Administrative theory of Management 

* Principles of Management 

* Nature of Management Principles 

* Characteristics of Management Principles


Q.1. Describe in brief the administrative theory of Management? 
OR 
Briefly explain the Fayol's general principles of Management. 
OR 
To arrange is to forecast and plan, to organize, to command, to coordinate and to control, Discuss 
OR 
Discuss the contribution of Fayol to the science of Management. 


Henri Fayol - Father of Mangement

Fayol was a French mining engineer in his early thirties, but after that he switched over to general management ans was Managing Director from 1888 to 1918. He wrote his book General and Industrial Management in 1916 in French, which was translated in English in 1949, only when American Management writers came to know about his ideas. 
Fayol is known as the father of management or the founder of the classical management. Not because he was first to investigate managerial behaviour, but because he was the first to systematize it. He was contemporary to Taylor. Taylor was basically concerned with organizational fucntions, whereas Fayol was interested in the total organization. It may be noted that Taylor is known as the father of scientific management, i.e. supervisory or lower management, while Fayol is recognized as the father of management, i.e. the higher management or the general management. 


Division of Business Activities

According to Fayol, business activities in any organization consist of six interdependent operations as follows: 
1. Technical - activities concerning production. 
2. Commercial - activities concerning buying, selling and exchange. 
3. Financial - activities concerning optimum use of capital. 
4. Security - activities concerning protection of property. 
5. Accounting - activities concerning final accounts, costs and statistics. And 
6. Managerial - activities concerning planning, organizing, commanding, coordinating and controlling. 
According to him, the first five activities were well known and as such to devoted his attention to the description and explanation of the managerial activities. Also he analyzed the nature of such activities and skill requirements, which were so far given little scattered attention by thinkers. 
Universality of Management: (Elements of Management)

Fayol considered the process of management to be of universal application and distinguished between five elements of the process. He regarded these elements of management as the function of management, which were being performed by all managers universally and at all the levels of organization. He divided management functions into five parts as follows: 

  • Forecasting and planning
  • Organizing
  • Command
  • Coordination
  • Control

Thus, according to Fayol, management means to forecast and plan, to organize, to command, to co-ordinate and to control. The management was defined as the process of performing these functions. It may be noted that the present pattern of management functions follows broadly the lines set by Fayol. 
Fayol emphasized that management involved the application of certain skills, which could be acquired by persons on the basis of systematic instructions and training. Once acquired the skills could be applied to all kinds of institutions including church, schools, political as well as industrial organization.


Q.2. Describe the basic principles of management? 
Principles of Management

Fayol made a distinction between "elements of management" and "general principles of management". Besides a systematic analysis of the management process and management functions, Fayol formulated a set of fourteen principles as guidelines for implementing the process of management. 
These principles may be listed as follows: 

1. Division of Work 
In any organized situation, work should be divided into compact jobs to be assigned to individuals. This applies to managerial work and non-managerial work. Division of labour facilities specialization and improves efficiency, if it is done within reasonable limits. 

2. Authorities and Responsibility 
The authority is the official right to a manager to manage people and things. Authority of a manager goes hand in hand with the responsibility for effective results. In other words, there should be parity or balance between authority and responsibiliy vested in a managerial position. 

3. Discipline 
Discipline is defined as observance of diligence and respect for seniors and rules and regulations. Managers as leaders of their work groups should enforce discipline throughout the organization. Fayol declares that discipline requires good superiors at all levels. He emphasized the need of discipline among the personnel for the smooth running of organization. He advocated penalties to prevent in violation. 

4. Unity of Command 
It means that a subordinate in an organization should be under direct supervision of a single from whom he should get instructions and to whom be should be accountable. In other words, every employee should have only one boss. If a subordinate has more than one boss, to that case conflict and condition in authority and instructions of general bosses would result. 

5. Unity of Direction 
Fayol advocates one head, one plan for a group of activities having same objective. In other words, a set of activities having the same objective should be under the direction of a single manager. Similarly, there should be one plan of action for such a set of activities because the objective is the same. This principle promotes smooth coordination of activities, efforts and resources. 

6. Subordination of Individual Interest to Group Interest 
The collective good and common interest of the organization should prevail over the narrow, sectional and self-interest of its members of an organization for the welfare of both the organization and the members. 

7. Remuneration of Personnel 
Remuneration as well the methods of payment in an organization should be fair so as to afford maximum satisfaction both to the organization and its employees. 

8. Centralization 
According to Fayol, every thing which reduces the importance of subordinates role is centralization and that which increases it, is decentralization. In his opinion, the question of centralization and optimum degree in particular case. There should be a proper combination and decentralization in an organization based on a consideration of several internal and external factors. 

9. Scalar Chain 
Fayol defines the scalar chain as the chain of superiors ranging from the ultimate authority (i.e. top authority) to the lowest ranks. It is also known as hierarchy of management. Every communication should follow the prescribed route, i.e. the proper channel. Authority relationships are said to be scalar when subordinates report to their immediate superiors and when their superiors, in turn, directly report as subordinates, to their superiors. 
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10. Order 
Order relates to both persons and things. It means a systematic arrangement of materials and systematic placement of people in the organization. In material order, everything should be in its proper place and there should be a place for everthing. For social order there should be a place assigned to each employee, and each employee should be in the place assigned. The right man in the right place is the ideal here. 

11. Equity 
Equity means combination of fairness, kindliness and justice. Equity motivates the workers to perform their duties. Besides, it promotes a friendly atmosphere between superiors and subordinates. 

12. Stability of Tenure of Personnel 
Management should strive to minimize employee turnover (i.e. changes in staff). In other words efforts should be made to achieve relative stability and continuity of tenure of the personnel. This could be achieved by attractive remuneration and honourable treatment of personnel. Stability and continuity of personnel promote teamwork, loyalty and economy. 

13. Initiative 
It refers to the freedom to propose a plan and execute it. Management should encourage subordinates to take desirable initiative in thinking out plans and executing them. Entending opportunities and freedom to contribute their best could do this. 

14. Esprit de corps 
Esprit de corps means the spirit of loyalty and devotion, which unites the members of a group or society. It is a sense of respect and belongingness to one's organisation. This principle stresses the need for team spirit, cordial relations, and co-operations among the personnel. 
It is to be noted that Fayol made is clear that he had no intention to close the list of principles or make them inflexible. 


Critical Evaluation

Fayol's administrative or process or functional theory of management may be evaluated as follows: 

(A) Contribution of Fayol's Work 
Fayol's major contribution was to identify management as a separate set of skill or functions performed by managers in the organizations. The skills and abilities required for effective management were stated to be dependent on the manager's positions at different levels of organization. Fayol pointed out that administrative or managerial skills were more essential for higher-level manager, whereas technical skills and abilities were required more of the lower levels. 

Fayol was the first thinker who emphasized, for the first time the necessity of formal education and training in management. He was the person who provided a set of means (i.e. planning, organizing, commanding, coordinating and controlling) for understanding the management process. He also provided principles for implementing this process. 
He provided conceptual framework for analyzing the management process and emphasized that management was a separate, distinct activity. 
Management as a body of knowledge gained immediately from Fayol's analysis of management skills of universal relevance and the analysis of the principles of general management. 

(B) Limitations or Weaknesses 
Fayol's administrative theory of management is criticized on the following grounds. 

1. It is too formal as Fayol divides "business activities" into six categories, and their management into five functions and the implementation of these functions with the help of fourteen principles. 
2. Some critics call this theory as inconsistent, vague and inadequate. 
3. It does not pay adequate attention to workers. It has pro-management bias. 
4. Jernert Simon calls Fayol's principles as proverbs, comparable to folklore and folk wisdom. 


Conclusion

Inspite of several criticisms of Fayol's work, his theory of managerial functions still exerts considerable influence on the practice of management as well as the teaching of this subject world over. 
It may be also noted that when combined together the scientific management approach and the functional approach are called classical school or classical theory of management or classical approach to management.



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