Class 12 Business Studies Notes Chapter 1 (Nature and significance of Management) – Business Studies-I Book
Alright class, let's delve into the first chapter, 'Nature and Significance of Management'. This is a foundational chapter, and understanding these concepts well is crucial, not just for your board exams but also for various government exams where general management principles are often tested.
Chapter 1: Nature and Significance of Management - Detailed Notes
1. Concept of Management
- Definition: Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.
- More simply put: It's the process of getting things done with the aim of achieving goals effectively and efficiently.
- Key Terms:
- Process: Refers to the primary functions of management (Planning, Organising, Staffing, Directing, Controlling - POSDC).
- Effectiveness: Doing the right task, completing activities, and achieving goals. It's concerned with the end result. (Example: Producing the targeted 1000 units, regardless of cost).
- Efficiency: Doing the task correctly and with minimum cost and resource wastage. It's concerned with cost-benefit analysis. (Example: Producing 1000 units using fewer resources like labour, materials, money).
- Relationship between Effectiveness and Efficiency: Both are equally important. Being effective but inefficient means goals are met but at a high cost. Being efficient but ineffective means costs are low, but goals aren't achieved. Management aims for high effectiveness and high efficiency.
2. Characteristics/Features of Management
- Goal-Oriented Process: Management unites the efforts of different individuals towards achieving organizational goals. The goals should be simple and clearly stated.
- Pervasive: Management activities are universal. They are applicable to all types of organizations (economic, social, political), at all levels, and in all departments.
- Multidimensional: Management is complex and involves three main dimensions:
- Management of Work: Translating work in terms of goals to be achieved and assigning the means to achieve them (e.g., planning, organizing, controlling production targets).
- Management of People: Dealing with employees as individuals with diverse needs and behaviour, and also as groups. It involves staffing, directing, motivating, and team building. Human resources are an organization's greatest asset.
- Management of Operations: Managing the production process which transforms inputs (materials, technology) into desired outputs (goods/services). It links management of work and management of people.
- Continuous Process: Management functions (POSDC) are performed continuously by all managers simultaneously. It's an ongoing series of functions.
- Group Activity: Management involves coordinating the efforts of diverse individuals working together towards common organizational goals. It requires teamwork.
- Dynamic Function: Management must adapt itself and its goals according to the changing environment (social, economic, political, technological, legal). Successful organizations adapt.
- Intangible Force: Management cannot be seen but its presence can be felt through the results like orderliness, achievement of goals, employee satisfaction, etc.
3. Objectives of Management
Management seeks to achieve certain objectives, which can be classified as:
- Organisational Objectives (Economic Objectives): Aimed at the prosperity and growth of the organization. Key objectives are:
- Survival: Earning enough revenues to cover costs.
- Profit: Essential for covering costs, risks, and ensuring continued successful operation.
- Growth: Increasing sales volume, number of employees, capital investment, product range, etc., indicating success.
- Social Objectives: Involve the creation of benefits for society. This includes:
- Using environmentally friendly methods of production.
- Providing quality products/services at reasonable prices.
- Generating employment opportunities (especially for disadvantaged sections).
- Contributing to community development (e.g., schools, healthcare).
- Avoiding unfair trade practices.
- Personal Objectives (Individual Objectives): Related to satisfying the diverse needs of the employees within the organization. This includes:
- Competitive salaries and perks.
- Good and healthy working conditions.
- Opportunities for personal growth and development (training, promotion).
- Peer recognition and social interaction.
- Job security.
- Note: Organisational goals and personal goals should be harmonized.
4. Importance of Management
Management is essential for the success of any organized activity. Its importance lies in:
- Achieving Group Goals: Management directs individual efforts towards common organizational objectives.
- Increases Efficiency: Reduces costs and increases productivity through better planning, organizing, staffing, directing, and controlling.
- Creates a Dynamic Organisation: Helps people adapt to changes in the environment, ensuring the organization's survival and growth.
- Achieving Personal Objectives: Motivates and leads employees in a manner that helps them achieve personal goals while contributing to organizational objectives.
- Development of Society: Contributes to society by creating employment, providing quality goods/services, adopting new technology, and contributing to GDP growth.
5. Nature of Management: As an Art, Science, and Profession
- Management as an Art:
- Art: Skillful and personalized application of existing knowledge to achieve desired results.
- Features of Art present in Management:
- Existence of Theoretical Knowledge: Management has well-defined concepts and principles derived from experiences and experiments (e.g., Marketing, Finance, HR principles).
- Personalised Application: Managers apply theoretical knowledge differently based on their unique skills, creativity, experience, and personality.
- Based on Practice and Creativity: Management skills improve with practice. Managers develop their own unique styles and innovate.
- Conclusion: Management is an art as it requires personalized application, creativity, and practice.
- Management as a Science:
- Science: Systematized body of knowledge that explains general truths or the operation of general laws.
- Features of Science vs. Management:
- Systematised Body of Knowledge: Management has its own theory and principles based on cause-and-effect relationships (e.g., Principle of Division of Work). This feature is present.
- Principles Based on Experimentation: Management principles are derived from observation and repeated experimentation, but mostly in human behaviour, which is unpredictable. So, management principles are not as exact as scientific principles. This feature is present but management is considered an inexact or social science.
- Universal Validity: Scientific principles have universal validity. Management principles are also universal to an extent but need modification according to the given situation. Their application is context-dependent. This feature is present but modified.
- Conclusion: Management is not a pure science like Physics or Chemistry, but it can be considered an inexact or social science.
- Management as a Profession:
- Profession: An occupation backed by specialized knowledge and training, with entry restricted through examination or education, governed by a code of conduct and representative body.
- Features of Profession vs. Management:
- Well-defined Body of Knowledge: Management has a well-defined body of knowledge taught in institutions. This feature is present.
- Restricted Entry: Entry to management is not strictly restricted by examination or degree like Medicine (MBBS) or Law (LLB). Anyone can be called a manager regardless of academic qualification. This feature is not strictly present.
- Professional Association: Several management associations exist (like AIMA in India), but membership is not mandatory for managers. This feature is present but not fully established.
- Ethical Code of Conduct: AIMA has prescribed a code of conduct, but it lacks universal statutory backing for managers. This feature is present but not fully enforced.
- Service Motive: Basic motive of a profession is service. Management aims at profit maximization, though increasingly focusing on social objectives too. This feature is present but profit motive often dominates.
- Conclusion: Management does not meet all the exact criteria of a profession yet, but it is rapidly moving towards professionalization.
6. Levels of Management
These refer to the hierarchical arrangement of managerial positions in an organization.
- Top Level Management:
- Consists of: Board of Directors, Chairman, CEO, CFO, President, Vice-President, General Manager.
- Functions: Determine overall objectives and strategies, frame policies, coordinate activities of different departments, responsible for welfare and survival of the organization, liaise with the outside world (government, suppliers, media). They focus on long-term planning.
- Middle Level Management:
- Consists of: Division Heads, Departmental Managers (e.g., Production Manager, Sales Manager, Finance Manager), Plant Superintendents.
- Functions: Act as a link between top and lower-level management, interpret policies framed by top management, assign duties to subordinates, motivate employees, ensure necessary personnel in their department, cooperate with other departments. They focus on departmental plans.
- Operational/Supervisory/Lower Level Management:
- Consists of: Foremen, Supervisors, Section Officers, Superintendents.
- Functions: Directly oversee the efforts of the workforce, interact with actual workers, ensure quality output, maintain discipline, pass worker grievances to middle management, ensure safe working conditions, responsible for boosting the morale of workers. They focus on day-to-day operational planning.
7. Functions of Management (POSDC)
These are the basic activities performed by every manager:
- Planning: Deciding in advance what to do, how to do it, when to do it, and who is to do it. Bridges the gap between where we are and where we want to go. Involves setting objectives and developing appropriate courses of action.
- Organising: Identifying and grouping activities, assigning duties, establishing authority-responsibility relationships, and allocating resources required to carry out a specific plan. Creates the organizational structure.
- Staffing: Finding the right people for the right job. Involves recruitment, selection, placement, training, and development of personnel. Filling and keeping filled, the positions in the organization structure.
- Directing: Leading, influencing, and motivating employees to perform the tasks assigned to them. Involves supervision, communication, leadership, and motivation. It initiates action.
- Controlling: Monitoring organizational performance towards the attainment of organizational goals. Involves establishing standards of performance, measuring actual performance, comparing it with standards, and taking corrective action if deviations are found.
8. Coordination - The Essence of Management
- Definition: Coordination is the process of synchronizing the activities of different departments and individuals towards the achievement of common organizational goals. It binds all other functions of management.
- Nature/Characteristics of Coordination:
- Integrates Group Efforts: Unifies diverse interests into purposeful work activity.
- Ensures Unity of Action: Provides a common focus or direction to the efforts of different individuals and departments.
- Continuous Process: Needed at all levels and in all functions, on an ongoing basis.
- Pervasive Function: Required in all types of organizations and at all levels.
- Responsibility of All Managers: Top level coordinates overall plans, middle level coordinates departmental activities, lower level coordinates workers' activities.
- Deliberate Function: Coordination doesn't happen automatically; it requires conscious effort by managers. Cooperation (willingness to help) helps coordination, but coordination is a deliberate management function.
- Importance of Coordination:
- Growth in Size: As organizations grow, coordination is needed to integrate the efforts of more people and activities.
- Functional Differentiation: Departments tend to focus on their own objectives; coordination links their activities for overall organizational goals.
- Specialisation: Specialists often focus narrowly; coordination is needed to reconcile their different approaches and opinions for the benefit of the organization.
Why is Coordination called the Essence of Management?
Coordination is not a separate function but the underlying force that connects all other managerial functions (Planning, Organising, Staffing, Directing, Controlling). It is needed while performing all these functions.
- Planning needs coordination between master plans and departmental plans.
- Organising needs coordination between authority, responsibility, and resources.
- Staffing needs coordination between skills required and people assigned.
- Directing needs coordination between orders, instructions, suggestions, and motivation.
- Controlling needs coordination between standards set and actual performance achieved.
Multiple Choice Questions (MCQs)
-
Management is essential for organisations which are:
a) Non-profit organisations
b) Service organisations
c) Social organisations
d) All of the above -
Successful organisations do not achieve goals by chance but by following a deliberate process known as:
a) Planning
b) Co-ordination
c) Controlling
d) Management -
Efficiency is concerned with:
a) Doing the right thing
b) Doing things right
c) Achieving end results
d) Meeting targets on time -
Which of the following is NOT a characteristic of Management?
a) It is a goal-oriented process
b) It is pervasive
c) It is a rigid process
d) It is a group activity -
Survival, Profit, and Growth are essential targets for any business. These fall under which objective of management?
a) Social Objectives
b) Personal Objectives
c) Organisational Objectives
d) Community Objectives -
Identifying the type of management as an art involves which feature?
a) Principles based on experimentation
b) Universal validity
c) Personalised application
d) Systematised body of knowledge -
Which level of management is responsible for interpreting the policies framed by the top management?
a) Operational Level
b) Middle Level
c) Top Level
d) Supervisory Level -
Which function of management involves monitoring organisational performance towards the attainment of organisational goals?
a) Planning
b) Organising
c) Directing
d) Controlling -
Coordination is considered the essence of management because:
a) It is a separate function of management.
b) It is the primary goal of management.
c) It is inherent and required in all management functions.
d) It is the responsibility of only the top-level managers. -
The function of management related to placing the right person at the right job is:
a) Planning
b) Organising
c) Staffing
d) Directing
Answer Key for MCQs:
- d
- d
- b
- c
- c
- c
- b
- d
- c
- c
Remember to focus on the keywords, definitions, and distinctions between concepts like effectiveness vs. efficiency, the different objectives, levels, and functions. Understanding why management is considered an art, science, and profession, and the role of coordination is also very important. Good luck with your preparation!