Class 12 Business Studies Notes
Chapter 1: Nature and Significance of Management

What is Management?

Management is an art of getting things done with and through others. Management can be defined as the process of getting things done with the aim of achieving organizational goals effectively and efficiently.

Effectiveness vs Efficiency

Characteristics of Management

1. Goal-oriented Process: It is a goal-oriented process, which is undertaken to achieve already specified and desired objectives by proper utilization of available resources.
2. Pervasive: Management is universal in nature. It is used in all types of organisations whether economic, social or political irrespective of its size, nature and location and at every level.
3. Multidimensional: It is multidimensional as it involves management of work, people and operations. Every organisation is established for doing some work like school provides education, a factory produces goods etc. The management has to ensure the participation of its people in the realisation of the organisation goal. Also, management needs to conduct the various operations such as production, sale, purchase etc.
4. Continuous: Management is not a process which can be performed once and for all, but it is a continuous process. Functions of management like planning, organising, staffing, directing and controlling continuously need to be done.
5. Group Activity: It is a group activity since it involves managing and coordinating activities of different people as a team to attain the desired objectives.
6. Dynamic function: It is a dynamic function since it has to adapt itself according to need, time and situation of the changing environment. In order to be successful, an organisation must change itself and its goals. For example, McDonalds made major changes in its ‘Menu’ to survive in the Indian market.
7. Intangible Force: Management is such a force that cannot be seen, only its presence can be felt. When the goals of an organisation are being realised in accordance with its plans, we can say that the management of the organisation is good.

Importance of Management

1. Achieving Group Goals: Management creates team work and coordination in the group. Managers give common direction to individual efforts in achieving the overall goals of the organization.
2. Increases Efficiency: Management increases efficiency by using resources in the best possible manner to reduce cost and increase productivity.
3. Creates Dynamic organization: Management helps the employees to overcome their resistance to change and adapt as per changing situation to ensure its survival and growth.
4. Achieving personal objectives: Management helps the individuals achieve their personal goals while working towards organisational objectives.
5. Development of Society: Management helps in the development of society by producing good quality products, creating employment opportunities and adopting new technology.

Management as an Art, Science, and Profession

Management as an Art

Art refers to skillful and personal application of existing knowledge to achieve desired results. It can be acquired through study, observation and experience. The features of art are as follows:

• Existence of theoretical knowledge: In every art, systematic and organized study material should be available compulsorily to acquire theoretical knowledge.
• Personalised application: The use of basic knowledge differs from person to person and thus, art is a very personalised concept.
• Based on practice and creativity: Art involves the creative practice of existing theoretical knowledge.

In management also a huge volume of literature and books are available on different aspects of management. Every manager has his own unique style of managing things and people. He uses his creativity in applying management techniques and his skills improve with regular application. Since all the features of art are present in management so it can be called an Art.

Management as a Science

Science is a systematised body of knowledge that is based on general truths which can be tested anywhere and anytime. The features of Science are as follows:

• Systematized body of knowledge: Science has a systematized body of knowledge based on principles and experiments.
• Principles based on experiments and observation: Scientific principles are developed through experiments and observation.
• Universal validity: Scientific principles have universal validity and application.

Management has a systematic body of knowledge and its principles are developed over a period of time based on repeated experiments & observations. However, since they deal with humans, their outcomes cannot be accurately predicted. Also, they cannot be called Universally valid because they have to be modified according to a given situation.

Conclusion: As the principles of management are not as exact as the principles of pure science, so it may be called an inexact science. The prominence of the human factor in management makes it a Social Science.

Management as a Profession

Profession means an occupation for which specialized knowledge and skills are required and entry is restricted. The main features of a profession are as follows:

• Well-defined body of Knowledge: All the professions are based on a well-defined body of knowledge.
• Restricted Entry: The entry in every profession is restricted through examination or through some minimum educational qualification.
• Professional Associations: All professions are affiliated to a professional association which regulates entry and frames a code of conduct relating to the profession.
• Ethical Code of Conduct: All professions are bound by a code of conduct which guides the behaviour of its members.
• Service Motive: The main aim of a profession is to serve its clients.

Conclusion: Management does not fulfill all the features of a profession and thus it is not a full-fledged profession. Anybody can proclaim to be a manager; a prescribed compulsory educational degree or license is not required. Besides, there are not any formal ethical codes which are required to be observed.

Levels of Management

“Levels of management” means different categories of managers, from the lowest to the highest, on the basis of their relative responsibilities, authority, and status.

1. Top Level Management

Consists of: Chairperson, Chief Executive Officer, Chief Operating Officer, President, Vice President or equivalent and their team.

Chief task is: To integrate and to coordinate the various activities of the business, framing policies, formulating organisational goals & strategies bearing the responsibility for the impact of activities of the business on society.

2. Middle Level Management

Consists of: Divisional or Departmental heads, Plant Superintendents and Operation Managers etc.

Main tasks are: To interpret the policies of the top management, to ensure the availability of resources to implement policies, to coordinate all activities, ensure availability of necessary personnel & assign duties and responsibilities to them.

3. Lower Level / Supervisory Level Management

Consists of: Foremen and Supervisor etc.

Main task is: To ensure actual implementation of the policies as per directions, bring workers’ grievances before the management & maintain discipline among the workers, maintain the quality of output and minimize wastage.

Functions of Management / Elements of Management

1. Planning: Implies setting goals and objectives in advance and developing a way of achieving them.
2. Organising: Is to assign duties, grouping tasks, establishing authority and allocating resources required to carry out a specific plan.
3. Staffing: Is finding the right people for the right job by following a series of steps and includes training and development.
4. Directing: Is leading, influencing and motivating employees to perform the tasks assigned to them. It includes four activities: Supervision, Communication, Leadership and Motivation.
5. Controlling: Is monitoring the organizational performance towards the attainment of the organizational goals.

Co-ordination: The Essence of Management

Coordination is to synchronise the various activities of an organisation. In the context of a business unit, the meaning of coordination is to balance its various activities (purchase, sales, production, finance, personnel etc.) so that the objective of business can be easily achieved. Lack of coordination results in overlapping, duplication, delay and chaos.

Coordination is not a separate function of management. It is the force that binds all the functions & thus, called the essence of management.

Characteristics of Coordination

1. Coordination integrates group efforts: It integrates diverse business activities into purposeful group activity ensuring that all people work in one direction to achieve organizational goals.
2. Coordination ensures unity of action: It directs the activities of different departments and employees towards achievement of common goals and brings unity in individual efforts.
3. Coordination is a continuous process: It is not a specific activity matter, it is required at all levels, in all departments till the organization continues its operations.
4. Coordination is all pervasive function: It is universal in nature. It synchronizes the activities of all levels and departments as they are interdependent to maintain organizational balance.
5. Coordination is the responsibility of all managers: It is equally important at all the Three-Top, Middle and Lower levels of management. Thus, it is the responsibility of all managers that they make efforts to establish coordination.
6. Coordination is a deliberate function: Coordination is never established by itself rather it is a conscious effort on the part of every manager. Cooperation is voluntary effort of employees to help one another. Effective coordination cannot be achieved without cooperation of group members.

Coordination is Needed in All Management Functions:

• Planning: Coordination between the master plan and departmental plan.
• Organising: Required between authority, responsibility and accountability.
• Staffing: Achieve balance between job requirement and qualities of personnel.
• Directing: Required between supervision, motivation and leadership.
• Controlling: Ensure actual result conform to expected results.

Needed at All Levels of Management

• Top level: Needs coordination to integrate activities of the organisation for accomplishing the organisational goals.
• Middle level: Coordination of the efforts of different sections and sub-sections.
• Lower level: Coordination in the activities of workers to ensure work progresses as per plans.

Need for Coordination

The reasons that bring out the importance or the necessity for coordination are:

• Growth in the size of the organisation: Results in the increase in varied quality of manpower too with varied individual aspirations. Coordination seeks to match the individual goals with the organisational goals.
• Functional Differentiation: Arising out of departmentalisation and division brings forth a motive for achievement of individual objectives, in isolation from other objectives leading to departmental clashes. Coordination seeks to iron out these variations.
• Specialisation: Can give rise to a feeling of superiority and prioritising of their zone or activities. Coordination seeks to sequence and integrate all the specialists of activities into a wholesome effort.