Nature and Significance of Management
In this video series, I will be covering the Business Studies subject as per the CBSE Class XII syllabus, and we will be following the standard NCERT Class XII Business Studies textbook. This is video number 1, and in this, I will be discussing Chapter 1 – Nature and Significance of Management.
Learning Objectives
Before we start any chapter, we should first understand what the learning objectives are. The objectives will help us focus on the important areas of the chapter.
- Understand the concept of management and the meanings of the terms Effectiveness and Efficiency, and their importance in management.
- Explore the objectives and importance of management.
- Discuss why management is a science, an art, and a profession.
- Understand the different levels of management: top, middle, and lower levels.
- Briefly talk about the different management functions: Planning, Organizing, Staffing, Directing, and Controlling.
- Discuss the concept and characteristics of coordination and its importance.
Introduction
The chapter starts with two examples.
Example 1: Tata Steel
The first one is about Tata Steel, founded in 1868 by Jamsetji Nusserwanji Tata. It has grown into a global business conglomerate that operates in over 100 countries. Several famous international brands, such as Jaguar and Land Rover, are owned by the Tata Group.
Jamsetji Tata was instrumental in the planning and establishment of Jamshedpur, which was India’s first planned city. One of the reasons for Tata’s success is the values and principles followed by all Tata Group companies, listed in the Tata Code of Conduct.
The Tata Group is used here as an example of how effective and efficient management and coordination at all levels are essential in building, sustaining, and profitably running such huge enterprises. This statement is true for any large company or corporate group like Reliance, Infosys, L&T, etc.
Example 2: Namchi Designer Candles
The next example is Namchi Designer Candles, started by Smita Rai, who lives in Namchi, Sikkim. She was originally making wax toys and candles as a hobby. She noticed that many women in her district were poor and jobless, and she wanted to teach them some skills to help them earn a livelihood.
While she had the skills required to make the products, she did not have all the skills, finances, and other resources required to set up an organization and teach her skills to large groups of women.
In 2012, she met Mr. Abhishek Lama, who was working as a Branch Manager of the North Eastern Development Finance Corporation (NEDFi). Primarily, NEDFi provides financial assistance to micro, small, medium, and large enterprises in the North Eastern Region of India. Apart from providing financial assistance, NEDFi also brought in the professional management skills required to help Ms. Smita Rai establish Namchi Designer Candles as a venture to provide opportunities for rural women.
Namchi Designer Candles has been running successfully and has won several awards over the years. Ms. Smita Rai continues to manage the day-to-day operations of the venture, which requires planning, organizing funds, recruiting workers, communication, meeting customers, etc.
So, the work of a manager consists of different activities or functions aimed at achieving the goals of the organization. These two examples, Tata Group and Namchi Designer Candles, are used to show how any successful organization—be it a big business or a small venture—achieves its goals by following a deliberate process called Management. Therefore, studying and understanding the concepts of management is very important.
Concept of Management
In the textbook, there are three definitions of the term Management taken from three different books. Understanding these definitions is important, and memorizing them can help in your exams.
- Harold Koontz & Heinz Weihrich: “Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.”
- Robert Trewatha & Gene Newport: “Management is defined as the process of planning, organising, actuating and controlling an organisation’s operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives.”
- Robert Kreitner: “Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment.”
These definitions outline many of the important topics that we will be covering in this subject, including coordination, effectiveness, efficiency, planning, organizing, staffing, directing, and controlling.
Understanding Management
In an organization, there is a group of people who are all doing different tasks but are working towards a common purpose. In a business, the purpose will be to grow and generate profits. The management takes charge of coordinating the efforts of all the people and guiding them towards the common goal.
Management is the process of getting things done with the aim of achieving goals effectively and efficiently. It is not just one function but a series of interrelated functions—planning, organizing, staffing, directing, and controlling—which are covered in later chapters.
Effectiveness vs. Efficiency
What are these Effectiveness and Efficiency? What is the difference between them?
- Effectiveness: Refers to getting the job done; completing the required task.
- Efficiency: Refers to getting the job done with minimum resources.
Example
If three persons are asked to dig one hole each to plant three trees:
- The first person hires a JCB and digs a hole in one scoop. (Effective but not Efficient)
- The second person buys a shovel and digs a hole in 10 minutes. (Effective and Efficient)
- The third person uses a spoon and spends more than an hour to dig a hole. (Effective but Inefficient)
All three have been effective because they completed the job. However, the first person was not efficient due to high costs, and the third person was inefficient due to wasted time. The second person was both effective and efficient.
Balancing Effectiveness and Efficiency
Management has to consider factors like cost, time, profit, and competition to balance between efficiency and effectiveness. Both are important and are two sides of the same coin.
| Effectiveness | Efficiency |
|---|---|
| Doing the right things. | Doing things in the right way. |
| Achieving desired goals. | Maximizing output with minimum input. |
| Setting goals—what should be achieved. | Deciding how to achieve those goals. |
| Important for reaching objectives. | Important for minimizing costs and resources. |
Characteristics of Management
The textbook discusses seven important characteristics of management:
- Management is Goal Oriented.
- Management is All Pervasive.
- Management is Multi-Dimensional.
- Management is a Continuous Process.
- Management is a Group Activity.
- Management is a Dynamic Function.
- Management is an Intangible Force.
1. Management is Goal Oriented
Every organization has a set of basic goals, which are the reasons for its existence. These basic goals should be simple, clear, and may also be called mission statements or vision statements. Management unites the efforts of all people in the organization and uses all available resources to work towards achieving these basic goals.
Examples
- Nike’s Goal: “To bring inspiration and innovation to every athlete in the world.”
- Bata’s Goal: “To make great shoes, accessible to everyone.”
2. Management is All Pervasive
Management is required in all types of organizations, whether they are businesses, NGOs, or informal groups. The basic activities of management—planning, organizing, staffing, directing, and controlling—are common to all organizations, although the scale may vary.
3. Management is Multi-Dimensional
Management involves managing:
- Work: The main products or services of the organization.
- People: All the people associated with the company.
- Operations: The processes through which the product or service is delivered.
This can also be referred to as managing People, Process, and Product (PPP).
4. Management is a Continuous Process
Management is an ongoing process involving planning, organizing, staffing, directing, and controlling. It never ends as long as the organization is active.
5. Management is a Group Activity
Management is a collective effort. Everyone in the organization participates in management in some way, working towards achieving organizational goals.
6. Management is a Dynamic Function
Management must adapt to changes in the internal and external environment. It involves adjusting strategies and operations to meet new challenges and opportunities.
7. Management is an Intangible Force
Management cannot be seen or touched but can be felt through the success or failure of an organization. It is an invisible force that influences the performance of the organization.
Objectives of Management
The management of any organization has to work towards three types of objectives:
- Organizational Objectives
- Social Objectives
- Personnel Objectives
1. Organizational Objectives
These include:
- Survival: Ensuring the business continues to exist.
- Profit: Generating adequate returns.
- Growth: Expanding the business operations.
2. Social Objectives
These involve fulfilling social responsibilities, such as:
- Providing employment opportunities.
- Engaging in corporate social responsibility (CSR) activities.
- Example: ITC’s e-Choupal program to assist small farmers.
3. Personnel Objectives
These relate to the needs and wants of the employees:
- Safe work environment.
- Competitive salaries and benefits.
- Career growth and development.
- Recognition and job satisfaction.
Importance of Management
Management is important for the following reasons:
- Helps in achieving group goals.
- Increases efficiency.
- Creates a dynamic organization.
- Helps in achieving personal objectives.
- Helps in the development of society.
Management as an Art, Science, and Profession
Management as an Art
Management requires creativity, skill, and practice. Like an artist, a manager applies personal skills and knowledge to achieve desired results.
- Involves creativity and innovation.
- Requires experience and skill.
- Demands flexibility and adaptability.
Management as a Science
Management has an organized body of knowledge based on theories and principles developed through observation and experimentation. However, it is an inexact science because principles may not always be universally valid due to variables like culture and traditions.
Management as a Profession
Management can be practiced as a profession:
- Has a well-defined body of knowledge.
- Entry is restricted through qualifications and exams (e.g., CA, CS).
- Regulated by professional associations (e.g., ICAI, ICSI).
- Enforces ethical codes of conduct.
However, not all managers are professionally trained, and general management does not require specific qualifications, so management is not always considered a full profession.
Levels of Management
Management can be classified into three levels:
- Top-Level Management
- Middle-Level Management
- Lower-Level Management
1. Top-Level Management
Includes titles like Chairman, CEO, COO, CFO, President, Vice President. They set the goals of the entire organization and decide the high-level strategy.
2. Middle-Level Management
Includes Divisional Managers, Regional Managers, Branch Managers, Plant Managers. They implement and manage strategies developed by top management and assign duties and responsibilities to teams.
3. Lower-Level Management
Includes Foremen, Supervisors, Team Leaders. They interact directly with workers, manage day-to-day activities, and ensure that work is being done as per plan.
Functions of Management
The main functions of management are:
- Planning
- Organizing
- Staffing
- Directing
- Controlling
These functions are interrelated and are covered in detail in later chapters.
Coordination
Coordination is the essence of management, linking all functions together. It synchronizes the activities of different departments and ensures unity of action.
Characteristics of Coordination
Coordination:
- Integrates group efforts.
- Ensures unity of action.
- Is a continuous process.
- Is an all-pervasive function.
- Is the responsibility of all managers.
- Is a deliberate function.
Importance of Coordination
Coordination is important due to:
- Growth in size: Ensuring all employees work towards common goals.
- Functional differentiation: Synchronizing different departments like production, marketing, finance, etc.
- Specialization: Integrating efforts of specialists and experts.
Management in the 21st Century
New communication technology has turned the world into a global village. Boundaries and cultural differences are getting blurred. Companies can have customers in any other country across the world. Modern managers need to:
- Think globally and act locally.
- Adapt to new communication technologies.
- Develop hard skills (analysis, strategy, technology).
- Develop soft skills (people management, emotional intelligence).
Conclusion
With that, we have completed this chapter. If you have any questions or feedback, please post a comment below. I will see you in the next video.
