Chapter 02

MANAGEMENT
Course: Introduction to Business
Course Code: BSIB1101
Department of Business Studies

Image : http://www.venturesquare.net/wp-content/uploads/2014/05/business-model.jpg
Outcome 2:

Discuss the meaning of management and its functions, describe the organizational
structure of a business and its functional departments and committees, and
explain the concept of corporate governance and social responsibility.

• Contents:
• Meaning of Management & Characteristics : Pages 169-172
• Nature of Management : Pages 173-174
• Levels of Management : Pages 175 - 178
• Functions of Management : Pages 179-182
• Organizing as a structure : Pages 235-238
• Organization charts : Pages 242 -245
• Formal and Informal organization Structure : Page 241
• Social responsibility of Business : Pages 33-43
Essential Reading
• Louis E. Boone and David L. Kurtz , Contemporary Business.
(8th Edition,. McGraw-Hill: Boston.
• Les Dlabay, Ed.D, James L. Burrow, Steven A. England,
Introduction to Business, (6th Edition), Cengage Learning,
• Pride, Hughes, Kapoor, Foundations of Business, , (4th Edition),
Cengage Brain
• Recommended Reading: ProQuest Resource
• Rao, P. Subba, and Hari Shankar Pande. Principles and Practice
of Management, Global Media, 2009. ProQuest Ebook Central,
http://ebookcentral.proquest.com/lib/momp/detail.action?do
cID=3011383.Created from momp on 2019-01-27 00:08:25.
Contents
1. Meaning & Definition of Management
2. Characteristics of Management
3. Nature of Management
4. Levels of Management
5. Functions of Management
6. Organizational Structure
7. Organizational Charts
8. Formal & Informal Organizations
9. Social Responsibilities of Business
1. MEANING & DEFINITION OF MANAGEMENT

Meaning of Management
§ The term 'management' refers to a set of functions, processes and techniques designed to get things done
in an organized setting through the efficient utilization of resources to achieve organization goals .

Definitions of Management
§ “Management is an art of knowing that what is to be done and seeing that it is done in the best possible
manner".
F. W Taylor
§ “Management is to forecast, to plan, to organize, to direct, to coordinate and to command others activities".
Henri Fayol
§ "Management is the art of getting things done by others"
1. MEANING & DEFINITION OF MANAGEMENT
Historical Thinking
"Management is the art of getting things done by others"

Critical Evaluation
§ A careful analysis of this statement, however, would point out its inadequacies(shortages/lack) and
fallacies(mistakes) about management, especially the following:

(a)that managers do not have any work earmarked for them in the organization;
(b)that in order to get things done, managers use or may use objectionable methods and unethical practices;
(c)that things get done automatically, without utilizing organizational resources.

Modern Thinking
§ Management is a process of getting things done by performing functions such as planning, organizing, staffing,
directing and controlling.

§ Management is a force in an organization which directs and coordinates the activities of its members in a
purposeful manner.
2. CHARACTERISTICS OF MANAGEMENT

1. Management is a process
2. Management is goal-oriented
3. Management is a social process
4. Management involves use of authority
5. Management is multi-disciplinary
6. Management is a combination of science and art
7. Management is a dynamic(active) process
8. Management is a continuous process
9. Management involves efficient utilization of resources
10. Management knowledge has universal application
3. NATURE OF MANAGEMENT
Management as a Science
§ As a science, management has the following characteristics :

a) Management has a body of systematized knowledge consisting of well-defined

concepts, principles, and techniques with-wide applications.

b) Management knowledge has been developed and formulated on the basis of

observation, experimentation, research and analysis.

c) Management knowledge is scientific in nature because it is based on cause and-

effect relationship.
3. NATURE OF MANAGEMENT
Management as a Art

§ As an art, the knowledge of management has the following characteristics:

a) Management knowledge is not abstract(theoretical) in nature. It has practical

application. The concepts, principles and techniques of management are used to solve
problems that arise in an organization.

b) Application of management knowledge calls for innovativeness and creativity on the

part of a manager in order to get better results and higher efficiency.

c) Management knowledge is considered to be an art because, in many situations, the

theoretical knowledge of management may be inadequate and irrelevant to solve a
practical problem.
4. LEVELS OF MANAGEMENT
Level of Management
§ A level of management determines the amount of authority and status enjoyed by managers at that level of
organization.
§ As one moves upwards in the organization, the amount of authority and status of a manager increases and the
manager plays more important a role and makes valuable contribution for achieving objectives.

Smaller Organization
§ Managerial positions are kept at two levels:

1. Functional level : Objectives are determined, policies and plans are made, and course of action is developed.
2. Operative level : Mainly concerned with implementation of plans and carrying out courses of actions.

Big Organization

§ Managerial positions are kept at three levels:

1. Top-level
2. Middle-level
3. Lower-level (or supervisory-level).
4. LEVELS OF MANAGEMENT
Top-level Management
§ It consists of Board of Directors, Managing Director, Chief Executive Officer (CEO) and General Manager.
§ The top-level managers enjoy higher status and more authority, and, at the same time, are directly accountable
for achieving organizational goals.

Functions:
1. They make corporate plan for the whole organization.

2. They decide upon the important matters and issues which directly affect profitability, survival, development
and competitive strength of the organization.

3. They determine objectives for the organization as a whole.

4. They exercise overall control over each and every activity being performed in the organization.

5. They design structure of the organization and create various positions in it.

6. They select key officials and executives for the organization.

4. LEVELS OF MANAGEMENT
Middle -level Management
§ The middle level management consists of departmental managers, deputy and assistant managers, administrative
heads, etc.

§ Middle level managers are connecting links between higher and lower levels.

Functions:
1. To prepare departmental plans covering all departmental activities within the framework of corporate plan.

2. To determine departmental goals and to decide about ways and means of achieving them, and thereby contributing
towards the overall objectives of the organization.

3. To perform managerial functions of planning, organizing, staffing, directing and controlling in their respective
departments.

4. To issue detailed orders and instructions for lower level managers, and coordinate and control activities being
performed in different work units at lower levels of organizational hierarchy.
4. LEVELS OF MANAGEMENT
Lower -level Management
§ This level consists of first-line supervisors, inspectors, section officers, etc.
§ They are in direct touch with 'frontline workers' or 'core workers' such as operators, assemblers, salesmen,
clerks, etc.

Functions:
1. Supervising /Getting work performed by the rank-and-file people.
2. Deciding the work time-table.
3. Giving orders and instructions to workers for their work duties.
4. Maintaining team spirit among workers for better inter-personal relations.
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5. FUNCTIONS OF MANAGEMENT
Main Functions
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling
5. FUNCTIONS OF MANAGEMENT
1. Planning
§ Planning is a primary function of management.

§ All other functions of management are based on it.

§ To get things done, a manager has to plan activities.

§ Through the process of planning, a manager decides:

§ what is to be done,

§ how it is to be done,

§ when and by whom it is to be done, etc.

5. FUNCTIONS OF MANAGEMENT
2. Organizing
§ It is a process of establishing working relationships among employees of the organization.

§ In the process of organizing, work is assigned to employees, they are made responsible for doing it, authority
is delegated, and the relationship of superior and subordinate is created throughout the organization.

Activities

1. Determination of various activities which are essential for achieving objectives of the organization.

2. Dividing and sub-dividing these activities into small jobs and tasks.

3. Grouping these jobs and tasks into identifiable groups on the basis of common features.

4. Creation of various departments and assigning these groups to them.

5. Delegation of authority to the respective departments.

6. Coordination of the functioning of all departments for achieving objectives.

5. FUNCTIONS OF MANAGEMENT
3. Staffing
§ Once plans have been made and the structure of organization has been designed, then a manager makes all necessary
arrangements for filling various positions created in the structure of organization.

§ Staffing is mainly concerned with an effective procurement of human resources and managing them properly.

§ Staffing is regarded as a unique and very important function because it is only through human force that all other
resources of the organization are utilized optimally.

Activities

1. Undertaking manpower planning and determining quantity and quality of human force needed in the organization.

2. Making necessary arrangements for procuring required manpower through recruitment and selection.

3. Formulating and implementing suitable personnel policies for retaining people in the organization for a longer period
of time.

4. Developing manpower to its maximum by providing training and conducting development programs.
5. FUNCTIONS OF MANAGEMENT
4. Directing
§ Directing involves guiding, leading and motivating subordinates so that they contribute towards achieving
organizational objectives.

§ Communication, motivation and leadership are the essential elements of directing function.

Activities

1. Issuing orders and instructions regarding the work to be performed by subordinates.

2. Guiding, counseling and educating them and telling them the right method of doing the given job.

3. Supervising the work of employees on a regular basis.

4. Maintaining discipline among employees and rewarding those who perform their jobs efficiently.

5. Motivating and inspiring subordinates to follow given orders and instructions so that they perform their work
responsibilities in a satisfactory manner.
5. FUNCTIONS OF MANAGEMENT
5. Controlling
§ The controlling function of management involves comparison between the actual work
performance and the planned standards, and taking corrective steps when there is a difference
between the two.

Activities

1. Determining standards of performance for the subordinates.

2. Measuring actual performance when subordinates complete assigned job.
3. Comparing actual performance with standards so as deviations. to discover
4. Finding out causes responsible for creating deviations and to study and analyze them.
5. Taking corrective measures in order to bring actual performance closer to standards.
6. ORGANIZATIONAL STRUCTURE
Meaning
§ An organization structure is the structural framework of all positions in a
set-up.
§ Each position has a set of tasks, responsibilities, and authority.
§ Each task is inter-related, and the collective performance of all tasks
by different position holders enables the achievement of
organizational goals.

§ Thus, an organization structure refers to a network of authority and

responsibility relationships by showing who reports to whom and for what
in a set-up to facilitate realization of common goals.

§ An organization structure is a mix of vertical and horizontal positions.

1. Horizontal positions : arise on account of assignment of activities among

various departments.
2. Vertical positions : arise on account of delegation of authority among
employees, from higher levels to lower levels.
6. ORGANIZATIONAL STRUCTURE
Characteristics & Elements
Characteristics

1. Network of activities.
2. Authority-responsibility structure
3. Differentiation and Integration

Elements of Organization

1. Activities.
2. Authority
3. Coordination
4. Environment
5. Objectives and plans.
6. ORGANIZATIONAL STRUCTURE
Features – Good Organizational Structure
1. Clear line of authority
§ A good organization structure clearly specifies the activities to be performed by different people, and the amount of authority
granted to them for this purpose.
2. Adequate delegation of authority
§ A good organization structure ensures parity between authority and responsibility.
§ Authority in excess of responsibility leads to its misuse.
§ When responsibility is more than the authority granted, it leads to non-performance or low-performance of work.
3. Less managerial levels.
§ A good organization structure permits efficient flow of communication and ensures coordination without much
inconvenience.
§ This is greatly facilitated if there are less number of levels of management in the organization.
4. Span of management
§ Span of management refers to a given number of subordinates that manager can effectively supervise.
5. Simple and flexible
§ A good structure is simple to understand and operate, and at the same time flexible enough to accommodate the requirements
of changing environment.
7. ORGANIZATIONAL CHARTS
Meaning
§ An organization chart is a diagrammatic representation of the various aspects of an organization
structure including :
§ job titles, lines of authority, major positions,
§ work-flow in various departments and their units,
§ reporting relationships, and official channels of communication.

§ An organization chart is generally prepared by using :

§ boxes (showing activities performed in the organization and the names and titles of people
performing those activities)
and
§ lines (showing the relationship among the people and functions and indicating official chain
of command and channels of communication).
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7. ORGANIZATIONAL CHARTS
Patterns of Presentation
01. Vertical Charts

§ Vertical charts show the organization structure

in a pyramid form.
§ The lines of command flow from top to the
bottom (i.e., vertically).
§ The conventional organizational charts are
arranged in vertical form, and therefore, they
are also known as 'top-to-bottom' charts.
7. ORGANIZATIONAL CHARTS
Patterns of Presentation
02. Horizontal Charts
• For all practical purposes, horizontal charts
are similar to vertical charts.

• The only difference is that horizontal charts

show the arrangement of functions and
positions with the lines of command flowing
horizontally, i.e., from left to right.

• This is the reason that horizontal charts are

also known as 'left-to-right' charts.
7. ORGANIZATIONAL CHARTS
Patterns of Presentation
03. Circular Charts
§ These charts show the structure of an
organization through the use of circles.

§ The top level of organization is shown at the

center of the chart, surrounded by a series of
outwardly moving circles to show middle
and lower levels respectively.

§ Circular charts are also known as concentric

charts.
8. FORMAL AND INFORMAL ORGANIZATIONS
Formal Organizations
§ A formal organization structure comes into existence by performing various activities in the
organizing process.

§ A formal organization, thus, is consciously planned and deliberately (purposely/intentionally)

designed.

§ It is based on superior-subordinate relationships which are created by assignment of work and

delegation of authority.

Informal Organizations

§ Informal organization may be defined as a network of personal and social relations, arising of
communication and behavioral tendencies in the course of functioning of a formal structure of
organization.

§ Managers have not direct control on informal groups.

§ However, informal organization does affect the functioning of formal organization.

9. SOCIAL RESPONSIBILITIES OF A BUSINESS

§ The concept of 'Social Responsibility of Business' includes responsibilities towards itself, shareholders, employees, other
business firms, government, customers/consumers, creditors and the society.

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SOCIAL RESPONSIBILILTIES OF BUSINESS

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9. SOCIAL RESPONSIBILITIES OF A BUSINESS
RESPONSIBILITIES TOWARDS CONSUMERS/CUSTOMERS

§ Consumer satisfaction is the ultimate aim of all economic activity.

• This includes:

1. the goods must meet the needs of the consumers of different classes, tastes and the
purchasing power;
2. they must be reasonably priced, be of a dependable quality and of sufficient variety;
3. the sale of such goods must be followed by after sales service to ensure advice, guidance
and maintenance;
4. there should be a fair and wide spread distribution of goods and services among all the
sections of consumers and community;
9. SOCIAL RESPONSIBILITIES OF A BUSINESS
RESPONSIBILITIES TOWARDS EMPLOYEES

§ The management should develop its administration in such a way so as to promote a spirit of
cooperative endeavor between employers and employees.
§ The cooperation of workers can be won by creating conditions in which workers are enabled to
put forward their best efforts in the common task as free men.

This means recognition:

1. of the workers' right to a fair wage;
2. of the right to participate in decisions affecting their working life;
3. to membership of the trade union; to collective bargaining; and to the right to strike.
9. SOCIAL RESPONSIBILITIES OF A BUSINESS
RESPONSIBILITIES TOWARDS OWNERS/SHAREHOLDERS

§ Management's first duty is to see that enterprise is stable, enterprising and actively engaged in
accomplishing its objectives.
§ It would then be capable of providing those who commit their capital to it with such a fair and
adequate reward for risk taken.

The expectations of these types of owners are:

1. a fair and reasonable return on the capital invested by them;

2. a part in profit, if the Memorandum so specifies, in the shape of profit-sharing or bonus payment
schemes;
9. SOCIAL RESPONSIBILITIES OF A BUSINESS
RESPONSIBILITIES TOWARDS INTER-BUSINESS

§ The social responsibilities of business include a healthy co-operative business relationship between
different businesses.
§ Businessmen must resist unfair and unethical competition and avoid unfair interference in their
rival's business such as:

1. price-rigging, undercutting, unfair canvassing, supply of substandard goods, application of

undue financial, legal and political pressure; spreading false rumors/statements about the rival's
products.
2. creating labor troubles for the competitors' industry or launching a boycott campaign of their
products.
3. employing unethical advertisements and controlling the supply of particular goods/services
produced by them only so that an artificial scarcity is created in the market.
9. SOCIAL RESPONSIBILITIES OF A BUSINESS
RESPONSIBILITIES TOWARDS STATE

§ The social responsibilities of business towards the state (government) demands that:

a) It will be a law abiding citizens

b) it will pay its dues and taxes to the state fully and honestly;

c) it will not corrupt public servants and the democratic process for his selfish ends; it will not
purchase political support by unfair means;

d) it will strive fairly and honestly to stimulate economic growth even by making reasonable
sacrifices on occasions of national need;
9. SOCIAL RESPONSIBILITIES OF A BUSINESS
RESPONSIBILITIES TOWARDS COMMUNITY

1. Industry related areas :

§ Industry/business can help rural areas by introducing 'self help' and 'earn-while-you-learn' programs.
§ Initially, such programs may be labor intensive in areas like carpentry, pottery, agro-based industry, farming, dairy
farming, poultry and storage etc.,

2. Transportation:
§ Business and other agencies can help the government by undertaking studies and programs of technical and financial
assistance for the development of cheap public transport.

3. Health and Education:

§ Business organizations also hold a responsibility towards improvement of the quality of life the people in the
community.

§ They can and should be engaged in works like providing water sources for drinking and bathing, improving sewage
disposal system, cleaning dirty areas of the solid waste, reducing pollution.
 CONTACT INFORMATION:

Name of Staff : Dr. Aliya Al-Mughairi

Office: Bs054
Email: [email protected]

VERSION HISTORY

Version No Date Approved Changes incorporated

01 Sem. (I) 2022/2023

39