Nature and Significance of Management

Management aims at guiding efforts towards achieving a common objective, therefore it has been
defined as a process of getting things done with the aim of achieving goals effectively and efficiently.
Effectiveness: It refers to completion of task on time, concern with achievement of goals and
producing target on time.
Efficiency: it refers to completion of task correctly with minimum cost , no wastage of resources and
producing with min. cost
FEATURES OF OBJECTIVES OF IMPORTANCE OF
MANAGEMENT MANAGEMENT MANAGEMENT
Goal-oriented process Organisational Achieving group goals
All-pervasive Survival Increases efficiency
Group activity Profit Creates dynamic org.
Continuous growth Achieving personal obj.
Dynamic Social Development of society
Intangible Personal
Multi-dimensional
Mang. of work
Mang. of people
Mang. of operations
NATURE OF MANAGEMENT
MANAGEMENT OF SCIENCE MANAGEMENT OF ART MANAGEMENT AS
PROFESSION
Systematic body of knowl. Theoretical knowledge Well defined body of knowl.
Derived from logical & Based on practice and Professional associations
scientific observations creativity
Based on repeated Personalised application Existence of ethical codes
experiments
Universal validity Service motive
Replication is possible Restricted entry
LEVELS OF MANAGEMENT
TOP LEVEL MIDDLE LEVEL LOWER LEVEL
Determining objectives Interpretation of policies Represent prob of workers
Framing plans and policies Orgn. Devl. Activities Good workng conditions
Organising activities Recruitment of employees Safety of workers
Assembling resources Motivating ppl to perf best Help middle level in (3)
Performance appraisal Contr & instructng employes Suggestion of workers
Welfare and survival of org. Maintaining qual. Standards
Liaison with world Boosting morale of wokers

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Coordination : It is the essence of management, means bringing together the activities and resources
of organisation and bringing harmony in them, it is the primary function of every manager as he needs to
relate and integrate various activites of different departments.
Features of Coordination Importance of Coordination
Integrates group efforts Size of organisation
Ensure unity of efforts Functional differentiation
Continuous process Specialisation
All pervasive
Responsibility of all mangers
Deliberate function

Principles of Management
Management principles are the statements of fundamental truth which act as guidelines for taking
managerial actions and decisions
Features of management Importance of management
Universal application Provide useful insight into reality
General guidelines Optimum utilization of resources
Evolutionary by practice and experiments Scientific decisions
Flexibility Meeting changing environment
requirement
Behavioural in nature Effective administrations
Cause and effect relationship Fulfilling social responsibilities
Contingent Management training, education and
research
FAYOL PRINCIPLES OF MANAGEMENT
Principle of division of work Principle of centralization and
decentralization
Principle of authority and responsibility Principle of scalar chain
Principle of discipline Principle of order
Principle of unity and command Principle of equity
Unity of direction Stability of tenure of personnel
Subordination of individual interest to indv. Principle of initiative
Interest
Principle of remunerations Principle of esprit De corps.

TAYLOR SCIENTIFIC PRINCIPLES OF SCIENTIFIC TECHNIQUE OF TAYLOR

MANAGEMENT
Science not rule of thumb Functional foremanship
Harmony, not discord Standardisation and simplification of work
Co-operation, not individualism Fatigue study
Devl. Of worker to their greatest efficiency Method study

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 Time study
Motion study
Differential piece wage system
Mental revolution
BUSINESS ENVIRONMENT

“The forces, factors and institutions with which the businessman has to deal with to achieve its
objective”

Features Importance
External forces Identify opportunities and getting first move advantage
Specific and general forces Identify threats and early warning signal
Inter-relation Tapping and assembling resources
Uncertainty Adjust and adapt with rapid changes
Dynamic Help in planning and policy making
Complex Improvement in performance
Relativity

Dimensions of Business Environment “factors, forces and institutions which have direct or indirect
influence over the business transactions.” ** “”Notes to be written””

Liberalisation : It refers to end of licence, quota and many more restrictions and controls which were put
on industries before 1991.

Privatization : It refers to giving greater role to private sector and reducing role of public sector.

Globalisation : It refers to integration of various economies of world, which was not followed in India till
1991 , which included strict restriction of imports and foreign investment, It all came to an end.

Liberalisation Privatization Globalisation

Abolition of licence except in few Disinvestment of public sector Abolition of export duty
Freedom in fixing the price of Revive sick units in public sectors Reduction of import duty
goods and services which are suffering losses
No restriction on expansion or Dilution of government stake Rationalization of tariff structure
contraction of business activities holding to less than 51%.
Easy and simplifying the Acceptance of foreign
procedure to attract foreign cap. investment.

Impact of change in economic policy after LPG

Increasing competition More demanding customers
Rapidly changing technological environment Necessity for change
Need for developing human resources Loss of budgetary support to public sector

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Market orientation Export a matter of survival.

PLANNING
Planning is “thinking in advance what is to be done, when it is to be done, how it is to be done and by
whom it should be done” , it also bridges the gap between where we are standing and where we want
to reach.

Features of planning Importance of planning Limitations of planning

Contributes to objectives Provides direction Leads to rigidity
Primary function Reduces the risk of Not work in dynamic
uncertainties environment
Pervasive Reduces over lapping and Reduces creativity
wasteful activities
Futuristic Promotes innovates ideas Involves huge cost
Continuous Facilitates decision making Time consuming process
Decision making Establishes standard for Does not guarantee success
planning
Mental exercise Achieving objectives of Lack of accuracy.
company

PLANNING PROCESS

Setting up of the objectives

Developing premises
Listing the various alternatives for achieving the objectives
Evaluation of different alternatives
Selecting an alternative
Implement the plan
Follow-up

Types of plan
1. Objectives
2. Rules
3. Strategy
4. Programmes
5. Policies
6. Methods
7. Procedures

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 8. Budget

ORGANISING
It can be defined as identifying and grouping different activities in the organization and bringing
together the physical, financial and human resources to establish most productive relations for the
achievement of specific goal of organization.
ORGANIZING PROCESS
Division of Grouping the jobs and Assignment of Establishing reporting
work departmentation duties Relationship

IMPORTANCE OF ORGANISING
Specialization Role Clarity in Optimum Co-ordination Adoption Expansion Development
clarity working utilization of and effective to and of personnel
relationship resources administration change growth

Organizational structure
It can be defined as “Network of job positions, responsibilities and authority at different levels” or it can
be called as frame work within which managerial and operational tasks are performed. FACTORS ARE :

Job design Departmentation Span of management Delegation of authority

Functional structure Divisional structure

Merits Merits
Specialization Product specialization
Easy supervision Fast decision making
Easy co-ordination Accountability
Increases managerial efficiency Flexibility
Effective training Expansion and growth
De-merits De-merit
Overall goal of org. not met All dept. require all resources
Lack of co-ordination and delay in results Each dept. focus on their product
Conflicts among various departments Conflict on allocation of resources
No accountability
Inflexibility
Suitable for large organization producing Suitable for organization producing
one line of product. different line of products, growing co.
which plan to add more prod.

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 Formal organization Informal organization
Merits Merits
Systematic working Fast communication
Achievement of organizational objectives Fulfills social needs
Co-ordination Correct feedback
Creation of chain of command
More emphasis of work
De-merits De-merits
Delay in action Spread rumours
Ignores social needs of employee No systematic working
Emphasis on work only May bring negative results
More emphasis to individual interest.
Delegation
In every organization managers are assigned lot of work and manager alone cannot perform all work. He
divides the work among different individuals working under him according to their qualification and get
the work done from them, to make sure that his subordinates perform all the work effectively and
efficiently in the expected manner the manager creates accountability and this whole process is known
as delegation.
IMPORTANCE OF DELEGATION
Effective Employees Motivation of Facilitates org. Basis of manag Better
management development employees growth hierarchy coordination
Reduces the work load of Basis of superior-subordinate
managers relationship
PROCESS OF DELEGATION
RESPONSIBILITY AUTHORITY ACCOUNTABILITY
Obligation of a subordinate Right to take decision Answerable for final output.
Arises from superior Restricted by law and Cannot be delegated or
subordinate relationship regulations passed
It flows upward Arises from scalar chain Enforced regular feedback
Authority = Responsibility Flows upwards
Flows Upwards
Centralization, it refers to concentration of power or authority in few hands, i.e. top level. An
organization is centralized when the decision-making authority is in the hands of top level management
only.
Decentralization, under it every employee working at different levels gets some share in the
authority.
Relationship between delegation and decentralization
Decentralization is extension of delegation . in delegation we multiply the authority with two whereas in
decentralization the authority is multiplies by many because systematic delegation taking place at every
level will result in evenly distribution of authority and responsibility at every level and result in
decentralization.

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 IMPORTANCE OF DECENTRALIZATION
Develop initiative among subordinates Facilitates growth
Develop managerial talent for future Better control
Quick-decision making Promotes initiative and creativity
Relief to top level management Improved team work
STAFFING
Staffing means finding the right person for the right job having the right qualification, doing the right
job at the right time and keep filling the positions in the organization structure.

IMPORTANCE
Employing Placing right person Growth of enterprise Optimum utilization
competent at right job of resources
personnel
Helping in Improves job Key to effectiveness
competing satisfaction of other function

STAFFING PROCESS
Estimating Recruitment Selection Placement and Training and
manpower orientation development

RECRUITMENT
INTERNAL RECRUITMENT EXTERNAL RECRUITMENT
TRANSFER, PROMOTION PLACEMENT AGENCIES, MEDIA, CAMPUS
Merits De-merits Merits De-merits
Economical No fresh idea Fresh talent Morale goes down
Motivates Limited choice Wider choice Employees not
adjust
Less training Not suitable (new Qualified personnel Expensive
co.)
Less turnovers Reduce productivity Latest tech. knowledge Lengthy process
Improve performance Competitive spirit
Transfer surplus employees
Selection process
Preliminary Selection test Employment interview Checking references
screening
Selection decision Medical exam. Job offer Employment
contract

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 Importance of training
a) From organization point of view
Reduced Better Attitude Helps in Managing Help to
learning time performance formation solving prob. manpower adapt
change

b) From employee point of view

Better cause options Earning more Boost up the morale Less chances of
accidents
DIRECTING
A function of management that instructs, guides, counsels, motivates and leads the subordinates in such
a manner that can help them to perform well in jobs for which they have been appointed.
Features Importance Elements of directing
Initiates action Initiates actions Supervision
Continuing function Integrates employee’s efforts Motivation
Takes place at every level Means of motivation Leadership
Flow from top to bottom Facilitates changes Communication
Stability and balance in org.

Supervision : It means instructing, guiding, monitoring and observing the employees while they are
performing jobs in the organization. IMPORTANCE / ROLE/ FUNCTIONS OF SUPERVISIOR ->
Link between Maintains Ensures Improves Optimium utilization
works & group unity Performance at motivation of resources
management work

Motivation : It can be defined as stimulating, inspiring and inducting the employees to perform to
their best capacity. It is a psychological term which means it cannot be forced on employees.

Features of Importance of Financial incentives Non-Financial

motivation motivation incentives
An internal feeling Change attitude +ve to – Profit sharing Status
ve
Produces goal directed Improves performance Stock option Career advancement
behavior
Complex process Achieving org. Goal Bonus Challenging Job
Continuous process Supportive work Commission Employees recognition
environment
Positive as well as Helps introduce changes Suggestion system Job security
negative
Reduction in employee Retirement benefits Employee’s
turnover participation

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Leadership : It is a process of influencing the behavior of people at work towards the achievement of
specific goal. It brings change in behavior and it’s a continuous process. TYPES of LEARDERSHIP :-
AUTOCRATIC LEADRSHIP PARTICIPATIVE LEADRSHIP FREE-REIN LEADERSHIP
-It exercises complete control -The leader takes decisions in -It involves complete delegation
over the subordinates. consultation and participation of authority so that subordinates
-He centralizes power in himself with employees. themselves take decision.
and takes all decisions without -He delegates and decentralizes -Avoids power, act as a contact
consulting the subordinates. the authority to bring information and
-He does not delegate authority , -He listens to the suggestions, resources needed by the
he gives order and expects the grievances and opinion of the subordinates.
subordinates to follow. subordinates. - Suitable : well trained & highly
-Suitable for uneducated, -Suitable: job satisfaction & knowledgeable staff.
unskilled labour independence of employees.
COMMUNICATION
Formal communication : It refers to official communication taking place in the organization. It
generally takes place in the written form such as issue of notice, letter, memo, document, etc.
TYPES of formal communication
Downward comm Upward comm Horizontal comm Diagonal comm

Informal communication : It refers to communication between different members of organization

who are not officially attached to each other is known as informal communication. Generally, the social
interactions, friendly talks and non-official matters are discussed in the informal communication.
TYPES of informal communication
Gossip Clusters Single strand Probability

BARRIERS TO EFFECTIVE COMMUNICATION

SEMANTIC BARRIERS PSYCHOLOGICAL ORGANISATIONAL PERSONAL BARRIERS
BARRIERS BARRIERS
Badly expresse Premature Organizational policy Lack of confidence in
message evaluation subordinate
Symbols with diff. Lack of attention Rules & regulations Lack of incentives
meaning
Faulty translations Loss by transmission Status difference Fear authority
& poor retention
Unclarified Distrust Complex
assumptions organization
Technical jargon Organizational
facilities
Body language &
gesture decoding

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 IMPROVING EFFECTIVE COMMUNICATION

Clarify idea Communicate for present as well as

future
Communicate according to the need Follow-up
of receiver
Consult others Good listener
Use of proper language Open mind
Proper feedback Completeness of message
FINANCIAL MANAGEMENT
Financial management is concerned with optimal procurement as well as the usage of finance. It aims at
reducing the cost of funds procured, keeping the risk under control and achieving effective deployment
of such funds.
It also aims at ensuring availability of enough funds whenever required as well as avoiding idle finance.

Role of Financial Management Objectives of Financial Management

Size and composition of Fixed Assets Profit maximization
Amount and composition of Current assets Maintenance of liquidity
Amount of short term and long term loan Proper utilization of funds
Fix debt equity ratio Meeting financial commitments

Finance Functions or Financial Decisions

Financing Decision Investment Decision Dividend Decision

Debt Equity Capital Budgeting Working Capital Profit Retained Earning

Financing Decision: A finance manager needs to decide how to much to raise the loan and from which
source. He need to decide how much to raise from OWNER’S FUND (equity) or from BORROWED FUND
(debt). While taking this decision the finance manager compares the advantages and disadvantages of
different source of finance.
FACTORS AFFECTING FINANCING DECISIONS
Cost Risk Cash flow Control Floatation cost Fixed operating State of capital
position considerations cost market

Investment Decision : A firm has many options to invest their funds but firm has to select the most
appropriate investment which will bring maximum benefit for the firm and deciding or selecting most

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appropriate proposal is investment decision. When decision is taken regarding fixed asset it is called
Capital Budgeting Decision.

Factors affecting Investment decision Importance of Capital Budging Decision

Cash flow of the project Long term growth
Return on investment Large amount of funds involved
Risk involved Risk involved
Investment criteria Irreversible decision

Dividend Decision : This decision is concerned with distribution of surplus funds. The profit of the
firm is distributed among various parties such as creditors, employees, debenture holders, shareholders,
etc.
If more investment opportunities are available and company has growth plans then more is kept aside
as retained earning and less in given in the form of dividend, but if company wants to satisfy its
shareholders and has less growth plans , then more is given in the form of dividend.

Factors affecting dividend decision

Earning Taxation policy

Stability of earnings Access to capital market
Cash flow position Legal Restrictions
Growth opportunities Contractual constraints
Stability of dividend Stock market reaction
Preference of shareholders

Financial Planning : Determination of amount of finance needed by an enterprise to carry out its
operations smoothly. To ensure availability of funds whenever these are required and make sure firm
does not raises resources unnecessarily.
Importance of Financial Planning

It facilitates collection of optimum funds Helps in proper utilization of finance

It helps in fixing the most appro. Cap. Structure Helps in avoiding business shocks & surprises
Helps in investing finance in right projects Link between investment and financing decisions
Helps in operational activities Help in coordination
Base for financial control It links present with future

Capital structure : Capital structure represents the proportion of debt capital and equity capital in the
capital structure. The capital structure should be such which increases the value of equity shareor
maximizes the wealth of equity shareholders.
Debt and equity differ in cost and risk. As debt involves less cost but it is very risky securities whereas
equity are expensive securities but these are safe securities from companies point of view.
Factors affecting capital structure

Cash flow position Floatation cost

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Interest coverage ratio Risk consideration
Debt service coverage ratio Flexibility
Return on investment Control
Cost of debt Regulatory framework
Tax rate Stock market conditions
Cost of equity Capital structure of other companies

Fixed working capital : Fixed capital involves allocation of firm’s capital to long term assets or
projects. Managing fixed capital is related to investment decision and it is also called capital budgeting.
The capital budgeting decision affects the growth and profitability of the company.

Factors affecting Requirement of fixed capital

Nature of business Growth prospects

Scale of operations Diversification
Technique of production Availability of finance and lease
Technology up-gradation Level of collaboration

Working capital : Working capital refers to excess of current assets over current liabilities. The net
working capital indicates the liquidity position of the company. The positive net working capital implies
positive liquidity position whereas negative net working capital indicates weak and poor liquidity
position.

Factors affecting Requirement of working capital

Length of operating cycle Credit avail

Nature of business Operating efficiency
Scale of operation Availability of raw materials
Business cycle fluctuation Level of competition
Seasonal factors Inflation
Technology and production cycle Growth prospects
Credit allowed

Financial Markets
A market where financial transactions in the form of creation of financial assets such as initial issue of
share/debentures or exchange of financial asset occur.

Functions of financial market

Mobilization of savings Facilitate price Provide liquidity to Reduce the cost of

and channeling discovery financial assets transactions

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 Types of Financial Markets
Money Market Capital Market
Instruments of Money Market Method of floatation in primary market
Commercial Paper Offer for sale
Call money Private Placement
Certificate of Deposit Right issue
Commercial Bill E-IPOs
Treasury Bill Offer through prospectus

Functions of stock Exchange

Providing liquidity and Pricing of securities Safety of transaction
marketability to existing securities
Contributes to economic growth Spreading of equity cult Providing Scope for speculation

TRADING PROCEDURE
Selection of broker Open demand a/c Placing the order Connecting to main
stock exchange
Execution of order Issuance of contract Delivery of shares Settlement of deal-
note before TTL
Delivery of securities Delivery of securities
in Demand Form
Functions of SEBI
Regulatory Functions Development functions Protective Functions
Registration of brokers and Training of intermediaries Prevents Insider Trading
agents
Notification of Rules and Promotion of fair Trade Prohibits Fraudulent and
regulations unfair Trade Practices
Levying of fees Research Promotes Fair Practices
Regulator of Investment Educates Investors
schemes
Prohibits unfair Trade Practices
Inspection and Enquiries
Performing and Exercising
Powers
Marketing Management
It means management of all activities related to marketing or in other words we can say, it refers to
087o planning, organizing, directing and controlling the activities which result in exchange of goods and
services.
CONCEPT OF MARKETING
Production concept Product concept Selling Concept Marketing Concept Societal Concept

FUNCTIONS OF MARKETING

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Gathering mkt info Market planning Product designing Standardization
Packing and labelling Branding Customer support service Pricing
Promotion and selling Physical distribution Transportation Storage and warehousing

# MARKETING MIX #

PRICE PROMOTION
PRODUCT PLACE

A) PRODUCT MIX : Total number of products and items that a particular seller or marketer offers to
the market is called product mix.

A.1 Branding : A brand is the identification of a product. It can be in the form of a name, symbol, or
design etc. The branding is not only done to identify the seller or producer but also to make your product
superior than competitor’s product.

Qualities of good Brand Advantages to seller Advantages to customer

Short and simple Help in product differentiation Identification
Easy pronunciation Help in advertising Ensures quality
Suggestive Differential pricing Status symbol
Unique and distinctive Easy introduction of new product
Meaning in other languages

A.2 Packing : A set of task or activities which are concerned with the designing, production of an
appropriate wrapper, container or bag for the product

Levels of packing Importance of packing Functions of packing

Primary Package Rising standards of Health Protection
Secondary Package Self service outlet Identification
Transportation Packing Product differentiation Convenience
Innovational opportunities Promotion

A.3 Labelling : It means putting identification marks on the package. It is the carrier of information and
it provides information like – name of the product, name of manufacturer, contents of products, expiry
and manufacturing date, general instruction for use , weight, price etc.
Functions :
Identification Grading Carrier of information Legal requirements Promote sales

B) Price: It is the value which a buyer passes on to the seller in lieu of the product or services provided.
Price is the crucial element of marketing mix because customer is very sensitive to this elemnt. Little
variation in the price may shift your customer to competitor’s product.

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 Factors affecting Price
Objectives Cost Competition
Custmer’s Demand Govt and legal regulation Marketing methods

Pricing strategies : Price Skimming & Penetrating Pricing

C) Place : It refers to the set of decisions that need to be taken in order to make the product available.
It is a important decision related to physical distribution of goods and services. These decisions are
deciding the channel of distribution, market for distribution etc.
Functions Of Distribution Channel
Sorting / Grading Accumulation Variety Risk taking
Packing Promotion Negotiation

Channel Levels
1) Zero level
2) Indirect level
2.1) One Level Channel
2.2) Two Level Channel
2.3) Three Level Channel
FACTORS AFFECTING CHOICE OF CHANNEL
Product Related Factor Market Related Factor Company Related Factor Competitive Factor
Value of product line Nature of market Finance Monopoly
Product complexity Size of market Degree of control Competition
Nature of product Geographical concentration
Perishable or non Quantity Purchased 5 Environmental Factor
perishable product Boom & Recession

Components of physical Distribution Factors determining level of inventory

Order processing Warehousing Firm’s Policy on Customer services
Transportation Inventory Degree of Accuracy of sales forecast
Responsiveness of Distribution System
Cost of inventory
D) Promotion : It refers to all the decisions related to promotion of sales of products and services. The
important decisions of promotion mix are selecting advertising media, selecting promotional techniques
, using publicity measures and public relations etc.
Advertising
Media of advertising Advantages of advertising Disadvantages of advertising
Newspaper Reach Impersonal
Magazines Choice Less effective
Television Legitimacy Difficulty in media selection
Radio Expressiveness Inflexibility
outdoors Economy Bad taste
Internet Enhance Customer satisfaction Confuse rather than help

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 Sale Promotion ---- Techniques for customers
Rebate Discounts Refunds Premiums Quantity deal
Sampling Contests Instant Draw 0% financing Usable benefits

Merits of De-Merits
sale promotion of sale promotion
Attention value Reflect crisis
Useful to launch new products Spoil product image
Aid to promotional tools
Synergy in total promotion

Personal Selling Features and advantages

Personal interaction Two-way communication Better response
Better convincing Relationship
Role of personal selling
Importance to business Importance to customers Importance to society
Effective promotion tool Help in identifying needs Converts latest demand into
effective demand
Flexible tool Latest market information Employment opportunities
Min wastage of efforts Exports advice Career opportunities
Consumer attention Induces customers Mobility of sales person
Relationship Product standardization
Personal support

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