Management and Entrepreneurship

Semester: VI
Course Code: AL61
 Contents
Unit I
• Introduction to Management: Definition of Management, Its nature
and purpose, Contributions of F.W. Taylor and Henry Fayol to
management theory, Functions of managers.
• Planning: Types of plans, Steps in planning, the planning process,
Management By Objectives (MBO)
• Organizing: The nature and purpose of organizing, Formal and informal
organization, Organization levels and Span of management, Principle of
span of management, the structure and process of organizing
Unit II
• Staffing: Situational factors affecting staffing.
• Leading: Human factors in managing, definition of leadership,
Ingredients of leadership
• Controlling: Basic control process, Critical control points and standards,
Control as a feedback system, Feed forward control, Requirements of
effective controls.
 Contents
Unit III
• Introduction to Entrepreneurship: The Foundations of
Entrepreneurship: What is Entrepreneurship? The benefits of
Entrepreneurship, The potential drawbacks of Entrepreneurship; Inside
the Entrepreneurial Mind: From Ideas to Reality: Creativity, Innovation
and Entrepreneurship, Creative Thinking, Barriers to Creativity
Unit IV
• The Entrepreneurial Journey: Crafting a Business Plan: The benefits of
creating a business plan, The elements of a business plan; Forms of
Business Ownership and Buying an Existing Business: Sole
proprietorships and partnership.
Unit V
• Launching the Business: Franchising and the Entrepreneur: Types of
Franchising, The benefits of buying a Franchise; E-Commerce and the
Entrepreneur: Factors to consider before launching into E-commerce,
Ten Myths of E-Commerce
 Books
Textbooks
• Harold Koontz, H. Weihrich, and A.R. Aryasri, Principles of Management,
Tata McGraw-Hill, New Delhi, 2004.
• Essentials of Entrepreneurship and Small Business Management – Norman
Scarborough & Jeffrey Cornwall (Pearson, 2016)

References
• Innovation & Entrepreneurship – Peter Drucker (Harper, 2006)
• Entrepreneurship: The Art, Science, and Process for Success – Charles
Bamford & Garry Bruton (McGraw-Hill, 2015)
• Managent and Enterpreneuship-NVR Naidu, T Krishna Rao, I.K. International
Publishing House Pvt. Ltd.@ 2008
• Poornima M Charantimath, Entrepreneurship Development and Small
Business Enterprises, Pearson Education, 2006.
 Course Outcomes
At the end of the course, student will be able to
1. Plan and organize the manpower in the given type of
organization (PO: 6,9,11)
2. Use staffing, Leading and controlling functions for the given
organization. (PO: 6,8,9,10)
3. Understand the fundamentals of entrepreneurship with the
goal of fulfilling the requirements of the industries and
holding the responsibilities towards the society. (PO-6,7,8)
4. Design a basic business plan by considering case studies and
show the involvement of ownership in Business. (PO-
3,7,8,11)
5. Start a new small business with the help of E-Commerce and
the current available technologies. (PO-5,11)
 Mapping Course Outcomes with Program Outcomes
Course Outcomes Program Outcomes
1 2 3 4 5 6 7 8 9 10 11 12
CO1: Plan and organize the manpower 3 3 2
in the given type of organization
CO2: Use staffing, Leading and 3 3 2 3
controlling functions for the given
organization.
CO3: Understand the fundamentals of 3 2 2
entrepreneurship with the goal of
fulfilling the requirements of the
industries and holding the
responsibilities towards the society.
CO4: Design a basic business plan by 3 2 3 2
considering case studies and show the
involvement of ownership in Business
CO5: Start a new small business with 3 3
the help of E-Commerce and the
current available technologies
 Unit - I

• Introduction to Management
• Planning
• Organizing
 Introduction to Management
• Management is the process of designing and maintaining the
environment in which individuals, working together in groups,
accomplish their aims effectively and efficiently.
• It is the process of carrying out the essential functions (planning,
organizing, staffing, directing, and controlling)
 Nature and Purpose of management
• In order to understand the basic nature of
management it must be analyzed in terms of art
and science, in the terms of managerial skills and
style of managers.
• The purpose - It is simply the
procedure/process/quality that is applied in a
work process either for a team or for an individual
in order to complete the task successfully and
hence achieve the ultimate goal of an
organization.
 Purpose of management
It is simply the procedure/process/quality that is
applied in a work process either for a team or
for an individual in order to complete the task
successfully and hence achieve the ultimate goal
of an organization.
Levels of management
 Top management
a. Top management lays down the objectives and broad policies of
the enterprise.
b. It issues necessary instructions for preparation of department
budgets, procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental
managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside
world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders
for the performance of the enterprise.
 Middle management
a. They execute the plans of the organization in accordance with
the policies and directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level
management.
d. They interpret and explain policies from top level management
to lower level.
e. They are responsible for coordinating the activities within the
division or department.
f. It also sends important reports and other important data to top
level management.
g. They evaluate performance of junior managers.
 Lower level management
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good
relation in the organization.
e. They communicate workers problems, suggestions, and
recommendatory appeals etc to the higher level and higher level goals
and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the
things done.
j. They prepare periodical reports about the performance of the
workers.
Functions of Management
ROLES OF MANAGER
CONTRIBUTION OF FAYOL AND TAYLOR

F.W. Taylor and Henry Fayol are generally

regarded as the founders of scientific
management and administrative management
and both provided the bases for science and art
of management.
 Taylor's Scientific Management
• Frederick Winslow Taylor well-known as the founder of scientific
management was the first to recognize and emphasis the need
for adopting a scientific approach to the task of managing an
enterprise.
• He tried to diagnose the causes of low efficiency in industry and
came to the conclusion that much of waste and inefficiency is due
to the lack of order and system in the methods of management.
• He found that the management was usually ignorant of the
amount of work that could be done by a worker in a day as also
the best method of doing the job.
• As a result, it remained largely at the mercy of the workers who
deliberately reduced the work.
 Taylor's Scientific Management
• The scientific method consists essentially of (a) Observation
(b) Measurement (c) Experimentation and (d) Inference. He
advocated a thorough planning of the job by the management
and emphasized the necessity of perfect understanding and
co-operation between the management and the workers both
for the enlargement of profits and the use of scientific
investigation and knowledge in industrial work.
• He summed up his approach in these words: • Science, not
rule of thumb • Harmony, not discord • Co-operation, not
individualism • Maximum output, in place of restricted output
• The development of each man to his greatest efficiency and
prosperity.
Elements of Scientific Management
• The techniques which Taylor regarded as its essential
elements or features may be classified as under:
• 1. Scientific Task and Rate-setting, work improvement,
etc.
• 2. Planning the Task.
• 3. Vocational Selection and Training
• 4. Standardization (of working conditions, material
equipment etc.)
• 5. Specialization
• 6. Mental Revolution.
Henry Fayol's 14 Principles of Management:

Henry Fayol - Father of Modern Management Theory

• 1. Division of work: Division of work or specialization alone can give maximum
productivity and efficiency. Both technical and managerial activities can be
performed in the best manner only through division of labour and specialization.
• Authority and Responsibility: The right to give order is called authority. The
obligation to accomplish is called responsibility. Authority and Responsibility are the
two sides of the management coin. They exist together. They are complementary
and mutually interdependent.
• Discipline: The objectives, rules and regulations, the policies and procedures must
be honoured by each member of an organization. There must be clear and fair
agreement on the rules and objectives, on the policies and procedures. There must
be penalties (punishment) for non-obedience or indiscipline. No organization can
work smoothly without discipline - preferably voluntary discipline.
Henry Fayol's 14 Principles of Management:
• 4. Unity of Command: In order to avoid any possible confusion and
conflict, each member of an organization must received orders and
instructions only from one superior (boss).
• 5. Unity of Direction: All members of an organization must work
together to accomplish common objectives.
• 6. Emphasis on Subordination of Personal Interest to General or
Common Interest: This is also called principle of co-operation. Each
shall work for all and all for each. General or common interest must be
supreme in any joint enterprise.
• 7. Remuneration: Fair pay with non-financial rewards can act as the
best incentive or motivator for good performance. Exploitation of
employees in any manner must be eliminated. Sound scheme of
remuneration includes adequate financial and nonfinancial incentives.
Henry Fayol's 14 Principles of Management:
• 8. Centralization: There must be a good balance between
centralization and decentralization of authority and power.
Extreme centralization and decentralization must be avoided.
• 9. Scalar Chain: The unity of command brings about a chain or
hierarchy of command linking all members of the organization
from the top to the bottom. Scalar denotes steps.
• 10. Order: Fayol suggested that there is a place for everything.
Order or system alone can create a sound organization and
efficient management.
• 11. Equity: An organization consists of a group of people involved
in joint effort. Hence, equity (i.e., justice) must be there. Without
equity, we cannot have sustained and adequate joint
collaboration.
Henry Fayol's 14 Principles of Management:

• 12. Stability of Tenure: A person needs time to adjust himself

with the new work and demonstrate efficiency in due course.
Hence, employees and managers must have job security.
Security of income and employment is a pre-requisite of
sound organization and management.
• 13. Esprit of Co-operation: Esprit de corps is the foundation of
a sound organization. Union is strength. But unity demands
co-operation. Pride, loyalty and sense of belonging are
responsible for good performance.
• 14. Initiative: Creative thinking and capacity to take initiative
can give us sound managerial planning and execution of
predetermined plans.
 Administration V/s Management
• ‘Administration as a function is concerned with the
determination of the corporate policy, the
coordination of finance, production and
distribution, the settlement of the compass (i.e.,
structure) of the organization, under the ultimate
control of the executive.’
• On the other hand, ‘Management is concerned
with the execution of the policy, within the limits
setup by administration and the employment of the
organization for the particular objects before it. T
Administration
V/s
Management
 Is management science or art?

• Its science--- underlying knowledge.

• Science underlying management is fairly
crude and inexact---many variables have to be
dealt with.
• Managers who manage without management
science should trust their luck, intuition or
historical decisions
 Is management a science or an
art?
• Management is an art. It is know-how
• Doing things in light of the realities of a situation
• Managers can work better if they have organized knowledge
about management------science

• Its an art----act of managing

• It uses know-how skills.
• Its Direction is towards the accomplishment of concrete
result.
• It creates new situations for further improvement.
• It is personalized because of success of management task is
related to the personality of the manager.
Is management a science or an art?
Is management a science or an art?
 Discussion question
• What are the trends and challenges of
management in global scenario ?
• What is the difference between effectiveness
and efficiency?
PLANNING
 Definition of planning
• Planning involves selecting missions and objectives and the actions
to achieve them
• it requires decision making that is choosing from among alternative
future courses of action.
• Plan thus provides a rational approach to preselected objectives.
• Planning also strongly implies managerial innovations
 Types of plans
• Purposes or Missions – identifies the basic
function or task of an enterprises or agency or any
part of it. The purpose of business generally is the
production and distribution of goods and services.
• Objectives or goals – are the ends towards which
activity is aimed, they are the results to be
achieved. They represent not only the end point of
planning but the end toward which Organizing,
staffing, leading and controlling are aimed
 Examples of mission statements
• Domino's - Sell more pizza, have more fun!
• Dunkin' Donuts - To be the leading provider of
the wide range delicious beverages & baked
product around the kingdom in a convenient,
relaxed, friendly environment, that insures the
highest level of quality product and best value
for money.
• Heart and Soul - to provide happiness and joy
through, food, music and art.
 Examples of objectives
• Offering wholesome, fairly priced, ethnically
diverse food options
• Creating an attractive and diverse menu
• Providing excellent customer services that
enhances the rapport with students through
responsiveness to needs and requests
• Establishing high quality jobs for target food
service employees, including good wages and
benefits, career advancement
 Types of plans
• Strategies– Strategies are grand plan. The
most common usage of the term are – general
programs of action and deployment of
resources to attain comprehensive objectives.
• Policies – are general statements
or undertakings which guide or channel
thinking in decision making. Not all policies
are “Statements”, they are often merely
implied from the actions of managers
 Examples of strategies
• Chef will position themselves as an aggressive,
innovative company that supplies the market
with new, high-quality products.
• Chef will position themselves in trade shows,
within industry publications, and the Internet,
to reinforce this marketing strategy.
• The brochures, letterhead, and business
correspondence will further reinforce these
concepts.
 Examples of policies
• to meet or exceed our obligations under current
legislation in respect to food safety
• The quality system focuses on the delivery of
safe quality foods and products to our customers.
• NESTLE- Continuously challenging ourselves to
improve the quality management system to
guarantee product safety, prevent quality
incidents and eliminate defects through the
review of quality objectives and results,
 Types of plans
• Procedures – are plans that require method of
handling future activities. They are guides to
action, rather than to thinking, and they detail
the exact manner in which certain activities
must be accomplished. They are chronological
sequences of required actions.
• Rules – spell out specific actions or non-
actions, allowing no discretion.
 Examples of procedures
• Hand washing steps for chef at a restaurant are as
follows:
• use water as hot as you can stand.
• Soap hands and lower forearms.
• Scrub for 20 seconds.
• Rinse.
• Dry with paper towel.
• Avoid recontamination of hands by using paper
towel or other barrier to turn off faucet handles.
 Examples of rules
• do whatever is reasonable to stop unnecessary
contact with ready-to-eat food;
• wear clean outer clothing, depending on the type
of work they do;
• make sure bandages or dressings on any exposed
parts of the body are covered with a waterproof
covering;
• not eat over unprotected food or surfaces likely to
come in contact with food;
 Types of plans
• Programs – are a complex of goals, policies,
procedures, rules, tasks assignments, steps to
be taken, resources to be employed and
other elements necessary to carry out a given
course of action; they are ordinarily supported
by budgets
• Budgets – is a statement of expected results
expressed in numerical terms. Referred
as “numberized” program.
 Examples of program statements
• Airline – to invest in new jets, involving many
millions of dollars for the purchase of the
aircrafts and the necessary spare parts
 Examples of budget
The financial budget usually has three parts:
• The cash budget
• The budgeted balance sheet
• The budget for capital expenditures
Steps in
planning
Steps in Planning
Steps in Planning
Steps in Planning
Steps in Planning

Numberizing the plans

• Developing budgets
• Volumes of sales
• Selling price
• Operating expenses
• Expenditures for equipment
Steps in Planning

Implementation
Planning process – rational approach to goal
achievement
• In this diagram, progress (ex: sales,
profits) is on vertical – axis and time
is on horizontal-axis.
• Time to – we are at time ‘to’
• We want to reach time ‘tn’
• In the diagram, we are at x and we
want to go to y
• We can start planning now
• We may even start planning at x1
(much earlier)
• The line xy is the decision path.
• In reality many factors my push us
away from or toward the desired
goal. These are the planning
premises
 Principle of commitment
• According to this principle, a time frame should be
provided by the plan during which the
commitments made in the plan have to be fulfilled.
• This commitment allows the managers to achieve
the targets in time.
• Logical planning should cover a period of time in
the future necessary to foresee as well as possible,
through a series of actions, the fulfillment of
commitments involved in a decision made today
Management By Objectives - MBO
• Management by objectives (MBO) is a management
model that aims to improve performance of an
organization by clearly defining objectives that are
agreed to by both management and employees.
• According to the theory, having a say in goal setting and
action plans should ensure better participation and
commitment among employees, as well as alignment of
objectives across the organization.
• The term was first outlined by management guru Peter
Drucker in 1954 in his book "The Practice of
Management."
Management By Objectives - MBO
• It is a process of agreeing within an organization so that
management and employees buy into the objectives and
understand what they are.
• It has a precise and written description objectives ahead, timelines
for their motoring and achievement.
• The employees and manager agree to what the employee will
attempt to achieve in a period ahead and the employee will accept
and buy into the objectives.
• Definition “MBO is a process whereby the superior and the
mangers of an organization jointly identify its common goals, define
each individual’s major area of responsibility in terms of results
expected of him, and use these measures as guides for operating
the unit and assessing the contribution of each of its members.”
Management By Objectives - MBO
Process of MBO
 Typical MBO Process
1) Setting objectives:
• For Management by Objectives (MBO) to be effective, individual
managers must understand the specific objectives of their job
and how those objectives fit in with the overall company
objectives set by the board of directors.
• The managers of the various units or sub-units, or sections of an
organization should know not only the objectives of their unit
but should also actively participate in setting these objectives
and make responsibility for them.
• Management by Objective (MBO) systems, objectives are
written down for each level of the organization, and individuals
are given specific aims and targets.
 Typical MBO Process
2) Developing action plans
• Actions plans specify the actions needed to address
each of the top organizational issues and to reach
each of the associated goals, who will complete
each action and according to what timeline.
• An overall, top-level action plan that depicts how
each strategic goal will be reached is developed by
the top level management.
• The format of the action plan depends on the
objective of the organization.
 Typical MBO Process
3) Reviewing Progress:
• Performance is measured in terms of results. Job performance is
the net effect of an employee's effort as modified by abilities,
role perceptions and results produced.
• Effort refers to the amount of energy an employee uses in
performing a job.
• Abilities are personal characteristics used in performing a job and
usually do not fluctuate widely over short periods of time.
• Role perception refers to the direction in which employees
believe they should channel their efforts on their jobs, and they
are defined by the activities and behaviors they believe are
necessary.
 Typical MBO Process
4) Performance appraisal:

• Performance appraisals communicate to employees how they are

performing their jobs, and they establish a plan for improvement.
• Performance appraisals are extremely important to both employee and
employer, as they are often used to provide predictive information related
to possible promotion.
• Appraisals can also provide input for determining both individual and
organizational training and development needs.
• Performance appraisals encourage performance improvement. Feedback on
behavior, attitude, skill or knowledge clarifies for employees the job
expectations their managers hold for them.
• In order to be effective, performance appraisals must be supported by
documentation and management commitment.
Advantages of MBO

Disadvantages of MBO
 Discussion question / activity
• What are the contemporary issues / criticisms
of planning function?
• Select an organization of your choice; identify
the Vision, mission, objectives, policies, rules,
procedures for that organization
• What is SWOT Analysis?
ORGANIZING
 Organizing - definition
• It is the creation and maintenance of an
intentional structure of roles
• Organizing is the process of arranging and
allocating works, authority, and resources
among an organization’s members so that
they can achieve an organizational goal
Formal and Informal Organizations
 Formal Organizations
• The purpose of formal organisation structure is achievement of
organisational goal.
• each individual is assigned a specific job.
• every individual is assigned a fixed authority or decision-making power
• superior-subordinate relations
• Systematic Working
• No Overlapping of Work
• Co-ordination
• Creation of Chain of Command
• Delay in Action
• Ignores Social Needs of Employees
• Emphasis on Work Only
 Informal Organizations
• gets created automatically without any intended efforts of managers
• formed by the employees to get psychological satisfaction
• does not follow any fixed path of flow of authority or communication
• Source of information cannot be known
• Fast Communication
• Fulfills Social Needs
• Correct Feedback
• Spread Rumours
• No Systematic Working
• May Bring Negative Results
• More Emphasis to Individual Interest
Formal and Informal Organizations
 Organization levels
• The levels exist because there is a limit to the
number of persons a manager can supervise
effectively
Span of management / Span of control
• Principle: there is a limit to the number of
subordinates a manager can effectively supervise, but
the exact number will depend on the impact of
several underlying factors.
• The number of important activities at the next lower
level of the organisation structure
• The personal qualities (e.g., intelligence, experience)
of the superior as well as the subordinates
• The development of communications within and
between the levels of the organisation structure.
 Span of management / Span of control
The number of subordinates that a superior can
effectively supervise is known as span of
management or span of control.
1. Overburdened with work.
2. Difficulty in coordinating the activities of large
number of people.
3. Difficulty in controlling.
 Narrow span of control
• Tall structures - classical bureaucratic organisations
• A manager can supervise less number of subordinates.
• He can, therefore, exercise tight control over their
activities.
• This creates large number of levels in the organisation.
 Narrow span of control
• Managers can closely supervise activities of the subordinates
• better communication
• promotes personal relationships
• Control on subordinates can be tightened
• creates many levels in the organization structure
• More managers are needed. This increases the overhead
expenditure
• Increasing gap between top managers and workers
• Decision-making becomes difficult because of too many levels
• Employees work under strict control of superiors
• low morale and job satisfaction
 Wide span of control
• Flat Structures
• When superior supervises a larger number of
subordinates, flat structure is created with
lesser number of hierarchical levels
 Wide span of control
• low cost as less number of managers
• decision-making process is effective as superiors delegate
authority to subordinates
• Subordinates perform the work efficiently since they are
considered worthy of doing so by the superiors
• effective communication as the number of levels is less
• promotes innovative abilities of the top management
• Superiors cannot closely supervise
• Managers may find it difficult to co-ordinate the activities of
subordinates
• Subordinates have to be trained so that dilution of control does
not affect organisational productivity
Factors affecting span of control
Logic of organizing
Organizing Process
 Case study
Mr. Rao and Ms. Shilpa Jain were respectively working as personal secretary and
computer operator to the General Manager in an organization. Mr. Rao was very nice
and courteous to the GM and other seniors in the organization. He would also go out
of the way to help them in their personal work. At the same time, he was autocratic in
dealing with juniors in the org. Many a times, he was a bit harsh with Shilpa who was
directly reporting to the GM. This led to strain in the relationship between the two,
who were also sharing the cabin attached to the office of GM. The cabin was dirty with
papers all around the room. There were wires and stains on the floor.
One hot summer day, Shilpa came to the office and switched on the ceiling fan. There
were loose papers lying on the table of Rao, which started flying. Shilpa saw the flying
papers but kept on doing the urgent work given by the GM.
Rao, who was half an hour late to office, was irritated to see his table. He shouted at
Shilpa and ordered her to sort out all the papers on the floor and arrange them
properly on his table. Shilpa refused and there were was a heated argument between
the two. The GM heard the noise but ignored it.
That afternoon, Rao submitted a note to the GM for his intervention. He also accused
Shilpa of dereliction of duties and insubordination on several instances.

Questions:
1) Discuss the chain of command prevailing between Rao and Shilpa
2) What could be the reasons for the GM to ignore the noise?
3) What should the GM do to sort this out?
 Case 2
A company manufacturing sewing machines set up in 1945
follows formal organization structure in totality. It is
facing a lot of problems due to delays in decision making.
As a result it is not able to adapt to changing business
environment. The workforce is also not motivated since
they cannot vent their grievances except through formal
channels. Employee turnover is high. Its market share is
also declining.
You are required to advise the company regarding the
changes it should bring about in its structure to
overcome the problems faced by it.
Thank You