MANAGEMENT CONCEPTS

INTRODUCTION
This Course consists of five units. The first unit is planned to introduce about the concept of
management and its features and functions. This unit will make us to familiarize the evolution of
the management thoughts. The second unit discusses about the concept of planning. It also takes
an attempt to highlight the nature and scope of the planning, process and steps involved in
planning, the same unit provides us to enrich our knowledge on objectives, policies, procedures,
and throw light on strategic formulations. It also helps us to read about the decision-making
process and types, and to enhance ideas on Management By Objectives. Unit three aims to make
us to learn the principles of organizations with the support of types and structures of
organization. The same unit is planned to discuss about the methods of delegation, the ways and
means of span of control and the significance of staff and committees. Fourth unit of the subject
is highlighting the style and sources of recruitment. Here in the same unit, objective and scope of
the training are also discussed. Along with the same communication process and practices in the
organization are also discussed .The fifth unit of the subject is promoting us to take up the
discussion on basic requisites for the coordination and controlling in any organization. This unit
will enable us to make rich enough on the importance and functions of control in an
organization. This unit shall progress to discuss on the control practices and control techniques
used by the organization.
 UNIT I Lesson-I INTRODUCTION TO MANAGEMENT
LEARNING OBJECTIVES
After reading this unit you should able to understand
 the nature and purpose of management
 that management is both an art and science
 the managerial functions such as planning, organizing, staffing, leading and controlling.
 the evolution of management thoughts
 the contribution of selected management thinkers
 various approaches to management
 contemporary management practices
 managing global environment

DEFINITION OF MANAGEMENT
There are different thoughts on the definition of management. Some are as fallows:
 Management as an art of getting things done by others
 Management as a process
 Management as a group of Managers
 Management as a discipline
The above said views are taken closely for the consideration to define the management. Mary
Parker Follet defined management as “the art of getting things done by others”. This definition
was criticized for the smack of a manipulative character about the practice of manager and also
for treating the employees for mere means to certain ends. Management was redefined by a
strong understanding that it is not only getting things done by others there should be something
more than that. This can be achieved by providing them good opportunities for growth and
advancements.
Harold Koontz defined the management as the art of getting things done through and formally
organised groups. It is “the art of creating an environment in which people can perform as
individuals and yet cooperate towards attainment of group goals”.
If we consider the management as a process, G.R.Terry has viewed management as a process.
Management is a distinct process consisting of planning, organizing actuating and controlling,
performed to determine and accomplish stated objectives by the use of human beings and other
resources.

According to McFarland, “Management is defined as the process by which managers create,

direct, maintain and operate purposive organizations through systematic, coordinated and
cooperative way”.
Though F.W. Taylor developed principles of management, credit goes to Henri Fayol, a French
management theorist for advocating and publicizing certain principles (or laws) for the
soundness and good working of the management. Henri Fayol warned that the principles of
management should be,
(i) Flexible and not absolute-must be usable regardless of changing conditions,
(ii) Used with intelligence and with a sense of proportion, etc.
Henri Fayol listed 14 principles that grew out of his experience.
Kreitner defines management as “Management is a problem solving process of effectively
achieving organizational objectives through the efficient use of scarce resources in changing
environment”.

CHARACTERISTICS OF MANAGEMENT
Management is a distinct activity having the following salient features or characteristics.
1. Economic Resource. Management is one of the factors of production together with land,
labor and capital. As industrialization increases, the need for managers also increases. Efficient
management is the most critical input in the success of any organized group activity as it is the
force, which assembles and integrates other factors of production, namely, labor, capital and
materials. Inputs of labor, capital and materials do not by themselves ensure production; they
require the catalyst of management to produce goods and services required by the society. Thus,
management is an essential ingredient of an organization.
2. Goal Oriented. Management is a purposeful activity. It coordinates the efforts of workers to
achieve the goals of the organization. The success of management is measured by the extent to
which the organizational goals are achieved. It is imperative that the organizational goals must
be well-defined and properly understood by the -managers at various levels.
3. Distinct Process. Management is a distinct process consisting of such functions as planning,
organizing, staffing, directing and controlling. These functions are so interwoven that it is not
possible to lay down exactly the sequence of various functions or their relative significance. In
essence, the process of management involves decision-making and putting of decisions into
practice.
4. Integrative Force. The essence of management is integration of human and other resources to
achieve the desired objectives. All these resources are made available to those who manage.
Managers apply knowledge, experience and management principles for getting the results from
the workers by the use of non-human resources. Managers also seek to harmonize the
individuals’ goals with the organizational goals.
5. System of Authority: Management as a team of managers represents a system of authority a
hierarchy of command and control. Managers at different levels process varying degrees of
authority, generally, as we move down in the managerial hierarchy, the degree of authority gets
gradually reduced. Authority enables the managers to perform their functions effectively.
6. Dynamic function: Management is a dynamic function of business organization, its functions
change from time to time depending upon the circumstance of the business, i.e., changes in
economic, social, political, technological and human conditions. Management adjusts itself to the
changing atmosphere making suitable forecasts and changes in the policies.
7. Social process: Management is a social process as it primarily deals with emotional, dynamic
and sensitive human beings. The major achievement is to win their confidence and cooperation.
Thus, it is difficult to precisely define the principles of management. Management principles are
constantly influenced by social traditions, customs and regulations.
8. Management makes things happen: Managerial ability is distinctly different from technical
ability. Management is the art of getting things done through people. It implies that under given
set of constraints or problem boundaries how positive results can emerge, by taking well-defined
actions.
9. Management is a multi-faceted discipline: Management has to deal with heterogeneous
resources. Their performance depends upon the proper knowledge and skill of various
disciplines. Management has grown as a body of discipline taking the help of so many social
sciences like-Anthropology Sociology, Psychology' etc. Due to this, management is also known
as a "Behavioral Science."
10. Intangible force: Managerial ability is an intangible force; it is a social skill, which cannot
be seen with the eyes but it, is evidenced by the quality and level of an organization.

Example: At AT&T, people remark, “If you are hiring people who do not like surprises, you
are probably not hiring the right people.”
Levels of Management
Management/Industrial Management has got the following activity levels.
1. Top Management.
2. Upper Middle Management.
3. Middle Management.
4. Lower Management
Top Management: It is the function of top management to watch, interpret, exploit of where
necessary, and counter external influences with appropriate decisions and plans and to initiate the
appropriate adjustment in the functional authority and status structures of the organization. It is
the top management’s duty to protect the integrity of the organization, so that it can survive for
its own employee’s , the shareholder’s, supplier’s and customer’s interests and for the general
good of the social and economic system within which it operates. Top Management
Functions are setting basic goals and objectives, Expanding or contracting activities, Establishing
policies, Monitoring performance, Designing/Redesigning organization and system, and
shouldering financial responsibilities, etc.
Top Management includes
(a) Board of Directors,
(b) Managing Directors,
(c) Chief Executives,
(d) General Managers,
(e) Owners, and
 (f) Shareholders and financiers.
Middle Management: the middle management level generally consists of divisional and
departmental heads such as plant manager, production manager, marketing manager, personal
directors etc. Their job is to interpret policies and directions set by the top level management into
specific plans and guidelines for action. Their responsibility is to coordinate the working of their
departments so that the set objectives can be achieved. They are concerned with short term goals
and specific results. They spend more time on operational planning, information processing and
day-to–day monitoring of their divisional activities. Middle Management Functions are running
the details of the organization, cooperating to run organization smoothly, understanding
interlocking of departments in major policies, achieving coordination between different parts of
the organization, conducting training for employee development and building an efficient
company team spirit.
Lower Management: This level of management consists of supervisors, superintendents, unit
heads, foremen, chief clerks etc, their primary concern is with the mechanics of the job and they
are responsible for coordinating the work of their employees. They must possess technical skills
so that they can assist their subordinates when necessary. They plan day to day operations, assign
personnel to specific job, oversee their activities, evaluate their performances, and become a link
between the workers and the middle level management.
 Figure1.1
The functions performed by top managers, middle managers, and lower-level managers are
shown in Figure1.1

Importance of Skills at Different Levels

There are various levels of management; and the managers at various levels perform all the
functions of management though in varying degrees. Thus, the level of skills required at different
managerial levels will be different. Conceptual skills are critical in top executive positions
whereas technical skills are very essential for lower level management. Technical skills can be
learnt easily, but other skills cannot be learnt unless an individual has the potential and capacity
and an inner urge to learn them. Conceptual skills are highly important for top management,
which is responsible for formulating long-range plans and policies for the whole business.
Human skills are important at all levels of management.

Roles of managers

In1973, Henry Mintzberg conducted one of the first comprehensive studies of the nature of
managerial work and gives us a complete picture of what a manager actually does. Based on his
study of the activities of five practicing chief executives, Mintzberg generalized his description
of the nature of managerial work in actual practice. He identified ten basic roles performed by
managers and classified them under three heads. (i) Interpersonal, (ii) informational, and (iii)
decisional. These roles-organized sets of behaviors belonging to a position-describe what man-
agers actually do, whereas functions of managers had historically described what managers
should do?
The interpersonal roles are as follows:
1. A manager is a symbol, or a figurehead. This role is necessary because of the position
occupied. It consists of such duties as signing certain documents required by law and officially
receiving visitors.
2. A manager serves as a leader that is, hires, trains, encourages, remunerates, judges the
subordinates.
3.A manager serves as a liaison between outside contacts such as the community, suppliers, and
others and the organization.
The informational roles found by Mintzberg are:
1. As monitors, managers gather information in order to be well informed.
2. Managers are disseminators of information flowing from both external and internal sources.
3. Managers are spokes-persons or representatives of the organization. They speak for
subordinates to superiors and represent upper management to subordinates.
Mints berg’s decisional roles are:
1. Managers as entrepreneurs are initiators, innovators, problem discoverers and designers of
improvement projects that direct and control change in the organization.
2. As disturbance handlers, managers react situations that are unexpected, such as mass
absenteeism, resignation of subordinates, or losing of customers.
3.A third decisional role is that of resource allocator.
4.Finally, managers are negotiators. At times, this role can be partially delegated; however,
managers assume it when conflicts arise.
MANAGEMENT –SCIENCE OR ART ?
Science: An organized or systemized body of knowledge pertaining to a specific field of
enquiry.
Art: It is the application of knowledge and personal skills to achieve results.
Profession: It is an
 occupation for which specialized knowledge, skills and training are required
 these skills are used for larger interests of the society and
 the success of these skills is not measured in monetary terms always.
The question whether management is a science, art or profession is put to debate quite
frequently. There are arguments on both sides. Let us examine these in detail.
Properties of Science
Science is a systematized body of knowledge based on certain principles, capable of general
application. This knowledge is obtained through the process of observation, experimentation and
testing. Science has four elements.
Systematic body of knowledge: Science is systematized in the sense that it is based on the cause
and effect relationship between different variables. Such a knowledge helps in explaining past
events and predicts the outcome of specific actions.
Scientific inquiry and observation: Scientific inquiry is unaffected by the personal likes and
dislikes of a scientist. When we say that the rotation of earth causes days and nights, we do not
express the opinion of just one person. This can be scientifically proved at any time.
Experimentation: The principles of science are derived after repeated observations and
experiments. The results of each experiment can be verified and outcomes predicted in a definite
way. When results get confirmed after repeated experimentation, they become principles.
Universal truths: Scientific principles represent basic truths. They are developed after a series of
experiments. They can be applied in all situations and at all times.
Management as a Science
Management is a science because it has all the characteristics of a science, namely: Systematized
body of knowledge: Management is a distinct discipline. It has a number of principles, which can
be studied and put to application. Management offers principles that could be put to good use
while solving problems.
Management is a social science: Management is a social science, as it deals with human
behavior about which little is known at present. As we all know, it is not possible to study human
behavior under controlled laboratory conditions. Human behavior is unpredictable and therefore,
defies experimentation. As a result, the principles of management cannot be accepted as absolute
truths. They are still in a developing stage and evolutionary in nature. Management, at best, can
be called as a soft science.
Management is an inexact science: Management is not an exact science like physics, chemistry
or biology. It does not offer absolute principles. It can offer only flexible guidelines that would
be of use in solving problems. Management can never be an exact science because business is
highly dynamic and business conditions change continually.
Manager vs. scientist: A scientist can afford to wait until all the information (about a thing) is
available. He can indulge in a series of experiments till the truth emerges clearly. However, a
manager cannot afford to do like that. He must take decisions based on inadequate information,
insufficient knowledge and resources. He must make decisions today in order to survive in
future.
Scientific management: When Taylor used the term 'scientific management', he was aware of the
fact that experimentation and verification of facts is not possible in managing human resources.
He had used the term 'scientific', as an organized body of knowledge as opposed to traditional
rules and empirical dexterity. Over the years, the traditional hit-or-miss methods have yielded
place to several systematic methods based on principles. No wonder, management is known as a
'sophisticated behavioral science' these days. Thus, art and science are complementary and
mutually supportive.
Properties of Art
Art is the application of knowledge and personal skills to achieve results. It is a way of living.
Art is based on the knowledge of principles offered by science. A surgeon or a physician without
the ledge of medical science becomes a witch doctor, with the knowledge of science; an artful.
Art is basically concerned with application of knowledge, how to do things creatively and
skillfully. It can be improved through constant practice only. Terry has drawn the distinctions
between science and art there fore:
Management is basically an art as it involves the use of know how and skills like any other art
such as painting, sculpture, etc. The practical knowledge acquired in the areas of planning,
decision making and motivating certainly help managers to tackle problems in a better way. The
arguments in favor of management as an art run as follows:
Use of knowledge: just as a doctor uses the science of medicine while diagnosing and treating the
patients, a manager uses the knowledge of management theory while performing the managerial
functions. Thus he uses sound knowledge in place of hit-or-miss methods, with a view to achieve
results effectively.
Creative art: Management is creative like any other art. It combines human and non-human
resources in a useful way so as to achieve results. It tries to produce sweet music by combining
the chords in an effective manner. It makes things happen by changing the behavior of human
beings.
Personalized: Like any other art, management is a personalized activity. Every manager has own
way of managing things and people, based on his knowledge and experience. There is one way
of doing things. As years roll by, managers learn the art of managing through a process of trial
and error.
Constant practice: Managers learn from mistakes. The application of managerial principle over a
period of time enables them to tackle difficult problems with confidence. In other words they
develop their skills through constant practice just as artistic skills can be developing through
training, so called managerial skills.

Management is Science as well as Art

Management is thus, an art as well as a science. The art of management is as old as civilization.
The science of management is young and developing. Both are complementary and mutually
supporting Managers need to acquire the knowledge of management principles and practice in
order to successful. They need to sharpen this knowledge through constant practice. The
theoretical knowledge in management must be put to good use in a skilful way, while achieving
results. As Drucker has pointed out, every organization has the same resources to work with. It is
the quality of management that spells the difference between success and failure. Managers need
to acquire knowledge systematically and put the same to good use, using intuition, judgment and
experience .A successful manager is one who is able to visualize problems before they turn into
emergencies. The ability to meet the problems head-on does not come by chance. It requires
sound knowledge and constant practice. Managers, therefore, have to fruitfully combine their
scientific knowledge with artistic skills in order to emerge as the winners, in a competitive
environment.
Learning Activity
Do you think that management education is essential for a professional career? Justify your
answer giving real-life based examples.

SUMMARY
Administration makes the important decisions of an enterprise in its entirety, whereas
management makes the decisions within the confines of the framework, which is set up by
the administration.
Administrators are mainly found in government, military, religious and educational
organisations. Management, on the other hand, is used by business enterprises.
Managers fruitfully combine their scientific knowledge with artistic skills in order to emerge
as the “winners’ in a competitive environment. Thus management is considered as both
science and an art.
Managers just don't go out and haphazardly perform their responsibilities. Good managers
discover how to master the basic functions: planning, organising, staffing, directing,
coordinating and controlling.The term ‘levels of management’ refers to a line of demarcation
between various managerial positions. There are three levels of management i.e. top level,
middle level and lower level of management.

StudyTips
Scientific management main objective is improving
economic efficiency, especially labour productivity.

KEYWORDS

Management: It is concerned with the carrying out the operations designed to

accomplish the aims.
Administration: It refers to the determination of major aims and policies.
Goal: An observable and measurable end result having one or more objectives to be
achieved within a more or less fixed timeframe.
Review Questions:
1. Define management
2. Is management – science or art? Discuss.
3. What are skills required to a manager?
4. Describe different levels of management
5. List the roles of managers
 LESSON-II EVOLUTION OF MANAGEMENT THOUGHTS AND MANAGING IN
GLOBAL ENVIRONMENT
Learning Objectives
Define organization as a system
Explain classical management theories
Describe various approaches to management
Explain various types of International Management Orientations called EPRG Framework
Identify the factors affecting Global Business
Discuss the concept of Multinational Corporations (MNCs)

Introduction
More than 200 years ago Adam Smith described the advantages of division and specialization.
However, the study of management as a science began recently, especially after the Industrial
Revolution. There has been a deluge of research during the last few decades of management. It
has attracted the attention of psychologists, sociologists, anthropologists mathematicians,
political scientists, economists and so on. Unfortunately, the approaches by these scholars have
created chaos and resulted in a 'confused and destructive warfare'.
Harold Koontz described the present state of management theory as a 'jungle’. According to
Koontz, Donnell and Weihrich there are eleven approaches for studying management. Way back
Stogdill has identified not less than eighteen approaches for studying management. Hutchinson
has identified five approaches. Thus, different writers have provided different categorization
schemes for studying management. In order to facilitate easy understanding, we can identify four
broad approaches namely, the classical, neo-classical, behavioral and modern theory.
(i) Classical School: It is the oldest school of management thought. The classical theorists
concentrated on organization structure for the achievement of organizational goals and also
developed certain principles of management. Many of the classical concepts and principles hold
good even to-day. The classical thought can be studied under two streams, namely, (a) Scientific
Management, (b) Bureaucracy
(ii) Neo-Classical School: The neo-classical writers tried to remove the deficiencies of the
classical school and suggested improvements for good human relations in the organization. Their
propositions are based on 'human relations studies' conducted at the Hawthorne Plant of General
Electricals, U.S.A. That is why, they are also known as 'human relationists.'
(iii) Behavioral Sciences School: This approach emerged as a result of the contributions of
psychologists, sociologists and anthropologists to the field of management. The behavioral
science perspective believes that it is difficult to understand the sociology of a group separate
from the psychology of the individuals comprising it and the anthropology of the culture within
which it exists. Thus, the behavioral sciences are transactional; they are concerned with all
relevant aspects of human behavior including the interactions among all important factors.
(iv) Modern School: The modem management thinkers define organization as a system and also
consider the impact of environment on the effectiveness of the organization. As a result, two
approaches have gained prominence after 1960s, which are as follows: (a) Systems approach,
and (b) Contingency approach.

Managing in Global Environment

To recognize opportunities or threats due to global environmental forces, it is necessary that
managers must differentiate between the task environment and the more surrounding general
environment. The task environment is the set of forces and conditions that affect an
organization's ability to obtain inputs and dispose of its outputs. It consists of the organization's
suppliers, customers, distributors, and competitors, and has the most immediate and direct effect
on managers. Suppliers are individuals and organizations that provide an organization with the
input resources that it needs to produce goods and services such as raw materials, component
parts, and employees. In global environment, relationships with suppliers can be complicated due
to materials shortages, unions, and lack of substitutes. Suppliers who are the only source of a
critical item are in a strong bargaining position to raise their prices. Managers can reduce these
supplier effects by increasing the number of suppliers of an input. Another element of task
environment is distributors. These are organizations that help other organizations sell their goods
or services to customers. Powerful distributors can limit access to markets through its control of
customers in that market. Customers purchase the goods and services that an organization
produces. Identifying an organization's main customers and producing the goods and services
they want is vital to organizational and managerial victory. Competitors also affect the global
environment of firms. Competitors manufacture goods and services that are comparable to a
particular organization's merchandise and services. Strong competitive enmity results in price
competition, and falling prices reduce access to resources and lower profits.
SCIENTIFIC MANAGEMENT APPROACH
The impetus for the scientific management approach came from the first industrial revolution.
Because it brought about such an extraordinary mechanization of industry, this revolution
necessitated the development of new management principles and practices. The main
contributors to scientific management include Frederick Taylor, Henry L. Gantt, Frank Gilbreth,
LillianGilbreth and Harrington Emerson and others.
Fredrick W. Taylor
Taylor was the first person who insisted on the introduction of methods in management and it
was he who, along with his associates, made the first systematic study of management. He
launched a new management approach in 1910 which is known as 'Scientific Management.' That
is why Taylor is regarded as the father of scientific management.
Taylor was born in 1856 in Philadelphia, U.S.A. He started his career as an apprentice in, a
small machine making shop in 1870 and rose to the position of Chief Engineer of Midvale Steel
Works in 1884 at the age of 28.
Meaning of Scientific Management
According to Taylor, "Scientific Management is the substitution of exact scientific investigations
and knowledge for the old individual judgment or opinion in all matters relating to the work
done in the shop". It implies the application of science to the management of a business concern.
It aims at replacement of traditional techniques by scientific techniques.
Principles of Scientific Management
Taylor's contribution has two dimensions: (i) mechanical and (ii) philosophical. On the
mechanical side, Taylor introduced time and motion studies. Standardization of tools, methods
and working conditions, differential piece rate were considered for the payment of wages, etc.
On the philosophical side, he tried to develop the science of management based on scientific
investigation and experiment. Before studying the techniques or elements of scientific manage-
ment, a proper understanding of Taylor's philosophy is a must. The scientific management is
based on the following five principles:
I. Science, not rule of thumb.
2. Harmony in group action, rather than discord.
3. Maximum output in the place of restricted output.
4. Scientific selection, training and placement of the workers.
5. Development of all workers to the fullest extent possible for their own and organization’s
highest prosperity.
The above principles are discussed below:
1. Replacement of old rules of thumb method: Scientific investigation should be used for taking
managerial decisions instead of basing decisions on opinion, intuition or rule of thumb. Under
scientific management, decisions are made on the basis of facts as developed by the application
of scientific method to the problem concerned. This is in contrast with the approach followed
under traditional management according to which decisions are based on opinions, prejudices, or
rule of thumb.
2. Scientific selection and training of workers: The procedure for selection of workers should
be designed scientifically. The errors committed at the time of selection may prove to be very
costly later on. If we do not have right worker on the right job, the efficiency of the organization
will be reduced. Therefore, every organization should follow a scientific system of selection. The
selected workers are to be trained to avoid wrong methods of work. Management is responsible
for their scientific education and training.
3. Co-operation between labor and management: There should be cooperation between the
management and the workers. This requires change of mental attitudes of the workers and the
management towards each other. Taylor called it mental revolution. When this mental revolution
takes place, workers and management turn their attention towards increasing profits. They do not
quarrel about the distribution of profits.
4. Maximum output: The management and the workers should try to achieve maximum output,
in place of restricted output. This will be beneficial to both the parties. Maximum output will
also be in the interest of the society.
5. Equal division of responsibility: There must be equal division of responsibility between the
managers and the workers. The management should assume responsibility for the work for which
it is better suited. For instance, management should decide the method of work, working
conditions, time for completion of work, etc. instead of leaving these to the discretion of
workers. The management should be responsible for planning and organizing the work, whereas
workers should be responsible for the execution of work as per instruction of the management.
Techniques of Scientific Management
To put the philosophy of scientific management into practice, Taylor and his associates have
suggested the following techniques:
1. Scientific Task Setting: It is essential to set the standard task which an average worker should
do during a working day. Taylor called it a fair day's work. He emphasized the need for fixing a
fair day's work because it will prevent the workers from doing work much below their capacity.
2. Work Study: Work-study implies an organized, objective, systematic, analytical and critical
assessment of the efficiency of various operations in an enterprise. It is a generic term used for
those techniques which are used in the analysis of human work in its entire context and which
lead systematically to the investigation of all factors, which affect the efficiency, and economy of
operations. Work-study includes the following techniques:
(i) Method study: This study is conducted to know the best method of doing a particular job. It
helps in reducing the distance traveled by materials, and brings improvements in handling,
transporting, inspection and storage of raw materials and goods.
(ii) Motion study: It is the study of the movement of an operator or a machine. Its purpose is to
eliminate useless motions and find out the best method of doing a particular job. By undertaking
motion study, an attempt is made to know whether some elements of a job can be eliminated,
combined or their sequence changed to achieve the necessary rhythm.
(iii) Time study: Time study is the technique of observing and recording the time required to do
each element of an industrial operation. Through time study, the precise time required for each
element of a man's work is determined. It helps in fixing the standard time required to do a
particular job.
(iv) Fatigue study: Fatigue, physical or mental, has an adverse effect on worker's health and his
efficiency. Fatigue study helps in reducing fatigue among the workers. Fatigue is generally
caused by long working hours without rest pauses, repetitive operations, excessive specialization,
and poor working conditions. The purpose of fatigue study is to maintain the operational
efficiency of the workers.
3. Planning the Task: Taylor emphasized the need for planning work. He advocated that
planning function should be separated. Workers should not be asked to choose their own
methods and decide what they have to do. The planning department should do the detailed
planning. The planning department should prepare detailed instructions for the workers as to the
type, quality and quantity of the products to be used.
4. Standardization: Taylor advocated the standardization of tools, and equipments, cost system
and several other items. Efforts should be made to provide standardized working environment
and methods of production to the workers. Standardization would help to reduce spoilage and
wastage of materials, improve quality of work, reduce cost of production and reduce fatigue
among the workers.
5. Scientific Selection and Training: The management should design scientific selection
procedure so that right men are selected for the right jobs. The first step in scientific selection is
determining the jobs for which workers were required. After that the most appropriate
qualification, training, experience and the level of efficiency for the requisite post are
determined. Employees are selected according to predetermined standards in an impartial way.
Workers should be specifically trained for the jobs they are appointed so that they can perform
their jobs effectively.
6. Differential Piece-Wage Plan: Taylor suggested this plan to attract highly efficient workers.
Under this plan, there are two-piece work uses, one is lower and another is higher. The standard
of efficiency is determined either in terms of time or output based on time and motion study. If a
worker finishes work within the standard time or produces more than standard output within the
standard time, he will be given higher piece rate. On the other hand, if a worker is below the
standard, he shall be given lower piece rate.
7. Specialization: Taylor advocated that specialization must be introduced in a factory. He
advocated functional foremanship for this purpose. In his scheme, planning was separated from
executing. He recommended eight foremen in all to control the various aspects of production. He
suggested four foremen in the planning department, namely, route clerk, and instruction card
clerk, time and cost clerk and shop disciplinarian. The four foremen recommended for getting the
required performance from the workers include gang boss, speed boss, repair boss and inspector.
Evaluation of Scientific Management
Taylor's scientific management was associated with many benefits to the industry. According to
Gilberts, the main benefits of scientific management are "conservation and savings, making an
adequate use of every one's energy of any type that is expended." Scientific management leads to
the following benefits:
1. Replacement of traditional rule of thumb method by scientific techniques for each element of a
man at work.
2. Proper selection and training of the workers.
3. Establishment of harmonious relationship between the workers and the management.
4. Achievement of equal division of responsibilities between the workers and the management.
5. Standardization of tools, equipment, materials and work methods.
6. Detailed instructions and constant guidance of the workers.
7. Incentive wages to the workers for higher production.
8. Elimination of wastes and rationalization of system of control.
9. Better utilization of various resources.
10. Satisfaction of the needs of the customers by providing higher quality products at lower
prices.
Criticism of Scientific Management:
Taylor’s scientific management was criticized not only by the workers and managers but also by
the psychologists, the general public, etc. The main grounds of criticism are given below:
1. The use of the word 'Scientific' before 'Management' was objected because what is actually
meant by scientific management is nothing but a scientific approach to management.
2. It was argued that the principles of scientific management as advocated by Taylor were
confined mostly to production management. He ignored certain other essential aspects of
management like finance, marketing, accounting and personnel.
3. Taylor advocated the concept of functional foremanship to bring about specialization in the
organization. But this is not feasible in practice as it violates the principle of unity of command.
4. Trade unionists regarded the principles of scientific management as the means to exploit labor
because the wages of the workers were not increased in direct proportion to productivity
increases.
The other contributors to scientific management like Henri L. Gantt, Frank Gilbreth, Lillian
Gilbreth later remedied many of the above objections and Harrington Emerson later remedied
many of the above objections. Taylor’s theory is still being applied by the modem business
undertakings. In short, it can be said that Taylor was the pioneer in introducing scientific
reasoning to the discipline of management.
Management process school is also called the 'traditional' or 'universality' school, as it believes
that management principles are applicable to all kinds of group activities. Henri Fayol is
regarded as the father of this school. Henri Fayol defined management in terms of certain
functions and then laid down fourteen principles of management which according to him have
universal applicability.
Henri Fayol-Theory of management
Fayol was born in 1841 and was appointed engineer of a French mining company in 1860. In
1880, he became the managing director of the same company. When he took charge, the
company was on the verge of bankruptcy; when he retired in 1918, its financial position was
very strong. Fayol attributed his success to his system of management which he emphasized
could be both taught and learnt. Unlike Taylor, Fayol studied management from the board of
directors down. Taylor's approach to management dealt with specifics of job analysis,
employees' motion and time standards while Fayol viewed management as a teachable theory
dealing with planning, organizing, commanding, coordinating and controlling.
Fayol's long practical experience is simply reflected in his written work. He tried to develop a
theory of management. He discussed the principles of general management and argued that
managerial ability can be acquired as any other technical ability. He not only recommended
formal teaching in management but also practiced it by founding the center for Administrative
Studies in Paris. Thus, he was a pioneer in the field of management education. In brief, Fayol's
views on management command acceptability even today because they are much in tune with the
requirements of the management in the present day world. He has been rightly called the father
of general management.
Fayol’s Theory of Management
Fayol began by classifying all operations in business organizations under the following six
categories:
(i) Technical (production);
(ii) Commercial (purchases and sales);
(iii) Financial (funding and controlling capital);
(iv) Security (protection);
(v) Accounting (balance sheet, costing records); and
(vi) Administrative or managerial (planning, organizing, commanding, coordinating and
controlling).
Fayol pointed out that managerial activity deserved more attention. In his view, management is
the process composed of five elements or functions: planning, organizing, commanding,
coordination and control.
Fayol observed:
(i) To plan means to study the future and arrange the plan of operations;
(ii) To organize means to build up the material and human organization of the business;
(iii) To command means to make the staff do their work;
(iv) To coordinate means to unite all activities; and
(v) To control means to see that everything is done in accordance with the standards that have
been laid down
Principles of Management
Principles of Management implies a list of current management practices. Though F.W. Taylor
developed principles of management, credit goes to Henri Fayol, a French management theorist
for advocating and publishing certain principles (or laws) for the soundness and good working of
the management. Henri Fayol warned that the principles of management should be, (i) Flexible
and not absolute-must be usable regardless of changing conditions, (ii) Used with intelligence
and with a sense of proportion, etc. Henri Fayol listed 14 principles are briefed as under.
1. Division of Work (or Labor)
- Division of work means dividing the work on the principle that different workers (and different
places) are best fitted for different jobs (or things) depending upon influences arising from
geography, natural conditions, personal aptitude and skills.
- Division of work leads to specialization.
- Concept of division of labor can be applied to all kinds of work, managerial as well as
technical.
Advantages of Division of Labor: Since the same worker does the same work repeatedly,
(i) He gains proficiency and skill on the jobs,
(ii) Rate of production increases,
(iii) Product quality improves,
(iv) He is in a position to suggest changes in product, processing or methods of doing that work.
Disadvantages of Division of Labor:
(i) Division of labor gives rise to loss of craftsmanship; workers become machine-minders and
no more,
(ii) With the passage of time, the same job becomes dull and monotonous,
(iii) Workers can not remain all-around and one cannot work in place of another if he is
absent.
2. Authority and Responsibility
- Authority and Responsibility should go together, hand-in-hand and must be related.
- An executive can do justice with his responsibility only when he has the proper authority.
- Responsibility without Authority or vice versa is meaningless.
3. Discipline
- Discipline is absolutely necessary for efficient functioning of all enterprises.
- Discipline may be described as a respect for agreements that are directed at achieving
obedience, application, and the outward marks of respect.
4. Unity of Command
- Unity of command means, employees should receive orders and instructions from one boss (or
supervisor) only. In other words a worker should not be under the control of more than one
supervisor.
- Unity of command avoids confusion, mistakes and delays in getting the work done.
5. Unity of Direction
- It is a broader concept than the unity of command.
- Unlike unity of command which concerns itself with the personnel, unity of direction deals
with the functioning of the body corporate.
- Unity of direction implies that there should be one plan and one head for each group of
activities having the same objective.
In other words, there should be one common plan for an enterprise as a whole.
6. Subordination of Individual to General Interest
- The interests of an individual person should be permitted to supersede or prevail upon the
general interests of the enterprise.
- This is necessary to maintain unity and to avoid friction among the employees.
7. Remuneration
Remuneration is the price paid to the employees for the services rendered by them for the
enterprise. Remuneration should (i) be fair, and (ii) bring maximum satisfaction to both
employees and the employer.
8. Centralization of Authority
-Centralization of authority means that the authority is in the hands of center, i.e., the authority is
not dispersed among different sections.
-In a business organization, authority should be centralized only to that degree or extent which is
essential for the best overall performance.
-Degree of centralization is decided by keeping in view the nature, size and complexity of the
(business) enterprise.
9. Scalar Chain
-Managers may be regarded as a chain of superiors. There should be an unbroken line of
authority and command through all levels from the highest (i.e., general manager) to the lowest
ranks (employee).
-The chain of superiors should be short circuited, when following it strictly will be detrimental to
performance.
10. Order
-This promotes the idea that everything (e.g., materials) and everyone (human being) has his
place in the organization.
-Materials and human beings should be arranged such that right material (things)/person are in
the right place.
11. Equity of Treatment
-Manager should have equality of treatment for all his subordinates.
-Manager should deal with his subordinates with kindness and justice.
-This will make employees more loyal and devoted towards the management/enterprise.
12. Stability
-Stable and secure work force is an asset to the enterprise, because unnecessary labor turnover is
costly.
-An average employee who stays with the concern is much better than outstanding employees
who merely come and go.
-Instability is the result of bad management.
13. Initiative
-Initiative is one of the keenest satisfactions for an intelligent employee to experience.
- Managers should sacrifice their personal vanity in order to permit their subordinates to exercise
their own initiative.
- A manger should encourage his subordinates to take initiative.

14. Esprit de Corps

- This principle of management emphasizes the need for teamwork (harmony, and proper
understanding) among the employees and shows the importance of communications in obtaining
such team work.

FOLLOWERS OF TAYLOR
Among the immediate disciples of Taylor were such outstanding pioneers as Henry L. Gantt and
Frank and Lillian Gilbreth, to mention only a few.
Henry L. Gantt’s Contribution of Management
Gantt like Taylor , a mechanical engineer joined Taylor at the Midvale Steel Company in 1887.
He stayed with Taylor in his various assignments until 1901, when he formed his own consulting
engineering firm. Although he strongly espoused Taylor's ideas and did much consulting work
on the scientific selection of workers and the development of incentive bonus systems, he was far
more cautious than Taylor in selling and implementing his scientific management methods. Like
Taylor, he emphasized the need for developing a mutuality of interests between management and
labor, a harmonious cooperation. In doing this, he stressed the importance of teaching, of
developing an understanding of systems on the both labor and management, and of appreciating
that "in all problems of management the human element is the most important one."
Gantt is perhaps best known for his development of graphic methods of describing plans and
making possible better managerial control. He emphasized the importance of time, as well as
cost, in planning and controlling work. This led eventually to the famous Gantt chart, which is in
wide use today and was the forerunner of such modern techniques as the Program Evaluation and
Review Technique (PERT). Some social historians regard the Gantt chart as the most important
social invention of the twentieth century.
 Frank and Lillian Gilbreth
The ideas of Taylor were also strongly supported and developed by the famous husband and wife
team of Frank and Lillian Gilbreth. Frank Gilbreth gave up going to the university to become a
bricklayer at the age of 17 in 1885; he rose to the position of chief superintendent of a building
contracting firm 10 years later and became a building contractor on his own shortly thereafter.
During this period, and quite independently of Taylor's work, he became interested in wasted
motions in work; by reducing the number of bricklaying motions from 18 to 5, he made possible
the doubling of a bricklayer's productivity with no greater expenditure of effort. His contracting
firm work soon gave way largely to consulting on the improvement of human productivity. After
meeting Taylor in 1907, he combined his ideas with Taylor's to put scientific management into
effect.
Lillian Gilbreth’s interest in the human aspects of work and her husband’s interest in efficiency
the search for the one best way of doing a given task lead to a rare combination of talents. It is
therefore not surprising that Frank Gilberth long emphasized that in applying scientific
management principles; we must look that at workers first and understand their personalities and
needs. It is interesting too that the Gilbreths came to the conclusion that it is not the monotony of
work that causes so much worker dissatisfaction but, rather, management's lack of interest in
workers.

Bureaucracy-Definition
A Structure with highly routine operating tasks achieved through specialization, much
formalized rules and regulations, tasks that are grouped into functional departments, centralized
authority, narrow spans of control and decision making that follows the chain of command.
Elements of Bureaucracy are:
1.Hierarchy
2.Division of work
3.Rules, regulations and procedures
4.Records
5.Impersonal Relationships
6.Administrative class
Advantages of Bureaucracy: it is having the following qualities of distinction like
  Specialization
 Rationality
 Predictability
 Democracy
Disadvantages of Bureaucracy are as follows;
 Rigidity
 Impersonality
 Displacement of objectives
 Compartmentalization of activities
 Empire building
 Red tape

NEO-CLASSICAL APPROACH
Theories resulted in work behavior and the researches tried to investigate the reasons for human
behavior at work. They discovered that the real cause of human behavior is somewhat more than
the physiological variable. These findings generated a new phenomenon about the organizational
functioning and focused attention, on human beings in the organizations. These exercises were
given new names such as ‘behavioral theory of an organization’, ‘human view of an
organization' or 'human relations approach in an organization.'
The neoclassical approach was developed as a reaction to the classical approach, which attracted
so many behaviorists to make further researches into the human behavior at work. ‘Mayo’ and
his associates at Hawthorne Plant of the Eastern Electric Company, Chicago started this
movement in the late twenties, gained momentum and continued to dominate till the sixties.
Douglas M. McGregor has given an impressive account of thinking of human relations in his
book entitled 'The Human Side of Enterprise.'
The classical theory was the product of the time and the following reasons were responsible for
its development:
(i) The management thinking was showing signs of change because of the improved standards of
living and education level. The technological changes were forcing the management to expand
the size of the organization and complexities were increasing. This also led to the fact that the
management be somewhat more sympathetic and considerate towards their workers.
(ii) The trade union movement got momentum and made the workers conscious of their rights. It
was no longer possible for the management to treat the human beings at work as 'givens'.
These were two main reasons, which were responsible for the change of management behavior
from autocratic to the custodial approach, which was based on offer of fringe benefits apart from
wages to meet their security needs.
Though neoclassical approach was developed as a reaction to the classical principles, it did not
abandon the classical approach altogether, rather it pointed to the limitations of the classical
approach and attempted to fill in the deficiencies through highlighting certain points which were
not given due place in the classical approach. In this regard, there were two schools of thought
one school of thought with writers as Simon, Smith burg, and Thompson, pointed out the
limitations of the classical approach to structural aspect only and the analysts called this group as
'neoclassicists'. This school of thought suggested modifications to the classical principles but did
not abandon the basic principles. The other school of thought which consisted of large number of
writers focused on the human aspect neglected by the classicists. This group was called as human
relationists or behaviorists. Both these schools were reactions to the classical theory but failed to
suggest or develop any new theory except providing some points of criticism on varying counts.
Both of them could be referred as neoclassicists.
Neoclassicists endeavored to identify the weaknesses of classicists through empirical research
and most of the criticisms of classical theory have emerged through researches. Hawthorne
studies were the beginning of the series. The other contributors are Roethlisberger, Dickson,
Whitehead, Lippitt and White, Coach and French Jr., etc.

HUMAN RELATIONS APPROACH

The classical writers including Weber, Taylor and Fayol neglected the human relations aspect.
The human relationists, (also known as neo-classicists) focused on the human aspect of industry.
They modified the classical theory by emphasizing the fact that organization is a social system
and the human factor is the most important element within it. They conducted some experiments
(known as Hawthorne Experiments) and investigated informal groupings, informal relationships,
patterns of communication, patterns of informal leadership, etc. Elton Mayo is generally
recognized as the father of the Human Relations School. Other prominent contributors to this
school include Roethlisberger, Dickson, Dewey, Lewin, etc.
Hawthorne Studies
In 1927, a group of researchers led by George Elton Mayo and Fritz J. Roethlisberger at the
Harvard Business School were invited to join in the studies at the Hawthorne Works of Western
Electric Company, Chicago. The experiment lasted up to 1932. Earlier, from 1924 to 1927, the
National Research Council made a study in collaboration with the Western Electric Company to
determine the effect of illumination and other conditions upon workers and their productivity.
Illumination Experiment. This experiment was conducted to establish relationship between
output and illumination. The output tended to increase every time as the intensity of light was
improved. But the output again showed an upward trend when the illumination was brought
down gradually from the normal level. Thus, it was found that there is no consistent relationship
between output of workers and illumination in the factory. There were some other factors, which
influenced the productivity of workers when the intensity of light was increased or decreased.
Relay Assembly Room Experiment. In this experiment, a small homogeneous work-group of
girls was constituted. Several new elements were introduced in the work atmosphere of this
group. These included shorter working hours, rest pauses, improved physical conditions, friendly
and informal supervision, free social interaction among group members, etc. Productivity and
morale increased considerably during the period of the experiment. Morale and productivity
were maintained even if improvements in working conditions were withdrawn. The researchers
concluded that socio-psychological factors such as feeling of being important, recognition,
attention, participation, cohesive work-group, and non-directive supervision held the key for
higher productivity.
Bank Wiring Observation Room Experiment. This experiment was conducted to study a
group of workers under conditions, which were as close as possible to normal. This group
comprised of 14 workers. After the experiment, the production records of this group were
compared with their earlier production records. There were no significant changes in the two
because of 'the maintenance of 'normal conditions'. However, the researchers observed existence
of informal cliques in the group and informal production norms.
The findings of Bank Wiring Experiment included the following observations:
1. Each individual was restricting output.
2. The group had its own "unofficial" standards of performance.
3. Individual output remained fairly constant over a period of time.
4. Departmental records were distorted due to differences between actual and reported output or
between standard and reported working time.
Mass Interview Programme. The researchers interviewed a large number of workers with
regard to their opinions on work, working conditions and supervision, Initially, managers and
researchers used a direct approach whereby interviewers asked questions considered important.
Later, this approach was replaced by an indirect technique where the interviewer simply listened
to what the employees had to say. The findings confirmed the importance of social factors at
work in the total work environment.
Contributions of Human Relations Approach or Hawthorne Studies
The human relationists proposed the following points as a result of their findings of the
Hawthorne experiments:
1. The organization in general is a social system composed of numerous interacting parts. The
social system defines individual roles and establishes norms that may differ from those of the
formal organization. The workers follow a social norm determined by their co-workers, which
defines the proper amount of work, rather than try to achieve the targets management thinks they
can achieve, even though this would have helped them to earn as much as they physically can.
2. The social environment on the job affects the workers and is also affected by them.
Management is not the only variable.
3. The informal organization does also exist within the framework of formal organization and it
affects and is affects by the formal organization.
4. At the workplace, the workers often do not act or react as individuals but as members of
groups. A person who resists pressure to change his behavior as an individual often changes it
quite readily if the group of which he is a member changes its behavior. The group plays an
important role in determining the attitudes and performance of individual workers.
5. There is an emergence of informal leadership as against formal leadership and the informal
leader sets and enforces group norms. He helps the workers to function as a social group and the
formal leader is rendered ineffective unless he conforms to the norms of the group of which he is
supposed to be in charge.
6. Both way communication is necessary because it carries necessary information downward for
the proper functioning of the organization and transmits upward the feelings and sentiments of
people who work in the organization.
7. Money is only one of the motivators, but not the sole motivator of human behavior. Man is
diversely motivated and socio-psychological factors act as important motivators.
8. Man's approach is not always rational. He may behave irrationally as far as rewards from the
job are concerned.
Appraisal of Neoclassical Theory Contribution
The neoclassical theory provides various modifications and improvements over the earlier theory
and offers a more humanistic view towards people at work. Neoclassicists have also introduced
behavioral science in the study of organizational functioning which has helped managers quite a
lot. This approach emphasized the micro-analysis of the human behavior. The theory has brought
into light certain important factors which were altogether ignored by the classicists such as
informal group, group norms, informal leader, non-economic rewards, etc. Thus, the approach
gives evidence of accepting the classical doctrine though superimposing its modifications,
resulting from individual behavior and the influence of the informal group.
Criticism of Human Relations Approach
The human relations approach has been criticized on the following grounds:
(i) Lack of Scientific Validity. The human relationists drew conclusions from Hawthorne studies.
These conclusions are based on clinical insight rather than on scientific evidence. The groups
chosen for study were not representative in character. The findings based upon temporary groups
do not apply to groups that have continuing relationship with one another. Moreover, the
experiments focused on operative employees only.
(ii) Limited Focus on Work. The human relations approach lacks adequate focus on work. It puts
all the emphasis on interpersonal relations and on the informal group. It tends to overemphasize
the psychological aspects at the cost of the structural and technical aspects.
(Iii) Over-emphasis on Group. The human relations approach over-emphasizes the group and
group decision-making. But in practice, groups may create problems and collective
decision-making may not be possible.
(iv) Over-stretching of Human Relations. It is assumed that all organizational problems are
amenable to solutions through human relations. This assumption does not hold good in practice.
(v) Conflict between Organizational and Individual goals. It views conflict between the goals of
the organization and those of individuals as destructive. The positive aspects of conflicts such as
overcoming weaknesses and generation of innovative ideas are ignored.
 BEHAVIOURAL SCIENCES APPROACH
Under behavioral science approach, the knowledge drawn from behavioral sciences, namely,
psychology, sociology and anthropology, is applied to explain and predict human behavior. It
focuses on human behavior in organizations and seeks to promote verifiable propositions for
scientific understanding of human behavior in organizations. It lays emphasis on the study of
motivation, leadership, communication, group dynamics, participative management, etc.

The essential characteristics of behavioral science approach are as under:

(1) Data must be objectively collected and analyzed.
(2) Findings must be presented so that the distinction between cause and effect, as opposed to
chance occurrences, is clear.
(3) Facts must be systematically related to one another within a systematic framework. Data
collection alone does not constitute a science.
(4) The findings of a study must always be open to further examination and question.
The proponents of behavioral science approach made the following propositions:
(i) An organization is a socio-technical system.
(ii) Individuals differ with regard to attitudes, perceptions and value systems. As a result, they
behave differently to different stimuli under different conditions.
(iii) People working in the organization have their needs and goals, which may differ, from the
organizational goals. Attempts should be made to achieve fusion between organizational goals
and human needs.
(iv) A wide range of factors influence inter-personal and group behavior of people in
organizations.

SOCIAL SYSTEM APPROACH

It was Chester I. Barnard who developed the concept of social system. He viewed organization
as a social system that is composed of people who work in, cooperation. An organization comes
into existence when (a) there are a number of persons in communication with each other, and (b)
they are willing to cooperate for a common purpose. Barnard also recognized informal
organization representing social interactions, which generally do not have a consciously
coordinated joint purpose. The executives should encourage informal organizations to serve as a
means of communication and group cohesiveness.
Chester I. Barnard –Contribution to Management
Barnard's treatment of management differed considerably from that of Taylor and Fayol. Taylor
concentrated on improving the task efficiency of the individual. Fayol, on the other hand,
moving to the totality concept of management directed his analysis to the operational side, i.e.,
principles and functions of management. But Barnard started with the individual, moved to
cooperative organised endeavor and ended with executive functions. His publication 'The
Functions of the Executive' (1938) is a highly significant work. He wrote this book with two
objectives: to set forth a theory of cooperation and organization, and to present a description of
the executive process.
The broad features of the Social System approach are as follows:
(i) Organization is treated as a social system. That is why, this approach resembles the human
relations approach.
'(ii) Relationships exist among the external and internal environment of the organization.
(iii) Cooperation among group members is necessary for the achievement of organizational
goals.
(iv) For effective management, efforts should be made for establishing harmony between the
goals of the organization and those of the various groups therein.
Barnard identified the following functions of an executive: (a) the maintenance of organizational
communication, (b) securing essential services from individuals in the organization, and (c)
formulating and defining the purpose. By performing these functions, the executives can achieve
good human relations in the organization.
Barnard also developed a new concept of authority-known as acceptance authority. He suggested
that a person will accept the communication as authoritative only when-four conditions are
satisfied: (a) he can understand the communication, (b) he believes that it is consistent with
organizational purpose, (c) he believes it to be compatible with his own personal interests, and
(d) he is mentally and physically able to comply with it.
Barnard is often remembered for his views on social responsibility of management. The
philosophy of social responsibility of management emphasizes that management should consider
itself as a provider of fair wages and security, and a creator of an atmosphere conducive to the
growth and development of the worker as an employee and as a citizen.

SYSTEMS APPROACH TO AN ORGANISATION

We may look at the organization from two different angles:
1. We may consider the overall picture of the organization as a unit; or
2. We may consider the relationship between its various internal components.
When we consider the overall picture of the organization, we consider all the elements-internal
and external-and their effects on each offer simultaneously. This approach may be called the
'goalistic view' because it tries to reach the goal of an organization by unifying the efforts of all
the elements. For example, when we consider finance, workers and their attitude, technological
developments, etc. we are following goalistic view. It serves as a mean-ends analysis, which in
turn facilitates division of work and helps in judging the extent of success of comparing actual
and targeted performance. But it does not answer many problems such as interdependence of
elements, organizations environment, interface, etc. It gives a systematic view when we consider
the second approach, i.e., we examine the relationship between each element of the organization
and their interdependence. If we examine employer-employee, customer and organization,
debtors-organization relationships, we follow systematic view.
The systems approach focused attention on the following aspects:
(i) It integrates all elements for the proper and smooth functioning of the organization.
(ii) The organization overall goals can be achieved successfully because it considers all the
aspects of the problems deeply and maintains a harmonious relationship between various
elements so that they work untidily to achieve goals.
(iii) The approach helps in acquisition and maintenance of various resources, i.e., man, material,
money, and machinery, etc. for pertaining the smooth functioning of the organization.
(iv) It allows adaptation to internal - requirements and environmental changes in order to survive
and grow.
Definition and Characteristics of System
1. Definition of System: Kast and Rosenzweig define the system as an organised unitary whole
composed of two or more interdependent parts, components or sub-systems and defined by
identifiable boundaries form its environmental suprasystem. More simply, a system may be
referred as units composed of several interdependent parts. System may be denoted as a grouping
of parts and not simply an agglomeration of individual parts. Though each part performs its own
functions yet they work towards a common goal. The behavior of the entity is a joint function of
the behaviors of the individual parts and their interactions. An organization is composed of a
number of sub-systems such as internal organization, technological, psychological, structural,
and managerial and environment etc. that are constantly changing and evolving. A change in one
may affect the other.
2. Characteristics of System: From the analysis of foregoing definition and discussion
following characteristics of a system emerge:
1. Interdependence of parts: A system has several parts. Each part is dynamic and affects all
other parts. They are interrelated and interdependent. Interdependence of different parts is must
in an organization as a system, because of division of labor, specialization, sharing of limited
resources, scheduling of activities, etc. The work of the organization is divided into various
departments, sub-departments and so on, assigning each unit an independent specialized task,
which on integration culminates into the accomplishment of overall organizational goals. These
parts are interconnected in such a way that a change in one part may affect the other part and in
this way, the whole organization.
2. Composition of several sub-systems: A system is composed of several sub-systems. For
example, in a manufacturing organization, total manufacturing is one system, within which may
exist a complete production system, which again may contain an inventory control system.
Conversely, a system or sub-system may form part or container of other system. For example, an
individual who may be a part of one system may also be a part or container for another
physiological system.
3. Every system has its own norms: Every system may be distinguished from other systems in
terms of objectives, processes, roles, structures, and norms of conduct. So, every system is
unique if anything happens in the organization, we regard it as an outcome of a particular system
and we locate the fault in the system.
4. Systems influence and are influenced by other systems: As systems are open, they influence
other systems in the environment depending upon its strengths and capacities in relation to other
systems. Obviously, the influence of environment, in most cases is greater than the systems over
all impact on the environment.
Concept of Sub-system in an Organization
In the previous section, we have suggested that a system is an integrated whole of various
sub-systems. An organization as a system can better be understood by identifying the various
sub-systems within it. The levels of systems within a sub-system are called sub-systems and
certain objectives, processes, role, structures and norms of conduct identify levels of systems
within. A system is composed of various lower order sub-systems and is also a part of a
super-system.
The various sub-systems of the system constitute the mutually dependent parts of the large
system, called organization. These sub-systems interact, and through interaction create new
patterns of behavior that are separate from, but related to, the patterns specified by original
system. The interdependence of different parts as characterized by Thompson, may be pooled,
sequential, or reciprocal. When dependence is not direct, it is pooled interdependence. For
example, an organization, having sales divisions in different cities making their own buying and
selling, but drawing upon its common funds is an example of pooled interdependence. When one
sub-system is directly dependent upon another, it is sequential interdependence. Such type of
interdependence may be seen in production job or assembly line when output of one sub-system
is the input for the other department or sub-system. Reciprocal interdependence refers to the
situation where outputs of each unit become inputs for another such as in production and
maintenance divisions. Thus, system behavior emerged as one, and since different variables are
mutually interdependent, the true influence of alerting one aspect of the system cannot be
determined by changing it alone.
Classification of Sub-systems
There are various ways of classifying sub-systems and one may support any of them. Each of the
organization unit may be treated as a sub-system. In other words, each functional unit of an
organization may be regarded as different sub-systems such as production sub-system, personnel
or finance or sales sub-systems, etc. Seiler has classified four components in an organization, i.e.,
human inputs, technological inputs, organizational inputs and social structure and norms. From
these inputs, he has derived the concept of socio-technical system, Kast and Rosenzweig have
identified five subsystems, i.e., goal and values sub-system, technical sub-system, psychological
subsystem, structural sub-system, and managerial sub-system. Katz and Kahn have, identified
five sub-systems. These are: technical sub-system concerned with the work that gets done;
supportive sub-system concerning with the procurement, disposal and institutional relations;
maintenance sub-system for uniting people into their functional roles; adaptive sub-system
concerned with organizational change; and managerial subsystem for direction, adjudication and
control of the many sub-systems and activities of the whole structure. Carzo and Yunouzas give
three kinds of sub-systems in an organization as a system, i.e., technical, social and power
sub-systems. We shall here discuss these three sub-systems.
1. Technical Sub-system: The technical sub-system may be referred to as the formal
organization. It refers to the knowledge required for the performance of tasks including the
techniques used in the transformation of inputs into outputs. Being a formal organization, it
decides to make use of a particular technology; there is a given layout; policies, rules and
regulations are framed; different hierarchical levels are developed, authority is given and
responsibilities are fixed; and necessary technical engineering and efficiency consideration are
laid down. The behavior in the organization cannot be explained fully by technical sub-system,
also because there is a fundamental conflict between the individual , a part of the system and the
system itself resulting from the expectancies of the organization and that of the people regarding
the work he has to perform. It requires certain modifications in the behavior of the man through
the social and power sub-systems (explained later).
The objective of the technical sub-system is to make necessary imports from the environment,
transform them into products or services and expert them back to the environment. For this
purpose, it involves decisions, communications, action and balance processes. Through the
decision process, three main problems of what to produce, for whom to produce and how to
produce are resolved. Decisions are based on information gathered from various sources. Such
informations are communicated through the communication process to action centers to
implement them. Through balance process, an administrative balance is obtained so that all parts
may be co-coordinated and no one part can dominate all other parts in the organization. These
processes take place on the basis of roles assigned to people according to the requirements of the
job. In order to handle the job properly one is given authority from the superiors and is assigned
a status matching with the importance of the job and the individual's ability to do the job. Norms
of conduct are defined in the well-designed policies, norms, rules, procedures and description of
the job. Thus, the arrangement of job in relation to each other, process and authority relations,
etc. provide a structure to the technical sub-system.
2.Social Sub-system: As we have explained earlier, there exists a conflict between an individual
and the system itself because people differ very widely in abilities, capacities, attitudes and
beliefs, likes and dislikes, etc. People find the formal set-up quite inadequate to satisfy all their
needs especially social ones. Gradually they are seen interacting with each other and at times by
cutting across the hierarchical and departmental lines, etc., on non-formal matters, and display
their positive and negative sentiments towards each other.
Another group of elements in social sub-system consists of status, role, norms and values. Status
is a position determined as being important in the interpersonal relationship of the group. Thus, it
is a social rank, prestige, sentiments and feelings of a person in comparison with a social system.
Some members come to be more highly respected than others while some others born to be
followers. Role is a pattern of action, expected of a person in his position involving others. Thus,
it describes specific form of behavior and develops originally from the task-requirements.
Different members have to play different roles assigned to them by the group- Norm is that the
general expectation demands character for all role incumbents of a system or subsystem. The
members of the group follow unwritten norms. Anybody not adhering to norms are reprimanded
or punished. Value is the more generalized ideological justification and aspiration. Value guides
the behavior of the members.
3. Power Sub-system: Power behavior of the people in an organization plays a very important
role. As the organization starts functioning, people realize the importance of their job in relation
to others in the organization; the benefits of their experience to the organization; the benefits of
their experience to the organization; the crucial location of their jobs and their personality
characteristics; the fact of their access to the superior authority holder. In this way, they have
acquired power to some degree or the others based on the source of their power that influences
the decision-making and regulate others behavior.
Individual's abilities to regulate the behavior of others vary. Some persons are more powerful
and some others have powerful influence areas than others have. Consequently, a power
differentiation based on the amount of power enjoyed (which is again a function of success
achieved and attempts made to influence the behavior of others) develops in a power structure. It
gives birth to politicking and people play opportunistic roles Power minded people have no
norms. Generally, the individual’s interests and the opportunity of serving those interests decide
norms and, therefore, sheer expediency is the norm. The power holder enjoys the status in
accordance with his abilities to influence the behavior of others in order to carry out his wishes.
This part of the system is known as power sub-system
Appraisal of Social System School
Chester I. Barnard is regarded as the founding father of social system school. He studied the
inter-relationships within the organization. His definition of formal organization is regarded to be
a major contribution in the field of management. The main focus of the official system is to study
different aspects of social systems. For the adherents of this school, organization is essentially a
socio-cultural system composed of groups of people who work in cooperation. For achieving the
goals of the organization, a cooperative system of management can be developed only by
understanding the social behavior of groups and individuals. In other words, the socio-cultural
environment and different types of pressures affect an organization as a social system.
The concept of informal organization is also a contribution of the social system school. The
analysis of social and group behavior in the context of social system has added to the knowledge
of management. The supporters of this school advocate that efforts should be directed towards
establishing harmony between the goals of the organization and the goals of the groups and
individual members.

CONTINGENCY APPROACH

Environmental change and uncertainty, work technology, and the size of a company are all
identified as environmental factors impacting the effectiveness of different organizational forms.
According to the contingency perspective, stable environments suggest mechanistic structures
that emphasize centralization, formalization, standardization, and specialization to achieve
efficiency and consistency. Certainty and predictability permit the use of policies, rules, and
procedures to guide decision making for routine tasks and problems. Unstable environments
suggest organic structures which emphasize decentralization to achieve flexibility and
adaptability. Uncertainty and unpredictability require general problem solving methods for
nonroutine tasks and problems. Paul Lawrence and Jay Lorsch suggest that organizational units
operating in differing environments develop different internal unit characteristics, and that the
greater the internal differences, the greater the need for coordination between units.
Joan Woodward found that financially successful manufacturing organizations with different
types of work technologies (such as unit or small batch; large-batch or mass-production; or
continuous-process) differed in the number of management levels, span of management, and the
degree of worker specialization. She linked differences in organization to firm performance and
suggested that certain organizational forms were appropriate for certain types of work
technologies.
Organizational size is another contingency variable thought to impact the effectiveness of
different organizational forms. Small organizations can behave informally while larger
organizations tend to become more formalized. The owner of a small organization may directly
control most things, but large organizations require more complex and indirect control
mechanisms. Large organizations can have more specialized staff, units, and jobs. Hence, a
divisional structure is not appropriate for a small organization but may be for a large
organization.
In addition to the contingencies identified above, customer diversity and the globalization of
business may require product or service diversity, employee diversity, and even the creation of
special units or divisions. Organizations operating within the United States may have to adapt to
variations in local, state, and federal laws and regulations. Organizations operating
internationally may have to adapt their organizational structures, managerial practices, and
products or services to differing cultural values, expectations, and preferences. The availability
of support institutions and the availability and cost of financial resources may influence an
organization's decision to produce or purchase new products. Economic conditions can affect an
organization's hiring and layoff practices as well as wage, salary, and incentive structures.
Technological change can significantly affect an organization. The use of robotics affects the
level and types of skills needed in employees. Modern information technology both permits and
requires changes in communication and interaction patterns within and between organizations.

The other major contributions by Leading Management Thinkers.

MARRY FOLLETT (1868 - 1933)
M.P.Follet is a social philosopher. Important contributions of Follett to management thought are:
 Constructive conflict
 Law of the situation
 Group ethic important
 Leadership
  Authority and responsibility
 Coordination principles
RENSIS LIKERT (1903 - 1972)
According to Rensis Likert, Director of the Institute of Social Research, University of Michigan,
the traditional job-centered supervision is mainly responsible for low productivity and poor
morale of employees He, therefore, advocated the employee-centered approach where maximum
participation would be given to operatives while setting goals and making decisions. Likert is
best known for his classifications of management styles into four categories:
System 1 (exploitative autocratic): Leaders have no confidence or trust in subordinates,
Subordinates are deprived of participation in decision-making.
System 2 (benevolent autocratic): Management has condescending confidence in subordinates
just as a master has towards a servant.
System 3 (participative): Leaders have substantial but not total confidence in subordinates
Participation is meaningful and employees are permitted to participate in decisions making.
System 4 (democratic): Participation is meaningful, as leaders have complete confidence and
trust in subordinates.
According to Likert, system 4 is an ideal management style and is associated with high
production, low costs and good labor relations. In an attempt to integrate individual and
organizational Likert developed the concept of 'linking pin'. In this approach, each work group is
integrated to the rest of the organization by means of persons who are members of more than one
group. Such overlapping membership is known as 'linking pin’.
PETER F. DRUCKER
Peter F. Drucker had revolutionalised management thinking in early 50's with his path breaking
books, presentations. He came into prominence with the publication of "The New Society".
Drucker is often hailed as a genius who had pioneered several modern management concepts in
the fields of innovation, creativity,problem solving, organization design, MBO etc. His major
contributions include:
 Nature of Management
 Management is a dynamic, life-giving element in an organization.
 Management is a distinct, discipline and a social function.
  Managers should be creative and innovative in order to produce results. He opined that
management is a great profession full of challenges.
 Mangers job
 Managers are known by their performance. They must set meaningful goals for the entire
organization.
Business is inextricably interwoven with society. It has certain social obligations. Managers
impact society through their actions. It is their duty to meet social expectations regarding quality,
service, etc
Drucker wanted business community to stand on their own. Profit is not the only goal always. He
knew that 'a healthy business cannot exist in a sick society'. Managers should realize that
businesses survive and flourish only through the blessing, while meeting social expectations and
enterprise objectives managers need to strike fine balance. He stressed the importance of setting
goals, defining problems correctly motivating people.
He wanted businesses to deliver want satisfying goods and services. The purpose of an enterprise
is to create a customer.
He wanted managers to set meaningful objectives in eight key areas of business. Market
standing, innovation, productivity, physical and financial resources, profitability, manager
performance and development, worker performance and social responsibility.
The Highlight of the Drucker’s elements.
MBO: Drucker stressed the importance of joint goal setting through a novel concept called
Management By Objectives (MBO). He emphasized the importance of participative goals that
are tangible, verifiable and measurable. He wanted managers to focus on what be accomplished
(goals) rather than how it was to be accomplished (methods).
2. Decentralization: Drucker vehemently criticized the functional focus of managers,
confirming their work to their own narrow specialized fields of study (such as marketing
manager, finance manager, production manager, etc.). He wanted managers to create
autonomous, self contained independent product divisions within a large undertaking, giving
adequate and proportionate emphasis to various products. In place of task specialization, he
advocated for decentralization. The federal structure, he felt, would make managers accountable
for and allow them to grow steadily.
3.Structure: Drucker wanted managers to reduce the number of layers within the organization;
the organization structure should be dynamic in nature. To realize this, he suggested concrete
steps: activity analysis, decision analysis and relations analysis.
Activity analysis: What is to be done, how it should be put together, how much emphasis to be
put on each activity.
4.Decision analysis: The degree of futurity in the decision, the impact of a decision on
activities, the various qualitative elements that enter the decision-making process, whether the
decision is a recurring phenomenon or a rare one, etc.
5.Relation’s analysis: Helps in providing a concrete shape to the structure and manning
structure properly.
6.Decision-making: According to Drucker, the life of a manager is a perpetual choice-making
activity. Management is nothing but decision-making only. He wanted managers to understand
the problems correctly before trying to find solutions. He wanted managers to took into the
following questions carefully:
What is the problem?
Which problem to solve?
What is the real, cause of the problem? (According to Drucker, critical factor analysis helps in
identifying the causes properly) .
MANAGERIAL FUNCTIONS
Many authorities and scholars on management have discussed the functions of management. But
there is no unanimity among them about the nomenclatures of the functions of management.
Ralph Davis classified managerial functions into three categories, viz., organizing, coordination
and control. He was of the view that command and coordination facilitate control and, therefore,
should be considered as parts of it. However some authors argue that co-ordination is not a
separate function the essence of management.
Joseph Massie prescribed a list of seven functions of management, namely, making, organizing,
staffing, planning, controlling, and communicating and directing. G.R. Terry described
managerial functions under four heads, which are: planning, organizing, actuating and
controlling. Koontz and O’Donnell have adopted the following classification: planning,
organizing, directing and controlling. They have further said, "In practice it is not always
possible to place all managerial activities neatly into these categories since the functions tend to
coalesce."
Luther Gulick coined the word 'PODSCORB' to describe the functions of management. This
word is made up of the initials of the following functions, (i) planning, (ii) organizing, (iii)
directing, (iv) staffing, (v) co-coordinating, (vi) reporting, and (vii) budgeting. Thus, we can say
that there is no universally accepted classification of managerial functions. But at the same time
it is significant to note that though there is disagreement over the grouping and classification of
management functions, there is general agreement that certain functions exist.
Henri Fayol gave for the first time a clear functional definition of management. According to
him, "To manage is to forecast and plan, to organize, to command, to coordinate and to control."
Thus, Fayol has given following five functions of management: Forecasting and planning,
Organizing, Commanding, Coordination and Control.
The basic reason for so many classifications of functions of management different authors
discussed them by studying different organizations. If we accept one of these classifications, it
should be kept in mind that functions are not independent and they frequently overlap each other.
According to C.S. George, the management process is not a series of separate functions, which
can be performed independently; it is a composite process made up of these ingredients. He
further said that no one function could be performed without involving the others.
For the purpose of analysis of management process, we can divide the management functions
into
(1) Planning, (2) organizing, (3) staffing, (4) directing and (5) controlling.
Planning
Planning is a mental process requiring the use of intellectual faculties, foresight and sound
judgment. It is the determination of a course of action to achieve the desired result. "It is the
selecting and relating of facts and the making and using of assumptions regarding the future in
the visualization and formation of proposed activities believed necessary to achieve desired re-
sults." It involves deciding in advance what to do, when to do it, where to do it, how to do it and
who is to do it and how the results are to be evaluated. Thus, planning is the systematic thinking
about the ways and means for the accomplishment of pre-determined objectives. Goals or
objectives have to be clarified first before taking any other decision. Goals provide the basis for
looking into the future and for evaluating the performance with the predetermined standards.
Planning bridges the gap between where we are , to where we want to go. It is a prerequisite to
doing anything. Systematic planning is necessary for any business activity; otherwise it will be
done in a haphazard manner. Proper planning is a must to ensure effective utilization of human
and non-human resources to achieve the desired goals. It has to be done at all levels of
management. The process of planning involves the following steps:
(i) Determination of goals or objectives of the enterprise, (ii) forecasting, (iii) search of
alternative courses of action, (iv) evaluation of various alternatives and formulation of a plan. (v)
Formulation of policies and procedures, (vi) preparation of schedules, programmes and budgets.

Organizing
Organizing is an important managerial activity by which management brings together the
manpower and material resources for the achievement of pre-determined objectives.
Organization is the process of establishing relationships among the members of the enterprise.
The relationships are created in terms of authority and responsibility. Each member in the
organization is assigned a specific responsibility or duty to perform and is granted the corre-
sponding authority to perform his duty.
In the words of Louis A. Allen, "Organization involves identification and grouping the activities
to be performed and dividing them among the individuals and creating authority and
responsibility relationships among them for the accomplishment of organizational objectives".
Thus, organizing involves the determination of activities to be performed, grouping them and
assigning them to various individuals and creating a structure of authority and responsibility
among the individuals to achieve the organizational goals. Organization involves the following
steps:
(1) Identification of activities required for the achievement of objectives and Implementation of
plans.
(2) Grouping of activities so as to create well-defined jobs
(3) Assignment of jobs to employees
(4) Delegation of authority to subordinates
(5) Establishment of authority-responsibility relationships throughout the organization
Staffing
The staffing function of management pertains to recruitment, selection, training, development
and appraisal of personnel. There is a controversy whether staffing is a function of every
manager in the organization as there is personnel department in every organization. Since every
manager is concerned with management of human resources, he must perform the function. In
fact, every manager is associated with the employment, training and appraisal of human
resources.

Directing
The term ‘directing’ or 'direction' is generally used in every walk of life. It has got a wide
interpretation these days. It is no more restricted to ‘commanding’ as viewed by Henri Fayol. In
the words of Marshall, "Directing , determining the course, giving orders and instructions and
providing dynamic leadership."" It relates to those activities, which deal directly with
influencing, guiding, supervising and motivating subordinates in their jobs. This function does
not cease with mere issuance of directives. According A. Terry, "Directing means moving to
action and supplying stimulative power to group of persons". Thus, directing involves issuing
instructions (or communication) to the subordinates, guiding, motivating and supervising
These sub-functions of directing are discussed below:
Communication. Communication is the process of passing information and understanding from
one person to another. This process is necessary making the subordinates understand what the
management expects from in. A manager has always to tell the subordinates what to do, how to
do it and when to do it. He has to create an understanding in their minds in regard to these things.
Communication is a two way process. A manager to be successful must develop an effective
system of communication so that he may issue instructions, receive the reactions of the
subordinates and guide and motivate them.
Leadership. A manager must perform the function of leadership if he is to guide the people
effectively for the achievement of organizational objectives. Leadership may be defined as the
process by which a manager guides and influences the behavior of his subordinates. A manager
must possess the leadership qualities if he has to get others to follow him and accept his
directions. He should also build up confidence and zeal to work among the subordinates.
Motivation. A manager can get the desired results from the people working in the organization
by providing them with proper stimulation or motivation. Motivation means inspiring the
subordinates with zeal to do work for the accomplishment of organizational objectives.
Motivation is the process of indoctrinating personnel with unity of purpose and the need to
maintain continuous harmonious relationship.
A successful manager makes appropriate use of motivation to actuate the subordinates to work
harmoniously towards the achievement of organizational goals. Effective motivation is necessary
for getting voluntary co-operation of the subordinates. Different types of rewards motivate
different people. The manager should study the behavior of individuals working under him to
provide them proper inducements. To some ,financial incentives are important while others are
motivated by non pecuniary incentives like job security, job enlargement, freedom to work and
recognition by peers and management.

Controlling The function of controlling deals with the measurement and correction of the
performance of persons against the pre-determined standards. E.F.L. Brech defined control as the
process of checking actual performance against standards to ensure satisfactory performance,
Fayol viewed control as verifying whether everything occurs in conformity with the plan
adopted, the instructions issued and principles established. Controlling leads to taking corrective
action if the results do not conform to plans.
The process of control involves the following steps:
(i) Establishment of Standards. The management must establish Standards with which the actual
performance of the subordinates will be compared. The standards of performance should be laid
down in unambiguous terms and should be understood by everyone in the establishment.
(ii) Measurement of Performance. After the performance is over, the actual performance has to
be measured in terms of quantity, quality, cost and time.
(iii) Appraisal of performance. The establishment of standards has no meaning unless they are
used in actual practice. The management must compare the actual performance with the
pre-established standards. The deviations from the standards should be recorded and brought to
knowledge of the management.
(iv) Taking Corrective Action. When the deviations from the standards are reported to the
management, it must take corrective action so that such things do not occur again. While taking
corrective steps, management should consider the improvement of plans and standards.
Managerial Skills
The job of a manager demands a mixture of many types of skills, whether he belongs to business
organization, an educational institution, a hospital or a club. A Manager is successful when he is
able to make a smooth functioning team of people working under him. He is to reconcile,
coordinate and appraise us viewpoints and talents of people working under him towards, the
organization goals. He has also to plan and organize the operations of the enterprise so that the
subordinates are able to use the material resources in the best possible manner. For this, he must
use the various skills in appropriate degrees.
We can broadly classify the skills required by managers into the following three categories: (i)
Conceptual skills (ii) Human skills, and (iii) Technical skills. Technical skills deal with jobs,
human skills with persons and conceptual skills with ideas. The three types of skills are
interrelated and all managers require them. But the proportion or relative significance of these
skills varies with the level of management.
(1) Conceptual Skills
Conceptual skill is the ability to see the organization as a whole, to recognize inter-relationships
among different functions of the business and external forces and to guide effectively the
organizational efforts. Conceptual skills are used for abstract thinking, and for the concept
development involved in planning and strategy formulation. Conceptual skills involve the ability
to understand how the parts of an organization depend on each other. A manager needs
conceptual skills to recognize the interrelationships of various situational factors and, therefore,
make decisions that will be in the best interests of the organization.
(ii) Human Skills Human skills are the abilities needed to resolve conflicts, motivate, lead and
communicate effectively with others. Because all work is done when people work together,
human relations skills are equally important at all levels of management.
(iii) Technical Skills
Technical skills refer to specialized knowledge and proficiency in handling methods, processes
and techniques of specific jobs. These skills are most important at lower levels of management
and much less important at upper levels. A production supervisor in a manufacturing plant, for
example, must know the processes used and be able to physically perform the tasks he
supervises. A word processing supervisor must have specialized knowledge about computer
software used in, the process. In most cases, technical skills are important at this level because
supervisory managers must train their subordinates in the proper use of work-related tools,
machines and equipment.

Managing in global environment

Management fundamentals may be applicable in different countries. How ever the
practice of carrying out the managerial function of planning, organizing, staffing,
leading and controlling differs considerably in domestic and international
enterprises.

INTERNATIONAL MANAGEMENT ORIENTATIONS (EPRG FRAMEWORK)

EPRG stand for Ethnocentric, Polycentric, Regiocentric, and Geocentric. It is a
framework created by Howard V Perlmuter and Wind and Douglas in 1969. It
is designed to be used in an internationalization process of businesses and mainly
addresses how companies view international management orientations.

Ethnocentric
A person who assumes that his or her home country is superior compared to the
rest of the world is said to have an ethnocentric orientation. The personnel of such
a company see only similarities in markets and assume that the products and
practices that succeed in the home country will, due to their demonstrated
superiority, be successful anywhere.

Polycentric
The term polycentric describes management’s often unconscious belief or
assumption that each country in which a company does business is unique. This
assumption lays the groundwork for each subsidiary to develop its own unique
business and marketing strategies in order to succeed; the term multinational
company is often used to describe such a structure.

Regiocentric

In a company with a regiocentric orientation, management views regions as unique and

seeks to develop an integrated regional strategy.

Geocentric

A company with a Regiocentric orientation views the entire world as a potential market and
strives to develop integrated world market strategies.
 FACTORS AFFECTING GLOBAL BUSINESS
Political
The rise of democracy has increased people’s expectations world over. The socialist
economies crumbled as they were run by the people with iron hand. People had very little
say in the governance of the country. The freedom of enterprise, taxation policy, trade
policy, export and import policies and developed capital market made capitalist countries
leaders in international business. Government in these countries played the role of
facilitators and not the regulators as in socialist countries.

Economic
Free market economies have been generating wealth at a much faster speed than the
controlled economies. Per capita income in capitalist countries has been much higher
compared to socialist economies.

Technological
Multinational companies have facilitated technology transfer by moving their
production operations or establishing new plants in less developed countries. Earlier
it was mostly intermediate or used technologies which were sold to other countries;
the trend has changed as the competition in international market has increased
considerably.

Socio-cultural
Demographic changes are taking place. Developing countries like India and China have a
young population, the phenomena which West had half a century back .

The new generation is exposed to the new media, which keeps them not only informed
about lifestyle and consumption patterns in developed world, but also influences the thought
process, attitude towards work and leisure, celebration of festivals, rituals, customs and
traditions.

Economic integration is leading to cultural integration also. With movement of people

growing across continents, societies are coming closer. Rigidities imposed by religions and
traditions are receding gradually.

Ecological
 Concern for environment protection is resulting into protective measures against
environmental pollutions and degradation.To develop technology and promote legislation in
different countries to protect environment are resulting into more effective treatment of
effluents, disposal of waste and energy consumption. The global warming has come as a
warning that industry and business cannot ignore.
CONCEPT OF MULTINATIONAL CORPORATIONS (MNCS)
A multinational company is an enterprise operating in several countries but
managed from one country. In other words you can say that multinational
companies are organisations whose ownership, management and control are spread
in more than one country. Such organisations are established in one country
referred to as the parent country and works as subsidiaries in other countries known
as host country to produce and distribute goods and services in all these countries.
Example: IBM Company (USA), Sony, Nestle, Coca-Cola etc. are some of the most popular
multinational companies of the world

Characteristics of Multinational Companies (MNCs)

The distinguishing characteristics of a multinational company
can be discussed as under:

1. Larger Dimension: You might have seen that usually a

multinational company is bigger in size, owning and
controlling assets worth billions of dollars. Generally their
sales turnover is greater than the Gross National Product of
many small countries.
2. Worldwide Operations: Multinational Corporation carries
out business in more than one country.
3 International Management: Multinational companies are managed on international
levels which operate on the basis of best alternative available anywhere in the world.
INTERNATIONAL ORGANISATION DESIGN

Organisational design aims at allocating organisational

resources, informing employees about the rules,
regulations and programmes and procedures of the
firm, assigning tasks to organisation members and
collecting and disseminating information necessary for
problem solving and decision making.
1. Global Product Design: Separate operating divisions are
 formed for different product groups. Operating divisions
are responsible for manufacturing, selling and other
business operations for specific products or product groups.
2. Global Functional Design: Organisation with single or
similar business operations may have functional divisions –
Marketing, Finance, Production, HR and R&D to look after
companywide operations

3. Global Customer Design: Customers or customer groups

are in focus in such type of design.

Summary
Management is the process of planning, organizing, staffing, directing and controlling to
accomplish objectives through the coordinated use of human and material resources.
Management thinkers have tried to interpret the term in multifarious ways: as a noun, as a
process, as a team, as a discipline, as an activity, as an economic resource, as a system of
authority or as a distinct class in society having its own value system.
Management is the life-blood of a business. It ensures optimum use of scarce resources, offers
competent leadership, ensures peaceful industrial relations, achieves goals, improves standard of
living and enables a company to manage change effectively.
Management is being increasingly accepted as a soft science and also as a difficult and complex
art, as it deals with human behavior, which is highly unpredictable. Management, from another
standpoint, is also interpreted as a profession having a well-defined set of principles and
practices capable of universal application. Professionalisation, no doubt, helps the discipline to
acquire a distinct character and recognition of its own but trying to link and measure managerial
success in terms of degrees may come in the way of developing creative entrepreneurs having
brilliant ideas but not professional qualifications.
Over the years, the subject of management has been written and re-written in terms of certain
well-accepted principles and time-tested practices. These principles are the products of years of
experience, research and analysis. They are not to be interpreted as absolute truths. When applied
carefully, using discretion and judgment, they have proved to be quite successful in delivering
results at various points of time all over the world.
Management can be studied from various angles. The classical theory has three important
branches. Bureaucracy prescribed that an organization be built around the work to be done. The
work must be logically divided and assigned to subordinates, who are expected to report the
progress to superiors at various Levels. The whole system should have some well defined rules
so that results can be obtained without friction. Scientific management emphasized the
importance of work design and encouraged managers to find 'one best way' to do things with
minimum effort and cost. The classical school to thought, thus, focused attention on the technical
and administrative and ignored the contributions of human beings completely.
The neo-classical theory tried to correct this deficiency by drawing rich inputs from various
behavioral sciences and practical experiments carried out by Elton Mayo. The theory attempted
creation of workforce with high morale through democratic means. The focus was on people,
incentives, democratization of workplace, and social interactions. The human resources theory
went a step by suggesting that human beings are the most valuable assets in every organization.
Every attempt must, therefore, be made to exploit the latent potential of human resources by
emphasizing things such as self-direction, self-control and creativity.
To improve the quality of decision-making, the quantitative approach has advocated the use of
mathematics, statistics and computers extensively. The variables affecting each problem must be
identified and measured in a definite way. This would help in solving issues in an objective
manner, eliminating the subjective element in decision-making completely.
The systems approach views the organization as a unified, purposeful entity, consisting of
interrelated parts. While deciding things, executives must look at the totality of the situation and
the resultant consequences carefully. They must strike a fine balance between the needs of
various parts of the enterprise and the goals of the firm as a whole.
According to the contingency approach there are no plans, organization structures, leadership
styles, or controls that will fit all situations. There are few if any, universal truths, concepts and
principles that can be applied under all conditions. Managers must find different ways that fit
different situations. Their actions, in the final analysis, must be consistent with the requirements
of internal as trial factors.
Learning Activity
1. Take an example of any hypothetical organisation. Do a comparative
analysis between social relation theory and scientific management
theory.
2. Globalisation must be taken for granted” implies that at least some
company managers must have geocentric orientation.

 SUMMARY
The classical management theory is referred to the
period between l880s and l920s. This phase ‘consists
of Scientific management of F.W. Taylor and his
followers, Administrative management of Henry Fayol
and others and Bureaucratic organisation of Max
Weber. The classical theory emphasised the economic
rationality of management and organisation and
suggested to determine the best way to perform a job.
This theory is criticised for its assumption that people
are motivated primarily by economic reward.
 The Neo-classical theory, which is identified with the period from 1920s to
1950s, is concerned with the human oriented approach and emphasised the
needs, drives, behaviours and attitudes of people.
 The human relations school together with (early) behavioural schools constitutes
this group. The social person view of employees is the basis of this set of
schools.
  The development of management thought is the result of contributions made by
pioneering management thinkers and experts from other social sciences such as
economics and psychology.
 A multinational company is an enterprise operating in several countries but managed
from one country. In other words you can say that multinational companies are
organisations whose ownership, management and control are spread in more than one
country.
 Study Tips
Taylor explained these ideas and techniques in his two books (Shop Management
and The Principles of Scientific Management).
Fayol is the first management thinker who provided the conceptual framework of the
functions of management in his book “General and Industrial Management.
Many MNCs had this strategy before World War II due to difficulties in transportation
and communication.
 KEYWORDS
Administrative Management: This approach seeks to systematically study the management
process and also with the functions that managers perform and effective principles of
management have been developed.

Autocratic Leader: A person who tells subordinates what to do and expects to be obeyed
without question.

Critical Path Method (CPM): A planning and control technique that involves the display of a
complex project as a network with one time estimate used for each step in the object.

Decision-making: The process of generating and evaluating alternatives and making choices
among them.

Delegation: The process of assigning responsibility along with the needed authority.

Geocentric: A company with offices in multiple nations that operates to achieve global
objectives as well as local objectives.

Globalisation: Globalisation is the process of international integration arising from the

interchange of world views, products, ideas, and other aspects of culture.
Have you understood questions.
1.Frequently visit any one of the organization on your choice and observe the management
functions and skills which is characterized by variety, fragmentation, and record how do
managers perform basic management functions such has planning, organizing, etc., keep
reflected and analyzed of your study.
2. Observe any organization that how a manager can use tools and techniques from each of the
major management perspectives in a contemporary manner.
3. Try to enroll your self as a trainee in any one of the organizations to find out whether the
organization is practicing the management as in the style of art or science.
4. Regularly read the business and management magazines to a reasonable period to find out the
professionalism practices and the development over in this practice

Review Questions:
6. State the Managerial functions.
7. What are skills required to a manager?
8. Discuss the evolution of management thoughts
4.What are international management orientations?

5.Write a short note on ethnocentric orientation.

6.Write a short note on polycentric orientation.
7.Write any two differences in regiocentric and geocentric orientations.
8What is Multinational Corporation (MNCs)?