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Management science
UNIT-I
Introduction to management
Management is a universal phenomenon. It is present
in virtually all walks of life the application of management
principles is not just limited to business organization rather seen in
clubs, families, schools sports teams and social functions like
marriage, picnics, and parties and so on. However it has special
significance with respect to business enterprises in the public as
private sectors
Management:-Management means to manage men, machines,
money andmaterial to achieve certain goals and objectives.
Management is effective utilization of human and
materialresources to achieve the enterprise objectives.

Importance of management

1. It helps in Achieving Group Goals - It arranges the factors of

production, assembles and organizes the resources, integrates the
resources in effective manner to achieve goals. It directs group efforts
towards achievement of pre-determined goals.

By defining objective of organization clearly there would be no wastage of

time, money and effort. Management converts disorganized resources of
men, machines, money etc. into useful enterprise. These resources are
coordinated, directed and controlled in such a manner that enterprise
work towards attainment of goals.

2. Optimum Utilization of Resources - Management utilizes all the

physical & human resources productively. This leads to efficacy in
management.

Management provides maximum utilization of scarce resources by

selecting its best possible alternate use in industry from out of various
uses.

It makes use of experts, professional and these services leads to use of

their skills, knowledge, and proper utilization and avoids wastage. If
employees and machines are producing its maximum there is no under
employment of any resources.
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3. Reduces Costs - It gets maximum results through minimum input by

proper planning and by using minimum input & getting maximum
output.

Management uses physical, human and financial resources in such a

manner which results in best combination. This helps in cost reduction.

4. Establishes Sound Organization - No overlapping of efforts (smooth and

coordinated functions). To establish sound organizational structure is
one of the objective of management which is in tune with objective of
organization and for fulfillment of this, it establishes effective authority
& responsibility relationship i.e. who is accountable to whom, who can
give instructions to whom, who are superiors & who are subordinates.

Management fills up various positions with right persons, having right

skills, training and qualification. All jobs should be cleared to everyone.

5. Establishes Equilibrium - It enables the organization to survive in

changing environment. It keeps in touch with the changing environment.

With the change is external environment, the initial co-ordination of

organization must be changed. So it adapts organization to changing
demand of market/changing needs of societies. It is responsible for
growth and survival of organization.

6. Essentials for Prosperity of Society - Efficient management leads to

better economical production which helps in turn to increase the welfare
of people. Good management makes a difficult task easier by avoiding
wastage of scarce resource.

It improves standard of living. It increases the profit which is beneficial to

business and society will get maximum output at minimum cost by
creating employment opportunities which generate income in hands.
Organization comes with new products and researches beneficial for
society.

Nature of management

 Universal Process: Wherever there exists human pursuit, there exists

management. Without effective management, the intentions of the
organisation cannot be accomplished.
 The factor of Production: Equipped and experienced managers are
necessary for the utilisation of funds and labour.
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 Goal-Oriented: The most significant aim of all management pursuit is to

achieve the purposes of a firm. The aims must be practical and
reachable.
 Supreme in Thought and Action: Managers set achievable goals and
then direct execution on all aspects to achieve them. For this, they need
complete assistance from middle and lower degrees of management.
 The system of authority: Well-defined principles of regulation, the
regulation of proper power and efficiency at all degrees of decision-
making. This is important so that each self must perform what is
required from him or her and to whom he must report.
 Profession: Managers require to control managerial expertise and
education, and have to adhere to a verified law of demeanour and stay
informed of their human and social responsibilities.
 Process: The management method incorporates a range of activities or
services directed towards an object.

Functions of management
1. Planning

It is the basic function of management. It deals with chalking out a

future course of action & deciding in advance the most appropriate
course of actions for achievement of pre-determined goals.

According to KOONTZ, “Planning is deciding in advance - what to do,

when to do & how to do. It bridges the gap from where we are & where
we want to be”.

A plan is a future course of actions. It is an exercise in problem

solving & decision making.

Planning is determination of courses of action to achieve desired goals.

Thus, planning is a systematic thinking about ways & means for
accomplishment of pre-determined goals.

Planning is necessary to ensure proper utilization of human & non-

human resources. It is all pervasive, it is an intellectual activity and it
also helps in avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing

It is the process of bringing together physical, financial and human

resources and developing productive relationship amongst them for
achievement of organizational goals.
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According to Henry Fayol, “To organize a business is to provide it with

everything useful or its functioning i.e. raw material, tools, capital and
personnel’s”.

To organize a business involves determining & providing human and

non-human resources to the organizational structure. Organizing as a
process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.
3. Staffing

It is the function of manning the organization structure and keeping it

manned. Staffing has assumed greater importance in the recent years
due to advancement of technology, increase in size of business,
complexity of human behavior etc.

The main purpose of staffing is to put right man/woman on right

job i.e. square pegs in square holes and round pegs in round holes.

According to Koontz & O’Donell, “Managerial function of staffing involves

manning the organization structure through proper and effective
selection, appraisal & development of personnel to fill the roles designed
un the structure”. Staffing involves:

 Manpower Planning (estimating man power in terms of searching,

choose the person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.

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4. Directing

It is that part of managerial function which actuates the organizational

methods to work efficiently for achievement of organizational purposes.

It is considered life-spark of the enterprise which sets it in motion and

action of people, because planning, organizing and staffing are the mere
preparations for doing the work.
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Direction is that inter-personnel aspect of management which deals

directly with influencing, guiding, supervising, motivating sub-ordinate
for the achievement of organizational goals. Direction has following
elements:

 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their

superiors. It is the act of watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-

ordinates with zeal to work. Positive, negative, monetary, non-monetary
incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and

influences the work of subordinates in desired direction.

Communications- is the process of passing information, experience,

opinion etc from one person to another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and

correction of deviation if any to ensure achievement of organizational
goals.

The purpose of controlling is to ensure that everything occurs in

conformities with the standards. An efficient system of control helps to
predict deviations before they actually occur.

According to Theo Haimann, “Controlling is the process of checking

whether or not proper progress is being made towards the objectives and
goals and acting if necessary, to correct any deviation”.

According to Koontz & O’Donell “Controlling is the measurement &

correction of performance activities of subordinates in order to make sure
that the enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:

1.Establishment of standard performance.

2.Measurement of actual performance.

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3.Comparison of actual performance with the standards and

finding out deviation if any.

4.Corrective action.

Henri Fayal’s administrative theory

Henry Fayol a French industrialist is developed a general
theory of management in all aspects of business of an
undertaking Fayols contributions were first published in book
form titled Administration industrial at general in French
language .his father of the modern management (or)
Administrative .even then Fayols admirable analysis of
managerial functions and principles is widely unclaimed as a
creditable contribution to management thought Fayol identified
the following functions (or) elements of management
1. Planning:-implying polices, programmes and procedures
2. Organization: - based on hierarchy of authority
3. Command:-meaning directing the business in order to
gain optimum return from all workers.
4. Co-ordination:-signifying a harmony in activities of the
organization and to facilitate its working.
5. Control:-mean to rectify the errors of the functionaries of
the organization and to ensure that errors do not recur.
Six categories of works
Fayal divided all the work carried out in business enterprises
into six categories:-
1. Technical activities (production, manufacture)
2. Commercial activities (buying, selling, exchange)
3. Financial activities (optimum use of capital)
4. Security activities (product, property and persons)
5. Accounting (maintaining account books)
6. Managerial activities (planning, organization, command, co
ordination and control)

Henry fayol the principles of management:-

The other major contribution of HENRI FAYOL to
the department management thinking is principles of
management. Fayol outlined a number of principles that he
found useful in running his large organization. He added that
these principles apply not only to business but also to political,
religious, philanthropic, military and other organization. These
principles are in widespread use today. The fourteen general
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principles of management are given below.

1. Division of work: - Division of work or work specialization

results in efficient use of resources and increases productivity.
This is applicable to both managerial and technical functions.
2. Authority and responsibility:- Authority means right to
give order or command. Responsibility is the obligation to
achieve objectives, responsibility comes with authority.
3. Discipline: - Discipline is absolutely necessary for the
smooth running of an organization. Disciplines means
following rules, regulations, policies and procedures by all
employees of organization. There must be clear and fair
agreement for observing rules and regulations also punishment
for disobedience and indiscipline.
4. Unity of command: - An employee should receive orders
from one supervisor only to avoid possible confusion and
conflict i.e. any worker should not be under control of more
than me supervisions. It avoids mistakes and delays in
getting work done.
5. Unity of direction: - All the activities must be aimed at
one common objective. The activities should be organized
such that there should be one
plan and one person in charge. This enables directions of
efforts towards attainment of one goal.
6. Subordination of Individual interest to general
interest:-The interests of one employee or group should not
be given importance over the interests and goals of
organization.
7. Remuneration: - Compensation and the methods of
compensation should be fair to both the employee and the
employer. Exploitation of employee of any kind must be
avoided.
8. Centralization: - The centralization of authority and power
to some extent is necessary where is most feasible otherwise
there should be decentralization of authority and power for
smooth functioning of the organization. A balance between
must be achieved. The objective is the optimum use of the
capabilities personnel.
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9. Scalar chain: - A scalar (hierarchical) chain of authority

extends from the highest to lower rank of an organization and
defines the communication path. However horizontal
communication is also encouraged as long as the manages in
the chain are kept informed.
10. Order: - Order is principle of arrangement of things and
people. Everything should occupy its proper place i.e.
everything should be in order due to good organization and
selection the right person should be in the right place, order
leads to the creation of sound organization with efficient
management good organization removes confusion.
11. Equity:-Kindliness and justice on the part of
management create loyalty and devotion among employees.
12. Stability of personnel tenure:-Stability of tenure of
personnel in the organization increases the efficiency of the
employees and is a symbol of sound management. Because
time is required to become effective in new jobs high turnover
of employees should be prevented instability (high turnover) is
a symbol of weak management.
13. Initiative: - Managers should encourage and develop
the subordinates to take initiative it is the result of creative
thinking and imagination and help in formulating planning
also its execution.
14. Spirit of co-operation: It is also called as Esprit-de
corps. Since union is strength, harmony and team work are
essential. These are prerequisites’ for better performance and
effective organization.
F.W.Taylors the principles of management (or)
scientific management principles.
F.W.Taylor is well known as the father of scientific
management. Fredric Winslow Taylor spent a lot time for
finding solutions to the problem on shop floors with an aim
to increase the efficiency Taylor noted in his observations
that the tools and equipments used by the workers on shop
floors were primitive in nature and the workers intentionally
delayed the work .Taylor was able to support the workman
by giving solutions to the problems faced and workers on
the shop floor as he himself spent his life time on a shop
floor as a worker by rose to the level of manager. Taylor
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developed and designed tools and equipments which could

reduce the fatigue of the workers by using standardized
equipments which led to increase in the efficiency and
ultimately productivity of the shop.
Scientific management is the process of application
of scientific principles to systematically analyze the work and
to find solutions to all the problems associated with improving
the efficiency of the methods of working
The elements of the principles of scientific management
suggested by
F.W. Taylor are as follows.

1.Science, not the Rule of Thumb-

This rule focuses on increasing the efficiency of an organisation through

scientific analysis of work and not with the ‘Rule of Thumb’ method. Taylor
believed that even a small activity like loading paper sheets into boxcars can be
planned scientifically. This will save time and also human energy. This decision
should be based on scientific analysis and cause and effect relationships rather
than ‘Rule of Thumb’ where the decision is taken according to the manager’s
personal judgement.

2. Harmony, Not Discord-

Taylor indicated and believed that the relationship between the workers and
management should be cordial and completely harmonious. Difference between
the two will never be beneficial to either side. Management and workers should
acknowledge and understand each other’s importance. Taylor also suggested
the mental revolution for both management and workers to achieve total
harmony.

3. Mental Revolution-

This technique involves a shift of attitude of management and workers towards

each other. Both should understand the value of each other and work with full
participation and cooperation. The aim of both should be to improve and boost
the profits of the organisation. Mental Revolution demands a complete change
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in the outlook of both the workers and management; both should have a sense
of togetherness.

4. Cooperation, not Individualism-

It is similar to ‘Harmony, not discord’ and believes in mutual collaboration

between workers and the management. Managers and workers should have
mutual cooperation and confidence and a sense of goodwill. The main purpose
is to substitute internal competition with cooperation.

5. Development of Every Person to his Greatest Efficiency-

The effectiveness of a company also relies on the abilities and skills of its
employees. Thus, implementing training, learning best practices and
technology, is the scientific approach to brush up the employee skill. To assure
that the training is given to the right employee, the right steps should be taken
at the time of selection and recruiting candidates based on a scientific
selection.

Elton Mayo’s Human Relation Hawthorne Experiments

Eloton Mayo’s research team have organized these experiments in
how throne plant of general Electric Company Chicago for a period of 8
years from 1924 to 1932.basically these experiment were designed to
study the relationship between productivity and physical working
conditions like illumination and working hours. They conducted
researches in four phases.
1. Illumination experiments: - these were undertaken to find out
varying levels of illumination on productivity. The hypothesis was that
productivity would increase with higher illumination so for this purpose
a group of workers were selected and made to work in various
intensities of illumination. But to the surprise of researchers they found
that the productivity initially increased because the workers were happy
to be involved in the experiment and they gave the same output at any
intensity of illumination and stopped the work when illumination was
equal to the moon light. The conclusion was that the human factor
determined the productivity.
2. Relay assembly test room experiments: - these experiments were
conducted to find out whether there was any relationship between job
conditions and productivity. There was productivity improvement which
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was not due to the changes in physical factors like changing the
incentive system, more rest time in between working hours reduction of
working hours and changes in working hours. but that was due to
change in attitude to words their work and work group .they developed a
feeling of stability and sense of belongingness, responsibility and self
discipline the relationship between workers and supervisors improved.
3. Mass interviewing programme: - under this programme about
20000 workers were interviewed in order to determined workers attitude
towards the company. Supervision, insurance plans, promotion and
wages. But as the answers were oversimplified by yes or no response the
root of the problems was not identified during the course of interview. It
was discovered that workers behavior was being influenced by group
behavior.
4. Bank wiring observation room experiment:-these experiments were
carried out with a view to analyze the functioning of small groups and
its impact on individual behavior the work involved was to attach wire
with the switches for a certain equipment used in telephone exchange.
Hourly wage rate was fixed based on the output of each worker while
the bonus was to be determined on the basis of average group output.
The hypothesis was that workers would produce more to earn more and
help others to earn more bonuses. But it did not work as the workers in
the group set certain norms of personnel behavior including output
norm and social norm. The study revealed that informal relationships
play an important role in determining the human behavior.
Organization

Organizing refers to the process of bringing

together physical, financial and human resources and
establishing productive relations among them for the
achievements of specific goods. It is concerned with building
up a stable frame work or structure of various interrelated
parts of an enterprise each part having its own function and
being centrally regulated. The aim of organizing is to enable
people to relate to each other and to work together for a
common purpose. The organized group of people in a collective
sense is known as organization.
Definition: - organization is the process by which individuals,
groups and facilities are combined in formal structure of tasks
and authority.
Principles of organization:-
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1. Objectives:-It is to be ensured that the objectives of

different departments in the organization are unified to the
corporate goals.
2. Cost effective operation: - An organization is said to be
efficient if it can achieve the goals at the lowest cost and
with minimum undesirable consequences.
3. Optimum number of subordinates: - In each managerial
position. There is a limit to the number of persons an
individual can effectively manage. The optimum number will
depend on various factors such as efficiency of the superior
and subordinates, the nature of work routine or special
responsibility and so on.
4. Specialization:-Similar activities are grouped together to
ensure better performance of the work and efficiency at each
level.
5. Define authority:-The authority and responsibility
relationships underlying each position in the organization have
to be defined clearly to avoid confusion or misinterpretation.
6. Flow of authority:-This refers to the line of authority from
the top management in an enterprise to other levels. If this is
clear than the terms of responsibility also can be understood.
Further this will strengthen the flow of communication to
different levels in the organization.
7. One employee one superior: - Each subordinate should
have only one superior. There should not be any room for
conflict of command.
8. One head one plan: - Every group of activities with common
objectives should be handled by one person and one plan. If
handled by different persons the organization many lose
directions.
9. Define responsibility:-A superior is responsible for the
omission and commissions of his subordinates and at the
same time the subordinates must be held responsible to their
superior for the performance of the work assigned.
10. Attain balance:-Every organization needs to be a balanced
one. There are several factors such as decentralization of
authority, delegation of authority, departmentation, span of
control and others that have to be balanced to ensure the
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overall effectiveness of the structure in meeting the

organizational objectives.
11. Flexibility: - The more the flexible structures the better is
the scope to be successful. The principle of contingency
endorses this. Where the organization procedures are cumber
some or right, it is necessary to develop an in-built mechanism
to forecast any type of constraint.
12. Continuity:-The organization structure should provide for
the continuation of activities. There cannot be any break down
in the activities of the organization for the reasons such as a
change in the policies or retirement or death of any key
employee in the organization.
Types of organization
1. Line organization
2. Line and staff organization
3. Functional organization
4. Committee organization
5. Matrix or project organization and
6. Customer organization
1. Line organization: - line organization is also called military
or scalar organization. It is said to be the oldest and most
traditional types of organization which is widely used even
today. This is called line organization because managers in this
organization have direct responsibility for the results based on
authority relationship a line organization structure can be
drawn as shown in figure.
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Merits of line organization:-

• It sets clearly the direct line of authority and

responsibility of a line manager.
• It is simple to understand
• Each section or department can be treated as a unit
for control purposes
• It is flexible
• It facilitates quick decisions and prompt action
Demerits of line organization:-
• It is likely that the line manager is over burdened with all
tasks relating to a particular section or department
• There is no scope for specialization
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• There is more scope for favoritism and nepotism

• It may lead to low morale in the organization
• Instability is likely due to lack of continuity.
2. Line and staff organization: - this concept is drawn from
earlier civilizations and armies .in this organization we have
both the line managers and the staff managers. Staff managers
support the functions of the line managers

The word” staff” means a stick for support. The managers are
specially appointed to give advice, suggest or assist the line
managers in their day to day matters. the line manager may
require legal updates and counseling and for this process. He
is provided with a competent specialist who can offer valuable
suggestions in the matters of policy –making and providing
the latest rules and regulations on a given issue the line
managers can take the support of their staff managers to get
a full view of the issue under Consideration. Line and staff
organization structure can be drawn as shown in figure.
Merits of line and staff organization:-
• It enhances the quality of decisions
• There is a greater scope for advancement
• It relieves the line manager
Demerits of line and staff organization:-

• It may create more friction or conflict between line

and staff managers
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• Staff suggestions are seldom implemented

• It is expensive to have both staff and line managers.
3. Functional organization:-functional organization is
suggested by F.W.Taylor in functional organization different
experts (specialists) guide the subordinates in organization.
Workers or subordinates thus receive order from several
specialists or officers and responsible for their performance
todifferent experts.

Figure shows a general manager having three managers each

representing a functional area production, marketing and finance.
General Manager are co ordinate all functional managers in the
organization

Merits of functional organization:-

• Planned specialization
• Facilitates large scale production through standardization
• The disciplinary controls are well defined
• Appropriate when there is a single product or service
• Offers clear career paths for functional specialists
Demerits of functional organization:-
• Ineffective controls as workers have more than one boss
• Very costly
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• Calls for more co ordination

• Less appropriate when an organization diversifies
• No clear line of authority.
4. Committee organization:-A committee is formed when two or more
persons are appointed to work as a team to arrive at a decision on the
matters referred to it is intended to utilize the knowledge skills and
experiences of all the concerned parties.
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Figure presents a typical committee organization in a

university. Here the finance committee is responsible for
executive council directly. Similarly the board of studies
(intended to review, revise and update the syllabus of different
academic courses in the university) submits its report to the
academic senate .the chairman of both the academic senate
and executive council is the vice –chancellor. The members of
committees for selection, convocation, purchases and others
meet discuss the issues placed before them decide and submit
their report to the register. Some of the issues that call for
appointment of committees are revision of wages, section of
faculty or technical staff disciplinary matters, purchase of
equipment and so on in a university. For example there are
various committees such as purchase committee (to decide
which equipment is to be bought).selection committee (to
recruit teaching and non –teaching staff members), board of
studies ( a committee to prescribe the syllabus for different
courses of engineering),anti- ragging committee( to prevent
ragging).these committees are supportive in nature in an
industry setting .there are several committees such as
production committee, finance committee, welfare committee
and so on.
Merits of committee organization
• It pools up the organizational resource in terms of
knowledge skills and experience
• It represents all interested groups and thus facilitates
group decision.
• It yields good results if the committees are headed by
taskmaster like chairman and time bound in terms of
decision –making
• It minimizes the fear of too much authority vested in one
person
• It motivates all the concerned or affected groups to participate.
Demerits of committee organization
• Responsibility for decisions cannot be fixed on a
particular person
• It calls for high degree of co ordination
• It involve high cost in terms of time and money
5. Matrix organization:-this is also called project
organization. It is a combination of all relationships in the
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organization vertical, horizontal and diagonal. It is mostly used

in complex projects. It provides a high degree of operational
freedom. Flexibility and adaptability for both line and the staff
managers in performing their respective roles. The main
objective of matrix organization is to secure a higher degree of
coordination than what is possible from the conventional
structure such as the line and staff.

Figure shows a General Manager having three Managers each

representing a functional area production, finance and
marketing, additionally there are two project managers for two
locations A and B. The figure reveals that both the functional
manager and the project manager exercise authority over those
working in the matrix unit the president co-ordinates or
balances power between the functional and the project mangers
each work group is held uniquely accountable to two
supervisors.

6.Customer organization: - here all the activities of the

enterprise are grouped on the basis of the enterprise are grouped
on the basis of the profile of its customers each group is
managed by one department head .this types of organization
caters to the differing characteristics and needs of its customers.
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This type of organization is designed to cater to the

requirements of clearly defined customer groups .A hole sale
cloth stores in this ladies, gens and children ect. Each of
these groups one department .each departments will be
managed by a qualified and professional manager. This is a
case of customer organization where service differs from
customer to customer

Merits of customer organization:

• It focuses on the specific needs of individuals customers
• It ensures better customer care
• It is based on growing and diversified needs of customers
Demerits of customer organization:
• It may be very costly
• Frequent changes in the market conditions may
render under- utilization of services
• The customer requirements keep changing and so
also the customer groups
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10. Social responsibility of management

Social responsibility requires the identification of
various interest groups which may affect the functions of
business organization and may also be affected by its
functioning normally various groups associated with a
business are shareholders, workers, customers, suppliers,
government, society in general management was responsibity
towards all these groups.
1. Shareholders: - it is the social responsibility of
management to provide true and fair information
regarding the functioning of the organization return on
capital, profits earned etc.in order to encourage them to
either directly participate in the management action or to
provide powers to intervene .it is necessary to protect the
interests of the shareholders.
2. Consumers:-the management should provide good quality
products to the consumers and at a reasonable price. It
should provide accurate and relevant information to the
customers. It should not provide harmful products and
goods.
3. Workers: - the management should adopt such policies
which are recognized by trade union rights. Which create a
sense of belongings and which improve the working and
living conditions of the workers. The workers should be
paid fair wages and they should be treated properly.
4. Suppliers and creditors: - the management should arrange
the amount of money within the time specified to repay the
loans taken from creditors and to pay for the supplies. It
should fulfill all obligations agreed and have good relations
with them.
5. Government: - the organization should abide by all the
laws of the government. It should pay all the taxes and
other duties fully in time. It should support the
government in all development activities.
6. General public: - the management should protect the
interests of society and support community development
activities. It should behave with the people in proper and
desire to improve the standard of living of the people.
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Importance essay questions

1. Write the nature and importance of management?
2. Explain function of management?
3. Explain Fayal’s principles of management.
4. Explain Elton Mays Human Relation Hawthorne Experiments
5. Explain varies types of organizations?
6. Explain social responsibilities of management?