IMPORTANCE OF DECISION-MAKING

Decision making is a mental process of selecting one best alternative for doing a work. Hence, the importance of decision making is everywhere. Recognizing the importance of decision making. H.Simon has called the process of managing as a decision making. In fact, management is always a decision making process. The following points indicate the importance of decision making in an organization.


(1) Indispensable Component

Decision making is an indispensable component of management process. It permeates all management functions and covers every part of the organization. Every manager is engaged in decision making for what is to be done, who will do it, how it is to be done, why it is to be done, and where it is to be done.

(2) Pervasive Function

Decision making is the pervasive function of managers aimed at achieving organizational goals. All managerial functions such as planning, organizing, leading, and controlling as well as all functional areas such as production, sales, marketing, and finance involve decision making. The function of decision making is performed by managers at all levels of managerial hierarchy. Thus, management is essentially a decision making process.

(3) Selecting the Best Alternative

A decision making is basically a choice making process. It is necessary in every organizational because there are many alternative courses of action to most situations. The decision maker evaluates various pros and cons of every alternative and selects the most acceptable alternative.

(4) Evaluation of Managerial Performance

Managers spend a great deal of their time in decision making. Making good decisions is not important but also essential to managerial success. The quality of the decisions is the yardstick of managers' effectiveness. Hence, managerial performance is evaluated on the basis of number and importance of good effective decisions.

MEANING AND NATURE OF DECISION-MAKING

Managers at all levels of organizations make decisions. A decision may be defined as a choice made from available alternatives. It represents a course of action about what must or must not be done. A decision is the product of decision making process. A decision occurs in response to problems or opportunities. It means to come to a conclusion of a problem.

Decision making is the act of making a choice. It can be defined as the process of selecting a course of action from among alternatives to achieve a desired goal or to solve a problem. Everyday a manager has to take hundreds of decisions consciously or unconsciously in the organizations. Managers must reach decisions about objectives and plans for their organizational units. They must decide how to direct, how to organize and how to control. The success of organization depends upon the ability to make good decisions and implement their decisions.

From the above description, the following nature and features of decision making emerge.

(1) It is a selective process in which only the best possible alternative out of available alternatives is chosen.
(2) It is a human and rational process involving the application of intellectual abilities to a great extent.
(3) Decision making is a dynamic process. It involves time dimensional and time lag.
(4) It is a goal-oriented process to achieve certain desired goals or objectives.
(5) Decision making implies freedom to the decision maker regarding the final choice.
(6) It is a continuous process. From the start of the day to the close, a manager has to take a number of decisions.
(7) Decisions may be positive for doing a thing or may be negative for not doing a thing.

QUANTITATIVE TOOLS FOR PLANNING

There are a number of quantitative tools that managers can use to enhance the efficiency and effectiveness of planning. The important quantitative tools and techniques for planning are as follows:

(1) Forecasting

Forecasting is an important part of organizational planning. Forecasting is the process of developing assumption about the future. It means estimating future on a systematic basis. Environmental scanning creates the foundation for forecasts, which are predictions of outcomes. Almost every manager makes forecasts of one thing or the other.

To carry out various kinds of forecasting, managers use several different techniques. Time series analysis and causal modeling are two common quantitative techniques.

a. Time-Series Analysis
b. Causal Modeling

(2) Linear Programming

Linear Programming is a procedure for calculating the optimal combination of resources and activities. It is appropriate when there is some objective to met within a set of constraints. It can be used to schedule production, select an optimal portfolio of investment or allocate sales representative to territories.

(3) Break even Analysis

Break even analysis is the procedure that estimates profit and loss figures for different levels of output. It also identifies the point of no profit or no loss. This technique can determine the specific impact on profit as a result of changes in cost, price, and volume. Production cost includes three types of costs: fixed costs, variable costs, and total costs.

(4) Simulations

The word simulate means to copy or to represent. A simulation is a model of a real-world situation that can be manipulated to discover how it functions. It is more useful in very complex situations characterized by diverse constraints and opportunities. The development of sophisticated simulation models may require the expertise of outside specialists or consultants.

(5) PERT

PERT is an acronym for Program Evaluation and Review Technique. A PERT is like a flow chart that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity. The purpose of PERT is to develop network of activities and their interrelationships so as to highlight critical time intervals that affect the overall project.

LIMITATIONS OF PLANNING

Planning plays an important role in directing the organizational activity. Despite of many benefits of panning, there are several limitations or disadvantages of planning. Some are inherent in planning process whereas others are associated with planning techniques and planners themselves. Some of them are as follows:

(1) Lack of Reliable Data: Planning is undertaken on the basis of certain assumptions in the future. The future is unpredictable and uncertain. Hence, future cannot be known accurately because reliable information and data are not available. If reliable data and information are not available for planning it is sure to lose much of it value.

(2) Rigidity: Planning implies strict adherence to predetermined policies, procedures, and programs. This restricts individuals freedom, initiative and desire for creativity. Business is by nature dynamic and the red-tapism created by detailed planning can prove disastrous for an organization.

(3) Time Consuming Process: Planning is a time consuming process. The various steps of planning may consume a lot of time. It is, therefore, unsuitable in those situations where sudden or immediate action is required to meet unexpected contingencies.

(4) Costly Process: Planning is also costly process. Money and effort have to be spent in collecting information, preparing estimates, forecasting and evaluation of alternatives. Services of experts may be necessary to select the best and most economical course of action for the organization. Planning cost may go on increasing if planning becomes more elaborate and formulated due to additional staff, time and proper work.

(5) Rapid Change: Rapid changes in technology, consumer tastes and fashions are further constraints to planning. In a complex and rapidly changing environment planning is more difficult as it adds new problems. In rapidly changing conditions planning activity taken in one period can not be relevant for another period.

SWOT ANALYSIS

A strategic plan or mission for the future begins with an assessment of the current situation in which the organization exists. A systematic, thorough analysis requires attention to four things: strengths and weakness of the organization's resources(Internal environment) and opportunities and threats of the external environment. Such an analysis is known as SWOT ANALYSIS. SWOT is an acronym for Strength, Weakness, Opportunities, and Threats, which are described below:

1. Strengths

Organizational strengths are usually derived from its financial, human, and other resources that enable an organization to conceive and implement its strategies. Different strategies require different organizational strengths. A distinctive competence is a strength possessed by only a small number of competing organizations. Organizations that exploit their distinctive competencies often obtain a competitive advantage and attain above-normal economic performance.

2. Weaknesses

Organizational weaknesses are skills and capabilities that do not enable an organization to choose and implement strategies that support its mission. In practice organizations have a difficult time focusing on weakness in part because organization members are often reluctant to admit that they may not posses all the skill and capabilities needed. Organizations that fail to recognize or overcome their weakness are likely to suffer competitive disadvantages.

3. Opportunities

The organization's external environment presents both threats and opportunities. Organizational opportunities are ares that may generate higher performance. It has the potential to increase the organization's strength.

4. Threats

Organizational threats are ares that make it difficult for an organization to perform at a higher level. It has the potential to hurt or even destroy an organization.

ENVIRONMENTAL SCANNING

Scanning is generally defined as acquiring information. In the context of organizational planning environmental scanning involves monitoring changes and developments in the environment that have potential impact on the organization. It is essential for formulating plans. According to Azhar Kazmi '' The process by which organizations monitor their relevant environment to identify opportunities and threats affecting their business is known as environmental scanning.

In essence, environmental scanning is the process of actively monitoring the environment through activities like such as observation and reading. Extensive environmental scanning is likely to reveal issues and concerns that could affect an organization's current or planned activities. Research has shown that companies with advanced environmental scanning systems increased their profits and revenue growth.

The task of environment scanning is normally given to executive management, although managers from all levels may be involved in this activity. Through scanning broad strategies, long term policies, plans of actions, and operating programs are formulated.

Environmental scanning is absolutely necessary for strategy formulation. As the environment is complex environmental scanning should be cautiously dealt. Various authors have mentioned the methods and techniques for environmental scanning variously. Jain(1981) has proposed following scanning methods:

1. Extrapolation Methods
2. Historical Analogy
3. Intuitive Reasoning
4. Scenario Building
5. Cross Impact Matrices
6. Morphological analysis
7. Network Methods
8. Missing Link Approach
9. Model Building
10. Delphi Techniques

STRATEGIC PLANNING

Planning had all along been a part and parcel of the business activity. All organizations, irrespective of size, had been resorting to some kind of planning. But over time, the planing task was becoming increasingly complex. A variety of new factors entered the scene at various points of time, posing new challenges in running the organization. Uncertainty,instability, and changing environment became the rule rather than exception. This in turn made new demands on the planning front. This led to the evolution of strategic planning.

The term 'strategy' has been adapted from war and is used in business to reflect the broad overall mission and goals of an organization. It refers to organization's overall plan for dealing with and existing in its environment. A strategy is a unified, comprehensive and integrated plan designed to ensure that the basic goals of the organization are achieved. It's main purpose is to search sustainable competitive advantage for the organization.

Strategic planning refers to the formulation of basic long term organizational mission, purposes, and objectives; policies and programs to achieve them; and the methods needed to achieve organizational ends. It deals with the top management function of formulating the growth strategies of the organization.

Strategic planning is the process of examining the organization's environment, establishing a mission, setting desired goals and objectives, and developing an operating plan to achieve them. In high-performance organizations strategic planning never ends. Either the organization is formulating a new strategy or it's implementing an existing one, assessing progress, and revising processes as needed. The final outcomes of strategic planning are statements of vision, mission, strategy, and policy.

STEPS IN PLANNING

Planning is a process and therefore it embraces a number of steps to be taken. In planning various facts are collected and analyzed and best out of all is chosen and adopted.Following are the steps which should be followed in procedures of planning.

(1) Awareness of Opportunities

Strictly, this is not the part of the planning as it precedes the actual planning process. However, an awareness of opportunities in the environment is important to reveal the strength and weakness of the organization and understand the problems. Setting realistic objectives depends upon this awareness.

(2) Setting Objectives or Goals

The second step is to set objectives/goals for the whole organization as well as for each department. Objectives must be specific and clear. They specify the expected results and emphasis is placed. They give direction for planning.

(3) Developing Planning Premises

Premises are planning assumptions about the environment in which the plan is to be carried out. Thhus, it is a forecast of sales volume, production cost, product line, competition, availability of labor, wage structure, tax rates and political and social conditions. Thus, planning premises are vital to the success of planning as they supply pertinent facts and information relating to future.

(4) Determining Alternative Courses

The fourth step is to search and identify the alternative courses of action. However, all the alternatives cannot be considered for detail analysis. Hence, the planner must usually make a preliminary examination to discover the most fruitful possibilities.

(5) Evaluating Alternative Courses

After identifying alternative courses the next step it to evaluate their strong and weak points with reference to cost, risk, profitability, capital requirement,etc.Hence, for a best plan all the alternatives should be evaluate deeply.

(6) Selecting a Best Alternative

After evaluating the various alternatives, the most suitable alternative is selected keeping in mind the organizational goals/objectives. Occasionally, an evaluation may disclose that two or more are advisable. This is the real point of decision making.

(7) Formulating Derivative Plans

When a best alternative is selected a basic plan is formulated. After this various plans are derived for each department and segments of the organization to support the basic plan.

(8) Budgeting the Plans

After plans are set, the final step is to prepare budgets for each derivative plan. The overall budgets of the organization represent the sum total of income and expenses. If done well budgets become an important standard against which planning progress can be measured.

PROCESS OF PLANNING

All organizations engage in planning activities, but no two organizations plan in exactly the same way. Following are the steps of planning process that many organizations attempt to follow:

(1) Assessing the Organization's Environment

A plan for the future begins with an assessment of the current situation in which the organization exists. A systematic, thorough analysis requires attention to four things: internal strengths and weakness, and external opportunities and threats. Such as analysis is often refereed to as SWOT analysis.

(2) Establishing Mission Statement

After assessing the environment, managers first establishment organization's mission. The organizational mission is a long term vision of what the organization is trying to become. It provides the reason for existence. The mission outlines the organization's purpose, premises, values, and directions. Mission statement answers the question ''what is the organization;s purpose?''for employees, customers, and other constituents. Hence, for effective organizations, the mission statement must be customer-focused, achievable, motivational, and specific.

(3) Goals and Plans

Once the mission statement is formalized, the planning process becomes a parallel flow of goals and plans. The mission statement sets the stage for strategic goals and strategic plans. Top management sets strategic goals. Thy focus on broad, general issues. Strategic goals are achieved through strategic plans. Strategic plans are general plans for allocation of resources, priorities, and necessary actions to reach strategic goals.

Strategic goals and plans serve as inputs for developing tactical goals and tactical plans. Tactical goals are set by middle managers. Their focus is on how to ope rationalize actions necessary to achieve the strategic goals.

METHODS OF PLANNING

All organizations prepare plans. There is no choice whether to plan or not, but the choice lies in the way of planning. Therefore, managers should take precautions in formulating plans more effective so as to realize organizational goals in real terms. Organizations follow two methods of planning:

1. Top-down method
2. Participative method

(1) Top-Down Method: Traditionally planning was done entirely by top level managers who were often assisted by a formal planning department. Planning department consists of planning specialists whose sole responsibility was helping to write various organizational plans. The plans are reviewed and finalized by top managers. Plans developed by top-level managers flowed down through managerial hierarchy much like traditional goal setting. As they flowed down through the hierarchy, plans were tailored to the particular needs of each level.

However, this traditional top-down method of planning is still used by organization. It can be effective only if managers understand the importance of creating a workable, usable document that actually directs and guides organizational members. It should not be a document that looks impressive but is never used.

(2) Participative Method: Another method of planning is Participative Method, in which organizational members are involved in planning. It i true that top level managers must take initiative in planning and they must set strategic goals. But, it should not be considered only the job of the top managers to formulate plans and the subordinate managers to follow them.

In Participative method, plans are not handled down from one level to another. Managers at all levels must participate in the planning process. Plans are developed by organizational members at the various levels and in various work units to meet their specific needs. Top management reviews and managers we given opportunities to contribute to plan particular over which they have authority. This will lead to their commitment, loyality to planning and enthusiasm in implementing plans.

TYPES OF PLANNING

Planning begins with a goal or targeted outcome that the organization wishes to achieve. Although the basic process of planning is the same foe every manager, planning can take many forms and styles in practice. The forms and styles of planning are likely to vary from organization to organization. Plans can be classified in a number of ways such as:
1. Strategic Planning
2. Tactical Planning
3. Operational Planning


(1) Strategic Planning

Strategic planning is the overall planning of the organization. Organizations develop strategic plans for the attainment of strategic goals. More precisely, strategic plans is general plan outlining decisions of resource allocation, priorities, and action steps necessary to attain strategic goals. Top management and Board of Directors develop strategic plans. Strategic planning covers the long term and specifies actions to be taken from five to ten years in to the future. Managers that engage in strategic planning tend to work in a high state of uncertainty. The are required to make many assumptions about the threats and opportunities of the future. Due to long term uncertainty strategic planner needs large amount of information especially with regard to the future of the external environment.

(2) Tactical Planning

Tactical planning is developed for achieving tactical goals of the organization and to implement specific parts of a strategic plan. Tactical plans define the actions of major departments that are required in the execution of a strategic plan. Typically, they involve upper and middle level management to develop the tactical actions that are necessary. Compared to strategic plans, tactical plan cover a shorter time frame within the overall scope and timing as set by the strategic plan. Tactical planner deals with less uncertainty than the strategic planner does.

(3) Operational Planning

Operational planning is developed for lower management. Operational plans focus on operational goals to achieve tactical plans. They include how the resources of the organization will be used to help the organization achieve its goals. They identify the major activities required to achieve strategic goals. They cover rather short time frames and serve as the department manager's guide for the day to day operation. Typically, operational plans are stated in specific, quantitative terms related to normal departmental activities.

NATURE OF PLANNING

Planning has following nature and characteristics:

(1) Primary Function

Planning is the primary function of management. It precede all other management functions. Without setting the goals to be achieved and line of action to be followed there is no meaning of organizing, leading or controlling the activities of an organization. In fact, all other functions of management largely depend upon planning. It sets all other functions into action. Hence, it is the primary function of management.

(2) Pervasiveness of Planning

Planning is a pervasive activity. Managers at all level of organization perform the planning function. However, nature and scope of planning may differ of various levels of management. Top management looks after strategic planning. The middle and lower management are concerned with administrative planning and operational planning respectively.

(3) Focus on Objectives

A plan must focus on accomplishing certain objectives/goals. It identifies the actions that would lead to the desired objectives quickly and economically. Planning cannot be thought of without objectives.

(4) Future Oriented

Planning is done for the future. It decides in the present what is to be done in future. It is based on forecasting and a plan is a synthesis of forecasts. Thus, planning is forward looking in nature.

(5) Selective Process

In order to achieve a set of objectives, there are a number of alternatives, which are available to an organization. Hence, planning is essentially a process of choosing among alternatives. It is concerned with decision-making relating to (a) what is to be done, (b) how it is to be done, (c) when it is to be done, and (d0 by whom it is to be done.

(6) Intellectual Process

Planning is a mental process, which involves creative thinking and imagination. Managers have to consider various courses of action, go in details the pros and cons of every courses of action and the then finally decide which course of action may suit them best. It is not mere guesswork but involves rational thinking. It requires mental ability to think before acting.

(7) Continuous Process

Planning is a continuous and never ending process of a manager in an organization. Process is a systematic way of doing things. The manager plans on the basis of some assumption, which may not come true in the future. Therefore, he has to go on modifying, revising and adjusting plans in the light of changing environment. A manager cannot plan once for all.

(8) Increases Efficiency

Planning aims to increase the efficiency of the organization at all levels. The guiding principle of a good plan is the maximum output and profit at the minimum cost. In planning, the manager evaluates the alternative on the basis of efficiency. Hence, the concept of efficiency is implicit in planning.

CONCEPT OF PLANNING

Planning is the primary function of management. It means looking ahead and chalking out the future course out the future course of action. planning is concerned with deciding in advance what, when, where, why and how is to be done and who shall do it. Thus, planning is the process of setting goals and choosing the means to achieve those goals. It is also defined as the process of choosing among alternatives. It is thinking before doing. It is a preparatory step for the action that is to follow. Without plans managers cannot know how to organize people and resources effectively.


Simply, Planning is the process by which managers define goals and take necessary steps to ensure that these goals are achieved. Goals imply a desired future state. Planning arises from the recognition that some intervention is needed to bring about a change from the current or present state to some desired or alternative future state. The difference between the present level and the future state is commonly known as strategic gap. It requires time and preparation to bridge this gap.

Planning is a mental process which covers:1.assessment of the future; 2.determination of objectives in the light of future; 3.development of alternative courses of action to achieve such objectives; and 4.selection of the best course of action among these alternatives. Hence, it is blueprint for action. Without planning other functions become more activity producing nothing but chaos.

According to Stephen P. Robins,''Planning is deciding in advance about what to do, how to do it, when to do it, and who is to do it. It provides the ends to be achieved.'' In the words of Griffen, ''Planning means setting an organizational goals and deciding how best to achieve them.''

EMERGING BUSINESS ENVIRONMENT

In studying the business environment, it is desirable to be familiar with our own country's environment. The prevalent economic, socio-culture, political-legal, and technological environment affects the development of trade and industry as well as foreign investors. The elements of environment that affect the establishment and development of organization must also be considered.Hence, emerging business environment also can be divided into four parts:

(1) Economic Environment

The new economic policies and reforms have affected practically all the sectors of the economy. Major shifts have been made in industrial policy, trade policy, privatization policy, labor policy and policies relating to foreign investment. The economic environment consists of economic condition, trade and transmit policy, industrial policy, foreign investment, privatization policy, and fiscal and monetary policies. These elements are:-

(a) Economic Condition
(b) Trade and Transmit Policy
(c) Industrial Policy
(d) Privatization Policy
(e) Fiscal and Monetary Policies

(2) Socio-Culture Environment

Organizations exist in the society. Socio-culture environment is made of demographic, attitude and belief, religion, education, and language, which affect society's basic values, preferences and behaviors. They are influence the organizational decisions. Hence they are listed below:-

(a) Demographic
(b) Attitude and Beliefs
(c) Religion
(d) Education
(e) Language

(3) Political-Legal Environment

The political-legal environment contains those government regulations that define the rules by which business must operate. As mentioned earlier it is important to the manager because (1) it imposes certain legal constraints on the business organization,(2) it establishes a market atmosphere that may be pro-business or anti-business,and (3) it has the potential to provide the ability needed for long term business planning. Hence, the political-legal environment consists of trade policy, industrial policy, privatization policy, etc.Some of its type are listed below:-

(a) Constitution
(b) Political Parties
(c) Administrative Policies

(4) Technological Environment

The technological environment consists of those processes by which organization transforms inputs into outputs. The rapid changes in our society are obviously related to and somehow dependent upon the development of new techniques and new inventions. It provides the knowledge, systems, processes, equipment, and software that faciliate the organization's efficiency and effectiveness. Hence, the modern industrialization is the product of technological development. Its categories are:-

(a) Transfer of Technology
(b) Science and Technology

CONCEPT OF MANAGEMENT ETHICS

Ethics is an individual's beliefs concerning what is right or wrong, good or bad. It is important to note that ethics are relative not absolute. Ethical behavior is in the eye of the beholder that confirms to generally accepted social norms. Unethicl behavior, then, is behavior that does not conform to generally accepted social norms.

Managerial ethics are the standards of behavior that guide the condect and thinking of managers. They generally occur in the organizational context. Actions of peer managers and top managers as well as organization's culture all contribute to the ethical context of the organization. The importance of ethics increases in proportoirr to the consequences of the outcome of a decision or behavior. A a manager's actions become more consequential for others, the more important are the ethics of that managers. When attemping to decide what is right or wrong, managers can focus on (1)consequences, (2)duties, obligations and principles, and (3) integrity.

(1) Consequences: When attemping to decide what is right or wrong, people can sometimes focus on the consequences of their decision or action. If no one gets hurt, the decision is ethical. Focusing on the consequences, the decision maker is concerned with the utility of the decision.

(2) Duties, Obligation and Principles: Another approach to making an ethical decision is to examine one's duties in making that decision. It is based on universal principles such as honesty, fairness, justice and respect for person and property. Rights for privacy and safety are also important. If a given decision violates one of these universal principles, it is automatically unethical even if nobody gets hurt.

(3) Integrity: Another criterion for determining the ethics of behavior focuses on the character of the person involved in the decision or action. If the person in question has good character and genuine motivation and intentions, he or she is behaving ethically. The decision maker's environment or community helps define integrity.

SOCIAL RESPONSIBILITY OF BUSINESS

Every business organization operates in the society. It uses society's resources and sells its production to the society and earns profit. Business and society are meant and exist for each other. Without the help of society business cannot be operated. It can exist only if it fulfills its responsibility towards the society in the socially acceptable manner. Hence, fulfilling the responsibility towards society is the social responsibility of business. The idea of social responsibility is that decision-makers are obligated to take actions, which protect and improve the welfare of society as a whole along with their own interests. Every organization must share his prosperity with those members of the society who have helped the business to prosper. The growing power of pressure groups has added importance to social responsibility aspect.

Social responsibility may be defined as the obligation of an organization to protect and enhance society within which the organization operates. Adolfe Berle has defined ''Social responsibility as the management's responsiveness to public consensus''.

There are two opposing views of social responsibility. On the one hand classical view believes that business has only one responsibility-to maximize profits for the shareholders. On the other hand is the socio-economic view, which holds that the responsibility goes beyond making profits to include protecting and improving society.

TYPES OF ENVIRONMENT-INTERNAL AND EXTERNAL

Every organization needs to be perceived as operating in an environment. Organizations are neither self-sufficient not self-contained. Rather they exchange resources with and dependent upon external environment. External environment can be defined as all the forces and conditions outside the organization that are relevant to its operation and influence the organization. Organizations take inputs(raw materials, money, labor and energy) from the external environment, transform them into products or services, and send back as output to the external environment. The other environment is internal which can be defined as all the forces and conditions within the organization that influences its behavior. Thus, environment can be broadly classified into (1) Internal environment, and (2) External environment.

(1) Internal Environment

Each business organization has an internal environment, which includes all the elements within the organization's boundaries. Strictly speaking they are part of the organization itself. The major components of the internal environment are :

a. Employees
b. Shareholders and Board of Directors
c. Culture

(2) External Environment

According to James Stoner, External environment can be defined as all elements outside an organization that are relevant to its operation. This environmental context becomes more clear if the external environment is further divided into two distinct segments:(1) general environment and (2) task environment.

(a) General Environment

The general environment consists of interrelated forces that can be categorized into four elements:

1. Economic Environment
2. Socio-Culture Environment
3. Political Legal Environment
4. Technological Environment

(b) Task Environment

The task environment puts indirect pressures on business management through the institutional processes of following elements:

1. Customers
2. Suppliers
3. Competitors
4. Financial Institution
5. Government
6. Media

CONCEPT OF BUSINESS MANAGEMENT

An organization is a part of society and the business environment has a direct relationship with the policy of the organization. The environment may impose several constraints on the organization as it has a tremendous impact and influence. The organization on the other hand, has very little control over its environment. Therefore, the success of an organization depends to a very large extent on its adaptability to the environment.

Business organizations are neither self-sufficient nor self-contained. They exchange resources with the outside environment and depend on it for their survival. They draw inputs such as raw materials, capital, labor, energy and information from the external environment. They transform inputs into products and services and supply as outputs to the external environment.

Generally, there are two sets of environment in business: internal and external environment, which influences the business policy of an organization. The internal environment is known as controllable factors because the organization has control over these factors. They consists of employees, shareholders and board of directors, and culture. Organization can modify or alter such factors to suit the environment.

The external environment is known as uncontrollable factors because such factors are largely beyond the control of the organization. They consist of economic, socio-culture, political legal,and technological environment. They are uncertain and complex.

The term 'business environment' generally refers to the external environment. It includes factors outside the organization, which can lead to opportunities or threats to the organization. Both internal as well as external environmental factors play an important role in influencing the outcomes of business organization.

CONTINGENCY THEORY OF MANAGEMENT

Howard University professor Paul Lawrence and Jay Lorsch(1967) popularized the term Contingency Theory. The contingency theory was developed by managers, consultants, and researchers who tried to apply the theories and principles of the major schools to real life situation. It is based on the notion that the proper management technique in a given situation depends upon the nature and conditions of that situation. Hence, it is also called the situation approach.

Contingency theory recognizes that all the sub-systems of an organization and environment are interconnected and interrelated. By analyzing their interrelationships help management in finding solutions to specific situation. Different situations demand different solution. The basic idea of the contingency theory is that there is no best way to plan, organize or control. A technique that works in one situation will not necessarily work in all situations. There cannot be universal principles of management appropriate to all situations. The contingency theory seeks to match different situation with different management methods.

According to contingency theory, the correct management practice or managerial behavior in a particular situation and at a particular time depends on a many variables. It is the task of the manager through study and practice to develop a wide range of alternative management behaviors.

At present contingency theory is considered to be the practical approach of management. The major contribution of this theory to management reminds the manager that there is no one best way to do anything in the world of management.This theory seems to hold a great deal of promise for the future development of management theory and practice.

MANAGEMENT SCIENCE THEORY

Management Science Theory gives a quantitative basis for decision making. It specifically deals with the development of mathematical models to aid in decision making and problem solving. This theory holds that managing is a logical and rationale process, so it can be expressed in terms of mathematical models, Mathematical models are simplified representation of a system, process, or relationships. It is also called 'Operation Research', 'Mathematical School', or 'Quantitative Approach'.Management Science Theory uses quantitative techniques and mathematical models for managing decisions. The techniques commonly used for managerial decisions. The techniques commonly used for managerial decision-making include linear programming, critical path method, program evaluation review technique, games theory,queuing theory ana break-even analysis. This theory focuses on solving technical rather than human behavior problem. It is characterized by:

1.Primary focus on decision making
2.Based on economic decision theory
3.Use of formal mathematical models
4.Frequent use of computers.

The Management Science Theory has made significant contributions by applying the tools of mathematics to the solution of various complex problems of management. The exponents of this theory believe all the phases of management can be expressed in quantitative terms for analysis.It has developed quantitative tools in solving technical problems and forecasting.

SYSTEM THEORY OF MANAGEMENT

In 1960, a new thought to management appeared which tried to unify the prior theories. This theory is commonly known as 'System Theory'. The System Theory of management owes to origin of the General System Theory developed by Ludwig Von Bertalanhy.

In simple terms a system is a group of interrelated and interdependent part working towards a comman goal. It is a combination of several parts forming a complex whole. System Theory views the organization as a unified, purposeful system composed of interelated parts. It tries to give the manager a way of looking the organization as a whole. System theory tells us that the activity of any part of an organization affects the activity of other parts.

For any organization, the number one objectives is survival. To faciliate survival, a system may be viewed as consisting o four basic elements- inputs, tranformation process, outputs, and feedback.


Inputs are ingredients required to initiate the transfrmation process. They include human, financial, material, and information resources. Transformation process appies technology, operating systems, administrative practices and control techniques in order to produce the output. The output may be products or services, the sale of which creates profits or losses. The action of one element in the model influences other parts of the model. The process also has by-product outputs such as employee behavior, enviromental pollution, and information. A feedback loop is used to return the resultant enviromental feedback to the system as input.

The main features of system theory of management are as follows:

1. Sub-systems
2. Open System
3. Synergy
4. Flow
5. System Boundry
6. Feedback
7. Entropy.

DECISIONS THEORY OF MANAGEMENT

The Decision Theory of management led by Herbart Simon looks management process as a decision making process. Decisions are made through rationale choice among different altenatives available. It is a choince making activity and choice determines our activity. Decision theories have expanded their area of theory building in the decision making process to the study of decisions, decision-maker, and the enviroment of decision-maker.


Whatever a manager does, he does through making decisions. Hence, decision making is central to managing. Simon developed the administrative model of decision making which describes how decisions are actually made. Managers are often faced with uncertainity and nonprogrammed decision making situation. Simon's decision model is based on two concepts (1) bounded rationality and (2) satisficing. The manager who seeks to take logical and rationale approach to decision can follow the following six steps:

1. Recognize and define the decision situation
2. Identify appropriate alternatives
3. Evaluate each alternative
4. Select the best alternative
5. Implement the alternative, and
6. Evaluate the results and follow up.

BEHAVIOR THEORY OF MANAGEMENT

The classical theories viewed the organization from a mechanistic point of view. They placed emphasis on the design and performance of work and the process of the management. They had either ignored or over-simplified the human factor. In contrast Behavioral Theory(Behavioral approach) evolved in recognition of the importance of human behavior in organizations.Generally, behavior theory(approach) to management has two branches. The first branch is Human relations and second branch is Behavioral science theory.


(1) Human Relations Theory

The term human relations refers to the manner in which managers interact with subordinates. To develop good human relations, followers of his approach believe managers must know why their subordinates behave as they do and what psychological and social factors influence them. Human relationsts 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.The human relations movement grew out of a famous series of studies known as Hawthrone experiments.

(2) Behavior Science Theory

Mayo and his colleagues pioneered the use of the scientific method in their studies of people in the work enviroment. Later researchers more rigiously trained in the behavioral sciences used more sophisticated research methods and became know as 'behavioral scientist'. Generally, behavioral science theory is the study of observable and verifiable human behavior in organizations, using scientific procedures.It is largely inductive and problem centered,focusing on the issue of human behavior and drawing from relevant literature, especially from psyocology, sociology, and anthropology. It focuseson group behavior and group relationships.

CLASSICAL THEORY OF MANAGEMENT

The classical theory includes three theories. Two theories-(a) The Scientific Management and (b) The Administrative Management Theory developed separately but at about the same time period.Another important classical theory is Bureaucratic theory.

(1) The Scientific Management Theory

Frederick Winslow Taylor (F.W.Taylor: 1856-1915) is widely known as Father of Scientific Management. Taylor joined Midvale Steel Company as a worker and later became supervisor there. Afterwards he joined Bethlehem Steel Company. After retirement, he worked as a consultant. At both companies, he experimented to increase the efficiency of men at work and developed a new philosophy known as 'Scientific Management''.

Fundamentally, the scientific management is an attitude and philosophy of discarding the old rule of thumb. It means scientific investigations should be under taken to solve problems of industrial management. Scientific investigations include research and experimentation, collection, and analysis of data and formulation of certain principles on the basis of such analysis.

(2) The Administrative Management Theory

Henry Foyal is considered to be the Father of Administrative Management theory. He focused on the development of broad administrative principles applicable to general and higher managerial levels. He was a French mining engineer and became managing director and successful industrialist. He took the functioning approach to management. In 1916 he published his famous book in French language 'Administration Industrielle Generale''which was translated into English in 1929 under the title 'General and Industrial Management'.

Fayol provided a broad analytical framework of the process of administration. He used the word 'administration' for 'management'. A contemporary of Taylor, Fayol for the first time attempted a systematic analysis of the overall management process.

(3) Bureaucratic Theory

Max Weber (1864-1920) propounded the bureaucratic theory of organization and management. He was a German sociologist and contemporary of Taylor and Fayol. Weber developed the bureaucratic model of organization, which is essentially a universal model of efficient management. Bureaucratic was defined as ideal system wherein positions and tasks were clearly defined, division of labor was precise and clear, objectives were explicit, and a clear chain of command was maintained. Weber viewed bureaucracy as ''the most efficient form or that could be used most effectively for complex organizations business, government, military, for example arising out of the needs of modern, society''.

EVOLUTION OF MANAGEMENT THOUGHT

Management as a systematic body of knowledge and a distinct discipline id the product of the twentieth century. However, the history of management practice is as old as human civilization, when the men started living in groups. For every human group requires management.

The real development of management thought has begun with the scientific management approach given by F.W.Taylor. Though some of the concepts have been developed by thinkers earlier to Taylor. Early management thoughts have come from Roman Catholic Church, military organizations, the Cameralists, a group of German and Austrian public administrators and intellectuals during sixteenth to eighteenth centuries. Their concepts of management were mostly related to specialization, selection of subordinates and their training, simplification of administration procedures, unity of doctrine etc.

In the later period, Charles Babbage, James Watt, and Robert Owen made contributions. Their contributions were limited mostly to the field of developing the concept to make resources more effective at the shop-floor level. These contributions were made bit by bit and in haphazard manned that could not stimulate management as a distinct discipline for further study. however, the various ideas stated by them have created awareness about managerial problems. By the end of the nineteenth century, a stage was set for the systematic study of management. F.W.Taylor made a beginning in this direction in the early part of the 20Th century. During five decades there has been enormous development of management thought.

Koontz was the first academician to classify the various approaches into the schools of management theory. The evolution of management thoughts can be classified into ''Six (school of) Management Theories''.

(1) The classical Theory
(2) The Human Relations and Behavioral Science Theory
(3) The Decision Theory
(4) The Management Science Theory
(5) The Systems Theory, and
(6) The Contingency Theory

EMERGING CHALLENGES FOR MANAGEMENT

The challenge of managing in the managing world has made management an exciting profession. Some of the major emerging challenges that confront all managers today are as follows:

(1) Globalization of Business

One major challenge faced by all managers today is globalization. No longer can any organization regerdless of size or type ignore the globalization of business. Globalization implies free trade in products and services, offering a wide choice to customers across a boderless world. It experts continuos pressure on competing organizations to upgrade quality, reduce costs, and or develop new and superior products in terms of customers need and expectation.

(2) Information Technology

Today's managers must manage information technology(IT) and in e-business world. IT must be selected and implemented with the end user and work to be accomplished firmly in mined to be effective. The IT choices available to modern managers far exceed those that were available just a few years ago.

(3) Quality and Productivity

Another area of interest to emerge in recent years has been quality, productivity and their interrelationships. As Japanese manufacturers began beating out U.S. competitors in quality comparisons, Western managers soon began taking a more serious look at Total Quality Management(TQM).Hence, managers have become more cautions to increase the productivity of their employees.

(4) Ethics and Social Responsibility

The decision made by managers in organizations have a broad reach both inside and ouside the organizations. Thus, managers must be concerned with ethics, and social responsibility. Many organizations today are taking step to enhance the ethical standards of their managers and to avoid legal or public sentiment problems.

(5) Change

Managers also face more change today than ever before. It is important to keep in mind that any change in organication or enviroment may have effects extending beyong that area. Thus, managers face the challenge of managing change. They must be aware of factors contributing to change and impact on practice of management.

MANARERIAL ROLES

Henry Minizberg conducted one of the most frequently cited studies of managerial roles. He observed and interviewed chief executives from different industries. A summary of his findings gives us a more complete picture of what managers actually do. Minizberg (1973) developed a model of ten related roles that he called the ''Managerial Role Constellation''. These ten roles can be grouped as interpersonal, informational, and decisional. These roles describe what managers actually do, whereas functions of managers had historically described what managers should do.

(1) Interpersonal Roles

These role focus on interpersonal relationships. They are related to the contacts and dealings with other people within or outside the organization to achieve certain goals. The interpersonal roles are:

(a) Figurehead: All managerial jobs require some duties that are symbolic or ceremonial in nature such as greeting and receiving visitors, taking visitors to the dinner, attending ribbon cutting ceremonies, and the like.

(b) Leader: The manager is also asked to serve as a leader. As a leader, every manager has to direct and coordinate the activities of subordinates. It also involves staffing, motivating, and controlling the activities to make sure that things are going according to plan.]

(c) Liaison: A third interpersonal role is serving as liaison both within and outside contacts. Within the organization, managers must interact with numerous other managers and individuals. They must maintain good relations with them. Managers often have interactions with important people outside the organizations such as the community, suppliers, and others to gain favor or information.

(2) Informational Role

This set of roles focuses for receiving and sending information. Through interpersonal contacts, managers build a network of contacts. It places the manager at a strategic point to gather and disseminate information. The informational roles are:

(a) Monitor: As monitors, managers gather information in order to be well informed. The formal and informal contacts developed in the liaison role are often useful here.

(b) Dissemanitor: Managers are also disseminators of information. In this respect, he transmits information directly to his subordinates who would otherwise have no access to it.

(c) Spokesperson: In the spokesperson role, manager represents the department to other people. He formally relays information to people outside the departments and outside the organization.

(3) Decisional Roles

Developing interpersonal relationships and gathering information are important but these activities are not ends in themselves. They serve as the basic inputs to the process of decision making. Thus, the third major area focuses of decisional roles of managers. The important decisional roles are:

(a) Entrepreneur Role: As entrepreneurs, managers are initiators, innovators, and designers. In this role, the manager constantly looks out for new ideas and seeks to improve his unit by adapting it to changing conditions in the environment.

(b) Disturbance Handler: In this role, the manager must take corrective action needed to resolve important unexpected disturbances. So he must handle utility service problems, strikes, natural disasters, etc. Usually the decisions must be made quickly which means that this role takes priority over other roles. The immediate goal is to bring stability in the organization.

(c) Resource Allocator: These are never enough resources including money, time, people, and equipment in the organization. In resource allocator role, the manager must allocate scarce resources where they are most needed to meet the organizational goals. He must decide who will get what . Therefore, it is one of the most critical of the manager's decisional roles.

(d) Negotiator: Finally, managers are negotiators. They enter into negotiators with other groups or organizations. Managers must bargain with other departments and individuals to obtain advantages for their own units. The negotiations may be over work, performance, objectives, resources, or anything influencing the departments. For example a manager might represent the organization to negotiate a trade union contract or a long-term relationship with a supplier. He can also mediate a dispute between two subordinates.

MANAGERIAL SKILLS

A skill is an individuals ability to translate knowledge into action. A manager must posses a wide variety of skills and abilities to carry out various management functions. Robert Karz (1974) has identified three basic kinds of skills necessary for successful managers. They are (1) Technical skills, (2) Human skills, and (3) Conceptual skills. However, at present diagnostic skills and digital skills are also prerequisites to managerial success.

(1) Technical Skills

Technical skills are the ability to use the procedures., techniques, and knowledge of a specialized field. For example, an accounting manager needs the basic technical sills of accounting profession. First line managers need a high degree of technical skills in order to supervise subordinates properly. The need for technical skill decrease as the manager moves up in the organizational hierarchy.

(2) Human Skills

Managers spend considerable time interacting with people both inside and outside the organization. Hence, managers need human skills. Human skills are the ability to work with, understand, and motivate other people. They are needed to get along with people and to get work done through people. Human skills include interpersonal skills such as communication, negotiation, bargaining, directing, leading, motivating, and conflict resolution. Human skills are very important at all level of management. The popularity of team based management has increased the necessity for interpersonal skills for all members of the organization. A manager who has good human skills is likely to be more successful than with poor human skills.

(3) Conceptual Skills

Conceptual skills represent the manager's ability to organize information to better understand and take a broad and farsighted view of the organization. They include the manager's ability to see the organization as a whole and understanding how different parts depend on one another, and a change in one part will impact the other parts. This allows them to think strategically to see 'big picture' and to make broad based decision that serve the overall organization. The importance of conceptual skills increases as the managers move up in the organizational hierarchy.

(4) Diagnostic Skills

Successful managers also possess diagnostic skills. These skills enable a manager to visualize the most appropriate response to a situation. A manager must diagnose and analyze a problem in the organization by studying in symptoms and then developing a solution. Much of the potential excitement in a manager's job centers on getting to the root of problem and recommending solutions. The importance of diagnostic skills increases as the manager is promoted to the higher level.

(5) Digital Skills

Managers who have digital skills have understanding of computers, telecommunication, and in particular, know how to use digital technology to perform many aspects of their jobs. These skills are important because using digital technology substantially increases a manager's productivity. Computers can perform in minutes tasks in financial analysis, human resource planning, and other areas that otherwise take hours, even days to complete. Thus, computer is an especially helpful tool for decision making. Software enables managers to manipulate data and perform 'what if scenarios, looking at the projected impact of different decision alternatives'.


Although the proceeding skills are all vital, the relative importance of each will vary according to the level of the manager in the organization. For example, first line managers generally need to depend more on their technical and human skills. These managers have greater contact with the work being done and the people doing the work. Digital skills are equally important at all level of management. Middle managers require a more even distribution of skills. Finally, conceptual and diagnostic skills are extremely critical to the top managers. Top management's primary responsibility is to make the key decisions that are executed or implemented at lower levels. This requires top managers see the big picture in order to identify opportunities in the environment and develop strategic plans to capitalize on these opportunities

MANAGERIAL HIERARCHY : TYPES OF MANAGERS

Managerial hierarchy means dividing the authority and responsibility among the various managerial positions. Although all managers perform the same functions of planning, organizing, leading and controlling, there are hierarchies among them. Clearly there are many types of managers in an organization. Thus, it is useful to categorize managers as to their managerial level and then distinguish between functional and general managers.


Managerial Levels

It is the normal practice to place managers in a three-tier hierarchy as described below:

(1) Top Managers

Top managers consist of Board of Directors, Chairman, President, Vice-president, Managing Director or Chief Executive Officer (CEO) or General Manager. They make up the relatively small group of executives who manage the overall organization. They have the overall responsibility for the welfare and survival of the organization. They establish overall organizational goals and strategies for their achievement. Top management is the ultimate source of the authority. The important functions of top management includes:

a. Determine the goals of an organization.
b. Make policies and frame plans to attain the goals.
c. Set up an organizational structure to conduct the operations as per plan.
d. Assemble the resources of money, men, materials ans machines for executing the plans.
e. Provide overall directions in the organization.
f. Exercise effective control of the operations.


(2) Middle Managers

Middle managers consist of departmental, divisional and sectional heads attached to the different departments and sections. They are subordinates to the top managers and responsible for the first-line-managers. They usually have the responsibility for implementing and controlling plans and strategies as developed by the top management. They are also responsible for all the activities of first-line-managers. New information technology and recent efforts at restructuring or 'downsizing' organizations have reduced the numbers of middle managers. The main functions of middle management are as follows:

a. Interpret the policies framed by the top management.
b. Recruit and select suitable operative and supervisory staff.
c. Develop and train employees in the organization for better functioning.
d. Assign duties and responsibilities for timely implementation of the plans.
e. Issue instructions to the supervisory staff.
f. Motivate personnel to attain higher productivity and to reward them properly.
g. Cooperate with other departments for ensuring a smooth functioning of the entire organization.
h. Report and to make suitable recommendations to the top management for the better execution of plans and policies.


(3) First-Line-Managers

First-line-managers consists of foremen, supervisors, office managers, coordinators, sales officers, account officers,etc. First line managers are responsible for the implementation and control of the operational plans developed by middle managers. They supervise and coordinate the activities of operating employees. Actual operations are the responsibility of this level of management. In contrast to top and middle managers, first line managers typically spend a large proportion of their time supervising subordinates. The main functions of first-line-management are as follows:

a. Issue orders and instruction to the operatives (workers) and to supervise and control their work.
b. Classify and assign jobs to the workers.
c. Direct and guide the workers about work procedure.
d. Arrange the necessary tools, equipments, materials,etc. for the workers.
e. Look after the proper maintenance of tools, machinery, etc.
f. Solve the problems of workers.
g. Inform the unsolved problems of workers to the management.
h. Maintain good human relations and discipline among the workers.
i. Build a high group morale among the workers.


Functional and General Managers

Another way of classifying managers is to separate the functional managers from general managers. Organizations are often described as a set of functions. A function is a collection of similar activities. Functional managers are responsible for only one functional area. The major functions of managers are marketing, finance, operations, human resources and other areas.

(1) Marketing Managers : Marketing managers work in areas related to the marketing function such as new product developments, promotion, distribution, and sales. They must focus on satisfying the needs of customers and therefore, must be knowledgeable as to the needs of customers and nature of competitive goods and services.

(2) Financial Managers : Financial managers deal with an organization's financial resources. They are responsible for activities such as accounting , cash management, investments , stocks, debts, and taxes.

(3) Operations Managers : Operations managers are concerned with creating and managing the systems than create an organization's products and services. They are responsible for production control, inventory control, quality control, plant layout and site section.

(4) Human Resources Managers : They are responsible for hiring and developing employees for the organization. Hence, they are involved in human resource planning, recruiting, selecting, training and developing employees, designing compensation and reward system and discharging employees based on the human resource needs of the organization.

(5) Other Mangers : Many organizations have specialized management positions in additions to those already described. Public relations managers for example deal with the public and media. Firms in high-technology may employ a 'Research and Development manager to manage the firm's technology development. The number and nature of these specialized managers vary tremendously from one organization to another. As contemporary organizations continue to growing complexity and size, the number and importance of such managers are also likely to increase.

General managers are also known as administrative managers. General managers are not associated with any particular management specialty. They are generally generalists who are not responsible for one of the above organizational functions. They have some basic familiarity with all functional areas of management. General managers usually oversee a complex unit such as a company, branch or an independent operating department. They are responsible for all the activities of that unit, branch or department. Company presidents are general managers if employees from different disciplines report to them.

PROCESS AND FUNCTIONS OF MANAGEMENT

A process is a series of actions that achieves goal-making a profit or providing a service. Management is best defined as a process of using organizational resources effectively and efficiently to achieve organizational goals through managerial functions. Thus, organization uses resources and carries out four major managerial functions - planning, organizing, leading, and controlling.

Management uses resources to accomplish organizational goals. The resources can be divided into four types: human, financial, physical, and informational. Human resources are the people needed to get the job done. Financial resources are the money of the organization uses to reach the goals. Physical resources are raw materials, office space, production facilities, office equipment, vehicles and tangible goods. Information resources are the data that the manager and the organization use to get the job done.
Four Managerial Functions

Just as the different management experts have defined management differently, they have classified the managerial functions differently. The main reason for this is that the different experts have discussed the management functions by studying different organizations and from different angles. Some of the important functions are described below:

(1) Planning

Planning id a basic managerial function. It is concerned with the determination of goals to be achieved and the course of action to be followed to achieve them. It is a decision in advance, what to do, when to do, how to do, and who will to do a particular task. Hence, planning is thinking before doing. It involves selecting of goals and strategies, policies, programs and procedures fir achieving them.

Managers at every level of management perform planning. It is a prerequisite of doing anything. Good planning is essential to ensure proper utilization of human and non-human resources to achieve the predetermined goals. It is based on the estimates of the future situation and the success of a plan, therefore lies in the manager's ability to forecast future situation correctly and accurately. Thus, forecasting is an inseparable part of planning.


(2) Organizing

Organizing may be defined as identifying and grouping the activities to be performed, assigning them among individuals and creating authority-responsibility relationship among them. It is the collection and integration of various factors required to achieve the planned goals. According to Fayol -''to organize a business is to provide it with everything useful to its functioning - raw materials, tools, capital, and personnel''. Thus, organizing involves bringing together the human and material resources for the achievement of organizational goals. It involves the following processes:

(a) Determining and defining the activities involved in achieving the objectives
laid down by the management;
(b) Grouping the activities in a logical pattern;
(c) Determining manpower requirements;
(d) Staffing is one of the major activities. which is sometimes classified
separate management function.
(e) Assigning the activities to specific positions and people;
(f) Delegating authority and fixing of responsibility for carrying out such assigned duties;
(g) Coordinating these activities and authority relations.

Organizing function helps in increasing efficiency and reduces the operation cost through avoiding repetition and duplication of activities.


(3) Leading

Leading refers to providing positive and dynamic leadership. Once objective/goals have been developed and the organizational structure has been designed and staffed, the next step is to begin to move towards the objectives. The leading function serves this purpose. Sometimes called directing or motivating, leading involves influencing members of the organization to perform in ways that accomplish the organization's objectives. Leading can be defined as the management function of directing, communicating, influencing, supervising, and motivating human resources towards the achievement of organizational goals.

While functions like planning and organizing, are merely preparations for doing work, the leading function actually starts the work. It initiates organized action. It has to do predominantly with the interpersonal aspect of managing. All managers would agree that their most important problems arise from people- their desires and attitudes, their behavior as individuals and in groups.

Effective leadership is highly prized ability in organization and is a skill that some managers have difficulty in developing. Outstanding leadership has the capacity to achieve organizational success in sprite of poor plans or poor organizations. On the contrary, the best plans or organizations will fail under poor leadership.


(4) Controlling

Controlling is related to all other management functions. It is the process of measuring and comparing operating results with the plans and taking corrective actions when results deviate from plans. It is checking that the plans are carried out as per expectations. Hence, it is essential for achieving organizational goals. Control system provides standards for monitoring and evaluating the use of resources. Controlling involves the following sub-functions:

a. Determination of standards for measuring works performance.
b. Measuring the actual performance.
c. Comparing actual performance with the standards.
d. Finding the variances and deviations between the two and reasons for them.
e. Taking corrective actions to ensure attainment of goals.

If planning is looking ahead, controlling is looking back. Hence, there is no control without plans ans plans without control means no achievement.

The functions of management - planning, organizing, leading, and controlling are universally applicable to all organizations. In short management involves (a) managing the organization, (b) managing the managers, and (c) managing the workers and the work.

PRINCIPLES OF MANAGEMENT

A principle is a fundamental statement of truth that establishes a cause and effect relationship between two or more variables. It also serves as a guide to thought and action. On the basis of a principle we mat say that if this or that thing is done, it will lead to certain result. A principle may be either descriptive or prescriptive. As a descriptive, it simply describes a relationship between the variables. As prescriptive, it indicates what a person should do. Henry Fayol, who is regarded as father of modern management, has developed fourteen principles of management. They are as follows:

(1) Division of Work

This principle implies that every employee should be assigned only one type of work. The object of division of work is to derive benefits from the principles of specialization. It adds efficiency in the use of labor. Division of work applies to all kinds of work, management as well as technical and at all levels of organization.

(2) Authority and Responsibility

The right to give order, and power is called authority. On the other hand, responsibility means obligation to perform the work in the manner desired and directed by superior authorities. In any management process delegation of power, utilization of authority, and fixation of responsibility are the key to success. Authority without responsibility leads to irresponsible behaviour while responsibility with out authority will make a person ineffective. The success of management depends on parity of authority and responsibility.

(3) Discipline

Discipline implies obedience and respect of authority. It is essential for the smooth running of an organization. According to Fayol discipline requires (a) good superiors at all levels, (b) agreements with employees as clear and fair as possible, and (c) penalties judiciously applied.

(4) Unity of command

According to this principle, an employee should get orders and instructions only from one superior. He should be responsible only to one superior and not to so many bosses as described by Taylor in his functional foreman ship. If a subordinate has more than one superior, it will undermine authority, weaken discipline, divide loyalty and lead to confusion and delays.

(5) Unity of Direction

According to Fayol,''There should be one head and one plan'' for a group of activities having the same objective. Unity of direction signifies that each group of activities having the same objective must have one head and one plan. The purpose is to have better coordination among various activities to be undertaken by an organization.

(6) Subordination of Individual Interest to General Interests

This principle calls for the reconciliation of individual objectives with those of the organization and when the individual and organizational interests conflict, the latter must prevail. Hence, the interest of organization must prevail upon the interest of individuals. To ensure this, Fayol suggested (a) firmness and good example on the part of superiors, (b) arrangement as fair as possible, and (c) constant supervision.

(7) Remuneration of Personnel

Remuneration and method of payment should be fair as satisfactory to both employer and employees. Fayol was also in favor of providing non-financial benefits if possible. The rate of remuneration should be based on general business conditions, cost of living, productivity of concerned employees and the capacity of the organization to pay.

(8) Centralization

Centralization reduces sub-ordinate's role whereas decentralization increases it. According to Fayol, managers should retain final responsibility but the subordinates should be given enough authority to do their jobs properly. Hence, there must be a good balance between centralization and decentralization of authority and power. It depends upon so many factors such as size of undertaking, type of activities and the nature of organizational structure.

(9) Scalar Chain

Scalar chain refers to the chain of superiors ranging from the ultimate authority to the lowest rank. According to this principle, order or communication should pass through the proper scalar chain. However, to facilitate quick communication between two different links in the chain, a 'gang plank' or direct link may be created by passing the prescribed line of authority.

(10) Order

This principle is related to arrangement of material and people. Material order implies a proper place for everything and everything in its right place. Similarly, every man in the organization should be properly placed. The right man in the right job is very important for the successful functioning of an organization.

(11) Equity

Equity is the combination of kindness and justice. Employees expect equity from the management. It ensures healthy industrial relations between management and labor which is essential for the successful of working of an organization.

(12) Stability of Tenure

Employees must have job security. Frequent changes should be avoided. If they have job insecurity their morale will be low and they cannot do better job. Unnecessary labor turnover increases cost of selection and training. Whereas stability of tenure helps to develop loyalty and attachment on the part of employees.

(13) Initiative

It is concerned with thinking out and execution of a plan. Managers should encourage their employees to take initiative with in the limits of their authority and discipline. According to Fayol, ''Initiative is one of the keenest satisfaction for an intelligent man to experience''.

(14) Esprit De Corps

This is the principle of 'union is strength' and the strength of an organization lies cooperation and harmony in individual efforts. The management should follow the policy of 'divide and rule'. If there are any differences or misunderstandings or symptoms distrust among the employees, the manager should take timely steps to eliminate them.


The above principles of management as pointed out by Fayol, are not final. Principles are working hypothesis that is reasonably will established, accepted, and used in many successful organizations. According to Fayol, these principles have universal applicability. However, they cannot be applied blindly even in similar situation. they are to be used carefully and intelligently. As more research is conducted, new principles will emerges, other principles will be modified, and some will be discarded.

MANAGEMENT AS A PROFESSION

The rapid development of business and the separation of the ownership and management in the organization have contributed to the emergence of management as a distinct profession. To discuss whether management is a profession or not, it would be relevent to have a clear understanding of the essential features of profession.

The profession is an occupation, which involves the rendering of personal service of a special and expert nature. In order to practice their profession they must have minimum academic and professional qualifications prescribed by law or by the related professional associations. The essential features of a profession are as follows:

(1) Organized and specialized knowledge,
(2) Formal education and training,
(3) Service motive,
(4) Professional association, and
(5) Ethical codes.

Now, let us examine to what extent management fulfills the above requirements of a profession.

(1) Organized and Specialized Knowledge

Profession emerges from the establishment of an organized and specialized knowledge, which can be studied. It is true for all professions, including management. During the last five-six decades there has been a constant and steady growth of management techniques, principles and skills. Today, management is a separate discipline having a specialized and organized body of knowledge.

(2) Formal Education and Training

Profession requires a formal education and training in the specific area. No one can practice a profession without going through the prescribed course. Many institutes of management have been set up in foreign countries, which offer courses for specialized training in management. Formal education and training have become very helpful in getting jobs as managers. However, no minimum qualifications or course of study have been prescribed for managers by law.

(3) Service Motive

A profession is a source of livelihood primarily motivated by the desire to serve the community. Due to their expert knowledge, they are always in a position to charge higher fees. They earn but not at the cost of social interests. The success of profession cannot be measured in terms of money. Therefore, a profession enjoys high community respects. Management is an integrating agency, which integrates various resources and converts them into productive units. This is a major contribution of the management to the society, which cannot be measured in terms of money alone.

(4) Professional Association

In every profession there is a statutory association or institution which regulates that profession. The association is a representative body, which regulate and develop the profession and prescribe the criteria for individuals entering the profession. In management also, association has been formed for the regular exchange of knowledge and experience. However, they do not have the statutory power to regulate the activities of managers. Membership of this association is not compulsory in order to become a manager. Hence, the management does not satisfy this criteria of management.

(5) Ethical Codes

A profession must possess some ethical standards of conduct for its members, which contains rules and regulations providing the norms of honesty, integrity and professional ethics. Any member violating the code can be punished and his membership can be canceled. But there are no enforced ethical codes in the field of management. So, management does not satisfy this feature of a profession.



From the above discussion, it is very clear that the management does not satisfy all the features of a profession. Like other professions, management does not restrict the entry into managerial job to people. No minimum qualifications have yet been prescribed for managerial personnel. No management association has the authority to grant certificates for practice. In the absence of statutory association, ethical codes are also missing. Thus, management is not strictly a full-fledged profession like medicine, law or chartered accountancy. Even though, it does not satisfy all the features of professions, it is treated as a separated and distinguished profession now a days. At present a large number of new graduates are attracted to this field.

MANAGEMENT: A SCIENCE OR AN ART

The controversy, whether the management is a science or an art is very old which still exists. According to J. Paul Getty, ''Management cannot be systematized, or practiced according to a formula. It is an art, even a creative art''. Others disagree. It is said that. ''The management is the oldest of arts and the youngest of sciences ''. thus, the true nature of management will be clear after analyzing whether management is a science or an art.


Management as a Science

Science id a systematized body of knowledge gathered by observation and experiment, which is capable of verification. The essential features of science are as follows:

1. Principles are universally applicable.
2. Developed through scientific inquiry or experiments.
3. Established cause-and-effects relationships between various factors.
4. Their validity can be verified and predictable.

Management does satisfy the basic features of science. Management contains a systematized body of knowledge in the form of general principles, which can be universally applied. These principles are also based on scientific inquiry and investigation. They have been developed through experiments and practical experiences. The principles of management also establish cause and effect relationship between different variables. They can also be tested for their validity. moreover, the future events can be predicted with reasonable accuracy by using scientific principles.

Thus, management is undoubtedly a science. However, it is not an exact science as physics, chemistry and other physical sciences. this is because management deals with people and it is very difficult to predict accurately the behavior of human beings. Hence, management is behavior science. It is an inter-disciplinary science that has been developed with the aid of other disciplinary such as economics, mathematics, statistics, psychology, sociology, etc. That is why management is social science.


Management as an Art

Art means application of knowledge and skills to bring about the desired results. Management is one of the most 'creative art' as it requires a vast knowledge and certain innovating, initiating, implementing, and integrating skills in relation to goods, resources, techniques, and results. The function of an art is to accomplish goals by deliberate efforts. The essential elements of art are:

1. Practical knowledge
2. Personal skill
3. Result-oriented approach
4. Creativity
5. Improvement through continuous practice


Management satisfies also the basic features of art. An artist must not only learn the theory but also its application in practice. Similarly, a person cannot become a successful manager simply by reading theory and getting a degree in management. He must also learn to apply his knowledge in solving managerial problems. Every manager has his individual approach and style in solving managerial problems. It requires certain knowledge and skills to achieve desired results. A manager uses man, money, materials and machinery to promote the growth of his organization.

A manager is an artist because he applies the knowledge gained from the study of science of management for managing human and material resources. A person cannot be called a manager if he does not have the skills to apply the knowledge of management.

Thus, management is both a science and an art. It is considered a science because it has an organized body of knowledge, which contains certain universal truths. It is also called an art because managing requires certain skills, which are the personal possession of the managers. Science teaches us to know and art to do certain things by application of knowledge and skills. Every manager has to know and do things efficiently and effectively to be successful. Thus, a manager should be an applied scientist. He should possess not only specialized knowledge of management,but also the skill to put his knowledge into practice. Hence science and art are complimentary to each other. Art without science has no guide and science without art is knowledge wasted.

A successful manager must know the principles of management and also acquire the skill of applying those principles of solving managerial problems in different situations. Hence, science (theory) and art (practical) are both essential for success in management.