PRINCIPLES OF MANAGEMENT AND

PROFESSIONAL ETHICS
Subject Code - SBAA4002
UNIT - 1

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UNIT - 1
Management Theories
Definition of management - science or art - manager Vs
entrepreneur. Types of managers - managerial roles and skills.
Evolution of management-scientific, human relations, system
and contingency approaches; Types of Business.
Organizations - sole proprietorship, partnership, company, public
and private enterprises.
Organization culture and environment; Current trends and issues in
management.

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Management
Objectives of this lesson are
• To know the concept and meaning of management.
• To understand about basic nature of management.
• To get knowledge of overall importance of management.
• To understand the difference between management and
administration.
• To learn about the application of management principles.

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Management
• Today's manager combine traditional management abilities with novel
ways that stress the human touch, increase flexibility, and engage
personnel.
Management = Manage + men + t(tactfully)
• According To Harold Koontz "Management is the art of getting things
done through others and with formally organised groups.“
• According to George R. Terry ''Management Is a distinct process
consisting of planning, organising, actuating and controlling; utilising
in each both science and art, and followed in order to accomplish pre-
determined objectives.
• According to Massie & Douglas “Management is the process by
which co-operative group directs actions towards common goals."

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Levels of Management
• Top managers are responsible for the overall direction and operations of an
organization.
• Particularly, they are responsible for setting organizational goals, defining
strategies for achieving them, monitoring and implementing the external
environment, decisions that affect entire organization.
• Middle managers are responsible for business units and major departments.
• Examples of middle managers are department head, division head, and director
of the research lab. The responsibilities of middle managers include translating
executive orders into operation, implementing plans, and directly supervising
lower-level managers.
• First-line managers are directly responsible for the production of goods and
services.
• Particularly, they are responsible for directing nonsupervisory employees. First-line managers
are variously called office manager, section chief, line manager, supervisor.

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Levels of Management

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Management is an activity
Management is an activity just like playing, studying, teaching etc. It is
an art of getting things done through efforts of other people.
The management activities consist of
• Interpersonal activities
• Divisional Activities
• Informative Activities

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Interpersonal Roles
• Figurehead – includes symbolic duties which are legal or social in
nature.
• Leader – includes all aspects of being a good leader. This involves
building a team, coaching the members, motivating them, and
developing strong relationships.
• Liaison – includes developing and maintaining a network outside the
office for information and assistance.

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Decisional Roles
• Entrepreneur – involves all aspects associated with acting as an
initiator, designer, and also an encourager of innovation and change.
• Disturbance handler – taking corrective action when the organization
faces unexpected difficulties which are important in nature.
• Resource Allocator – being responsible for the optimum allocation of
resources like time, equipment, funds, and also human resources, etc.
• Negotiator – includes representing the organization in negotiations
which affect the manager’s scope of responsibility.

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Informational Roles
• Monitor – includes seeking information regarding the issues that are
affecting the organization. Also, this includes internal as well as
external information.
• Disseminator – On receiving any important information from internal
or external sources, the same needs to be disseminated or transmitted
within the organization.
• Spokesperson – includes representing the organization and providing
information about the organization to outsiders.

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Management as a process

Management as a process – Management is considered as process

as it comprises of
series of interrelated functions which lead to achievement of
organization goals.
Management as a process has following implications.
• Social Process
• Integrated Process
• Continuous Process
• Interactive Process

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Social process

• Management is a social process - Since human factor is most

important among the other factors, therefore management is concerned
with developing relationship among people. It is the duty of
management to make interaction between people - productive and
useful for obtaining organizational goals.

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Integrating process
• Management is an integrating process - Management undertakes the
job of bringing together human physical and financial resources so as
to achieve organizational purpose. Therefore, is an important function
to bring harmony between various factors.

Continuous Process
Management is a continuous process - It is a never ending
process. It is concerned with constantly identifying the problem
and solving them by taking adequate steps. It is an on-going
process.

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Management – As an Art
• An art requires the qualities: practical knowledge, personal skill,
creativity, perfection through practice, goal oriented.
• Every art requires practical knowledge therefore learning of theory is
not sufficient.
• It is very important to know practical application of theoretical
principles. (Apply various principles in real situations).

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Management – An art as well as science
• It is considered as a science because it has an organized body of
knowledge which contains certain universal truth.
• It is called an art because managing requires certain skills which are
personal possessions of managers.
• Science teaches to ’know’ and art teaches to ’do’.
• A manager to be successful in his profession must acquire the
knowledge of science & the art of applying it.

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Functions of Manager and Entrepreneur
Manager - Performs the basic functions such as planning,
organising, directing and controlling.

Entrepreneur - Main function is to reform or revolutionize the

factors of production such as: land, capital, labour,
organization, enterprise.

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Functions of a Manager
Henri Fayol, a French businessman, first proposed in the early part of 20th
century the various functions of a manager.
A manager is someone whose primary activities are a part of the
management process. In particular, a manager is someone who plans,
organizes, leads, and controls human, financial, physical, and
information resources.
1) Planning
2) Organizing
3) Commanding
4) Coordinating
5) Controlling

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Managerial Functions
Planning Organizing Staffing Leading Controlling
• Forecasting • Grouping of • Manpower • Supervision • Fixation of
• Decision making Functions planning • Motivation standards
• Strategy • Departmenting • Job analysis • Communication • Recording
formulation • Delegation • Recruitment • Leadership • Measurement
• Policy making • Decentralisation • Selection • Reporting
• Scheduling • Activity analysis • Training corrective
• Budgeting • Task allocation • Placement actions
• Problem-solving • Compensation
• Innovation • Promotion
• Investigation • Appraisal
and research

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Managerial Functions

Time Spent in Carrying Out Managerial Functions

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Evolution of Management

The practice of management is as old as human civilization.

The ancient civilizations of Egypt (the great pyramids), Greece
(leadership and war tactics of Alexander the great) and Rome
displayed the marvellous results of good management practices.

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Evolution of Management
The origin of management as a discipline was developed in the
late 19th century. Over time, management thinkers have sought ways to
organize and classify the voluminous information about management
that has been collected and disseminated. These attempts at
classification have resulted in the identification of management
approaches.

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Evolution of Management

The different approaches of management are:

a) Classical approach,

b) Behavioural approach,

c) Quantitative approach,

d) Systems approach,

e) Contingency approach.

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Classical approach

DEFINITION OF CLASSICAL APPROACH

“Classical approach of management professes the body of
management thought based on the belief that employees have only
economical and physical needs and that the social needs & need for job
satisfaction either does not exist or are unimportant. Accordingly it
advocates high specialization of labour, centralized decision making &
profit maximization.”

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Behavioural approach
The behavioural management theory had a profound
influence on management by focusing on understanding the
human dimensions of work.
It is also called human relations movement as
behavioural theorists focused on managing productivity by
understanding factors of worker motivation like their needs
and expectations, personality, attitudes, values, group
behaviour, conflict, and group dynamics.
It advocated the use of psychological techniques to
motivate employees.

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Quantitative approach
The quantitative management approach is used to
enhance decision making power by using quantitative
tools.
As well as techniques including computer
simulations, information models, optimization models
and statistics.
Therefore decision making is directly contributed
by quantitative management approach in the planning
and control.

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Systems approach

System approach integrates goals of different parts of

the organisation (sub-systems or departments) with the
organisation as a whole.
It also integrates goals of the organisation with goals
of the environment or society in which it operates.
Integration of goals maintains equilibrium or balance
and enables organisations to grow in the dynamic
environment.

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Contingency approach
• The Contingency Theory of Management is an extension of the Systems
Organisational Theory.

• The organisational design and the managerial decision of the Contingency

Theory depend on the situation, that is, whether it is contingent on the
circumstances and the situation.

• Therefore, the Contingency Theory is commonly referred to as a Situational

Theory.

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Introduction to Organization
• Organization is designed on the basic principles of labour and span of
management.

• Experience and Competence of the entire management necessary for

success of the organization.

• Nature, Scale and Size determines the structure of the organization.

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Organization Types
Types of Organizational structures:

1. Line, Military or Scalar

2. Functional
3. Line and Staff
4. Committee
5. Project
6. Matrix
7. Freeform

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1. Line Organization
Simplest and oldest type of organization

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Line Organization

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2. Functional Organization
Functional specialists dedicated to attend and lead common
functions of various departments.

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Functional Organization

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3. Line and Staff Organization
Line officers of each division may be assisted by staff officers. Staff
officers are advisory and do not have authority.

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Line and Staff Organization

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4. Committee Organization
Committee is a group of people either appointed or elected to meet and
execute the functions assigned to it.

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4. Committee Organization

MERITS DEMERITS
Pooling Option Time and Cost
Improved Cooperation Compromise
Motivation Personal Prejudice
Representation Logrolling
Dispersion of Power The strain on
Interpersonal relation
Executive training Lack of effectiveness

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5. Project Organization
Grouping of workforce and activities assigned for each project.

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6. Matrix Organization
Multiple command structure with support mechanisms and
organizational culture.

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7. Freeform Organization

• Forms whenever a need arises to form an organization to

achieve a particular objective.
• Organization dissolves as soon as the objective is achieved.
• Otherwise called organic or dynamic organizational structure.

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Types of Business Organizations
1. Sole Proprietorships:
• Owned by one person – has day-to-day responsibility of running
the business.
• Owns all assets and profits but also responsible for liabilities and
losses.
• Has complete control and makes all decisions – keep or re-invest.
• Total risk on business and personal assets.
• Law does not distinguish between the business and the owner.
• Limited to using funds obtained by personal means.
• Unable to attract high-caliber employees.
• Easy to dissolve when desired.

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Types of Business Organizations
2. Partnerships:
• Two or more people (Partners) share the ownership of a single
business.
• Partners should have legal agreement regarding assets and
decisions.
• Easy to establish partnerships and high ability to raise funds.
• Employees can be attracted with incentive to become a partner.
• Partners are liable for the actions of the other partners.
• Profits are to be shared. Shared decisions could lead to disputes.
• Partnerships have limited life – partner(s) withdrawal or death.
• Dissolving of business is not easy.

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Types of Business Organizations
3. Corporations:
• Owned by a group of shareholders.
• Is a separate entity apart from the owners. Can be taxed
and sued.
• Does not dissolve when ownership changes.
• Shareholders have limited or no liability for the
corporations.
• Can raise funds through sale of stock.
• The process of incorporation requires more time and
money.
• Have more paperwork to comply with regulations.
• Higher overall taxes.
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Types of Business Organizations
4. Joint Stock Company:
• Owned by shareholders; managed by Board of Directors.
• Private limited – formed by two persons upto 50. Transfer of shares
limited to members only. Government does not interfere in the
working.
• Public limited – membership open to general public. Minimum of
seven persons (no upper limit) required to form. Supervision and
control.
• No liability risk to shareholders and any risk of loss is divided.
• Difficult to preserve secrecy.
• Large amounts of legal formalities.

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Types of Business Organizations
5. Public Corporations:
• Wholly owned by the Government.
• Established usually by a special Act of the Parliament.
• Total capital provided by Government but are separate
entities.
• Good benefits and working conditions for employees.
• Any alteration in power and constitution requires
amendment in the particular act and hence difficult and
time consuming.
• No particular efforts for adopting new techniques or
improvements.
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Types of Business Organizations
6. Government Companies:
• Share capital held wholly or partly by central government.
• Board of directors managing the organization are accountable for
its working to the concerned ministry or department.
• Easy to form.
• Directors are free to take decisions and are not bound by certain
rigid rules and regulations.
• Misuse of excessive freedom.
• Directors spend time in pleasing the “government”.

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Classification of Environmental Factors

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Classification of Environmental Factors
Internal Factors:
• Direct impact on business.
• Company has control over these factors and can alter or
modify.
• Resources, capabilities and culture.

External Factors:
• Indirect influence on the business.
• Not under the control of the company.
• Micro and Macro – based on the influence spread.

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Reference books
Unit 1
1. Robins S.P. and Couiter M, Management, Prentice Hall India,
11th Edition, 2012.
2. Harold Koontz and Heinz Weihrich, ‘Essentials of
Management’ Tata McGraw Hill, 10th Edition, 2015

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Thank you

Any Queries..?

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