•

Technological Innovation
Management & Entrepreneurship

MODULE – 1
MANAGEMENT
Nature and Functions of Management
• Importance
• Definition
• Management Functions
• Levels of Management
• Roles of Manager
• Managerial Skills
• Management &Administration
• Management as a Science, Art &Profession
Importance of Management
• Management is a function of guidance and leadership control of efforts of a group
or individuals in order to achieve goals/objectives of an organization.
• Management is a critical element in the economic growth of a country.
• Putting together 4Ms- Money, Men, Material, and Machines together is
management.
• Management is essential in all organized efforts, be it a business activity or any
other activity.
• Management is the dynamic, life-giving element in every organization.
• In the words of Claude S George, management is “ the central core of our national
as well as personal activities, and the way we manage ourselves and our
institution reflects with alarming clarity what we and our society become.”
Definition of Management
• Mary Parker Follett: “Management is the art of getting things done through
people”.
• George R. Terry: “Management is a process consisting of planning, organizing,
actuating and controlling, performed to determine and accomplish the objectives
by use of people and resources”.
Functions of management or process of management

Fig: Management Process

• Four management activities included in this process are: Planning, organizing,
directing and controlling, in addition innovation and representation are also
considered.
• Planning:
• Determines in advance what should be done. Planning is the function that is
referred to as decision making. It involves mission and objectives and action to
achieve them.
This involves the following:
 Setting short and long term goals for organization.
 Selecting objectives , strategies and polices for accomplishing the planned goals.
 Deciding in advance what to do, how to do, who has to do, when to do and where
to do.
 Planning bridges the gap from where we are now to where we want to be in
future.
• Organizing :
• Organizing is a part of management that involves in establishing an intentional
structure of roles for people to fill in an organization. To organize a business well,
it is required to provide all the useful things for its proper functioning. They are
raw materials, tools, capital and personnel. This involves :
 Determination of activities required to achieve goals.
 Grouping these activities into department.
 Assigning groups of activities to manager.
 Forming delegation of authority.
 Making provisions for coordination of activities.
Staffing is also considered as an important function involved in building the human
organization.
• Staffing makes the provision for man power to fill different positions. This is done
by identifying work-force requirements, recruiting new staff, selecting, placing,
promoting, appreciating, planning their career, training the staff to accomplish
their tasks effectively and efficiently. This involves:
 Finding the right person for right job.
 Selecting the personnel.
 Placement, training and developing new skills required for present and future
jobs.
 Creating new positions.
 Apprising the staff and planning their growth and promotions etc.
• Directing:
• Directing involves three sub functions namely communication, leadership and
motivation.
• Communication is the process of passing information and understanding from
one person to another.
• Leadership is the process by which a manager guides and influences the work of
his subordinates.
• Motivation means encouraging the minds of employees of an organization to
perform their best.
• Controlling:
• Controlling is measuring and correcting of activities of subordinates to make sure
that the work is going on as per the plans. Controlling relates to the measurement
of achievement. This involves:
 Establishing standards of performance.
 Measuring performance and comparing with established standards.
 Taking necessary corrective action to meet the set standards
Levels of Management

• Almost all managers perform the same functions of management like

planning, organizing, directing and controlling there are levels among
them.
 Top management
 Middle management
 First line or supervisory or Lower level management
• Top management consists of Board Chairman, Directors, Company
Presidents, Vice- Presidents, CEO’s. These are the people who make
policies for the company, set goals and targets for the company. They
should possess conceptual and design skills.
• Middle management include finance manager, sales manager,
marketing manager, plant manager, personnel manager and many other
department heads etc.
• Lower level managers are supervisors and foremen.
Roles of Manager

• The three important roles played by a manager are

 Interpersonal Roles
 Informational Roles
 Decisional Roles
• Interpersonal Roles
• Figurehead: The manager has to perform some duties that are casual and informal
such as greeting the touring dignitaries, attending the functions of an employee,
taking an important customer to lunch etc.
• Leader: Manager must motivate and encourage his employees. He must try to
reconcile their individual needs with the goals of the organization.
• Liaison: Manager must cultivate contacts outside to collect information useful for
his organization.
• Informational Roles
• Monitor: The manager monitors his environment and collects information
through his personal contacts.
• Disseminator: The manager passes some of his privileged information directly to
his subordinates.
• Spokesman: The manager communicates the information/goals of organization to
his superiors. He also communicates the performance of company to shareholders
and the rules and responsibility to his subordinates.
• Decisional Roles
• Entrepreneur: For the improvement of the organization the manager continuously
looks for new ideas, which may result in the development of new products or
service or finding a change in work environment.
• Disturbance Handler: manager works as a problem solver. He finds solutions of
various un-anticipated problems both within and outside the organization.
• Resource Allocator: The manager must divide work and delegate authority
among his subordinates. He must decide who will get what.
• Negotiator: The manager has to spend considerable time in negotiations. Must try
to resolve any internal problems like trade agreements, strikes and solve the
problems of employees.
Managerial Skills

• A Skill is an individual’s ability to translate knowledge into action. Hence , it is

manifested in an individual performance.
• Skill is not necessarily inborn.
• It can be developed through practice and through relating learning to one’s own
personnel experience and background.
• In order to discharge his roles, manager should possess three major skills.
Conceptual Skill
Technical skill
Human relation skill
• Conceptual skill:
• It deals with the ability of manager to take a broad and farsighted view of
organization and its future, ability to think in abstract, his ability to analyse the
forces working in a particular situation, his creative and innovative ability and his
ability to assess the environment and the changes taking place in it.
• Technical skill:
• It is the managers understanding of the nature of the job that people under him
have to perform.
• Refers to the person’s knowledge and proficiency in any type of process or
technique.
• Using methods and techniques to perform a task, Keeping up with the latest
technology in your job
• Human relations skill:
• It is the ability to interact effectively with people at all levels and the manager
sufficient, ability
a) to recognize the feelings and sentiments of others.
b) to judge the possible reactions to and the outcomes of various courses of action
c) to examine his own concepts and values which may enable to more useful
attitudes and about himself.
Fig: Skill mix at different management levels

Skill mix of a manager with the change in his level:

a) Top level: technical skill becomes less important
b) Middle management: human relations skill become more important
c) Supervisory skill: technical skill becomes more important.
Management &Administration
• People feel that administration involves “thinking”. It is a top level function that
centers around the preparation of plans, rules, policies and objectives of an
organization.
• Whereas management involves “doing” and is a lower level function, concerning
with execution and direction of policies and operations.
• So administration is more important at higher levels. The time spent in
administrative and managerial function at different levels is as in fig.
• Management is regarded as comprehensive generic function covering entire
process of planning, organizing, directing and controlling.
• Administration is regarded as a branch of management that has two functions-
planning and controlling.
• The function of management is divided into two categories the upper level
management called as administrative management and lower level management
termed as operative management.
• This can also be defined as managing of business enterprises is called
management and managing non-business organizations is called administration.
• Administration determines the policies upon which the enterprise is to be
conducted while the function of management is to carry out the policies that are
laid down by the administrative group.
The differences between administration and management are listed below:
Management as a Science, Art &Profession

• There is great controversy whether management is science or art. It is an art in the

sense of possessing of managing skill by a person. It is a science also because of
developing principles or laws which are applicable in a place where a group of
activities are coordinated
Management as a science: Science is a systematized body of knowledge. We call a
discipline scientific if its:
• Methods of inquiry are systematic and empirical.
• Information can be ordered and analyzed; and
• Results are cumulative and communicable.
Systematic means orderly and unbiased attempt to gain knowledge must be with
the personal or other prejudgment
Inquiry being empirical means that it is not an armchair speculation or priory
approach.
the scientific information so collected as raw data must be finally ordered and
analysed with the statistical tools which makes the result
Management as an art:
• Management is the art of getting things done through others in dynamic
situations.
• A manager has to coordinate various resources against several constraints to
achieve predetermined objectives in the most efficient manner.
• Manager has to constantly analyze the existing situation, determine objectives,
seek alternatives, implement, and control and make decision.
• The theoretical lessons on principles, concepts and techniques learnt by a
manager in classroom is not enough to get the aimed results unless he possess the
skill (or art) of applying such principles to the problems.
• The knowledge has to be applied and practiced. It is like the art of musician or
painter who achieves the desired results with his own skill which comes by
practice. A comparison between science and art is given in table
Management- A profession
According to McFarland, “Profession” possesses the following characteristics:
• Existence of an organized knowledge and systematic knowledge .
• Formalized method of acquiring training and experience .
• Existence of an association with the professionalization as a goal .
• Existence of an ethical code to regulate the behaviour of the members of the
profession
• Charging of fees based on service with due regard to social interest.
• Management does not possess all the above characteristics of profession.
Management has no fixed norms for managerial behaviour. There is no uniform
code of conduct or licensing of managers.
• There are no restrictions to individuals to possess an academic degree. Unlike
medical or legal professionals, a manager need not possess an academic degree.
• In the light of absence of these characteristics, management cannot be called as
profession. However, ‘professionalization’ of management started and it is essential
nowadays to acquire some professional knowledge or training. In this regard
government of India has started six national institutes of management and a number
of universities and institutions are offering MBA programmes.
PLANNING
NATURE OF PLANNING:
• Planning is the most basic function of management. It is “deciding in advance”
what to do, how to do, when to do and who has to do it etc.
• It is an intellectual process, which requires a manager to think before acting. It is
nothing but thinking in advance. A manager should continuously watch the
progress of the plans like a navigator. Planning involves selection of objectives
and goals and determines the ways and means of achieving them.
• Planning bridges the gap from where we are to where we want to be. Planning is
vital at all levels of an organization.
• Planning involves four essential qualities:
 It must contribute to accomplish purpose and objectives.
 It must be considered as parent exercise in all processes.
 It must spread through all management functions.
 It must be efficient in such a manner so as to achieve the designed goals at the
least cost.
Importance of planning:
• Planning is important because:
 It overcomes uncertainty and change and minimizes risk.
 It facilitates effective control.
 It focuses attention and concentration only on the objectives of enterprise.
 It makes economic operation and leads to success.
 It forms the bridge between the present and the future.
Minimizes risk and uncertainty:
Helps to adjust in dynamic society. By adopting rational fact based procedures for
taking decisions, possible consequences can anticipated and planned for it
Facilitates control:
Planning sets goals, targets and means to accomplish these goals. These goals and
plans become standards or bench marks against which performance can be
measured. Thus good plans help effective control on the activity.
Focuses attention and concentration on the objectives of the enterprise:
Planning helps the managers to focus their attention on the goals and activates of
organization. This makes entire organization to accomplish the goals by avoiding needless
or overlapping activities.
Economic operation and leads to success:
Planning does not ensure success, but leads to success. If the work is planned in advance,
there will be no confusion and things will happen as per plan and can even reduce uncoated
expenditure.
Bridge between the present and the future:
There is a vast gap between what we are today and what we want to be in future. A proper
and systematic plan forms the bridge between the present and future. Hence planning is
important for the success of any organization.
Types of plans
• Plans are classified into standing plans and single use plans
• Standing plans provide guidelines for further course of action and are
used over a period of time. Standing plans are designed for situations
that recur often enough to justify a standardize approach. For example
a bank designs a standing plan to process a loan application. Using this
standing plan the bank manager decides whether to approve or not a
loan application depending upon the details furnished by the applicant.
• Single use plans are designed for specific end; when that end is
reached, the plan is dissolved or formulated again for next end.
Examples of such plans are project, budgets, quotas, targets etc. Single
use plans are generally derived from standing plans.
Fig: Hierarchy of organizational plans
• Vision
This is the dream that an entrepreneur creates about the direction that his business
should pursue in future.
It describes his aspirations, beliefs and value and shapes organization's strategy. It is
an ongoing process.
It should be brief, focused, clear and inspirational to an organization's employee. It
should be linked to customers needs and convey a general strategy for achieving the
mission.
• Mission
It is the unique aim of an organization that sets it apart from others of its type. It is
an organization's specialization in some area- service, product or client, which
decides the organization's scope of the business.
• Objectives
Objectives are goals or aims which the management wishes the organization to
achieve. These are end points towards which all business activities like organizing,
staffing, directing and controlling are directed.
The objectives should have “vision” “purpose” and “mission”.
Objectives are
the specific target to be reached by an organization.
Characteristics of Objectives:
Objectives are multiple in numbers: Every business enterprise has a package of
Objectives set in various key areas. These are market standing, innovation,
productivity, physical and financial resources, profitability, manager performance
and development, worker performance and attitude and public responsibility
Objectives are tangible or intangible: Some of the objectives such as productivity,
physical and financial resources are tangible; where as objectives in the areas of
manager’s performance, workers morale is completely intangible.
Objectives have a priority: At a given point of time one objective may be
important than another. For example maintaining minimum cash balance is
important than due date of payment.
Objectives are generally arranged in hierarchy: It implies that organization has
corporate objectives at the top and divisional, departmental and sectional
objectives at the lower level of organization.
• Requirements of sound objectives:
Objectives must be clear and acceptable: The objectives must be clear and
understandable amongst people which could be achieved by unambiguous
communication, should be compatible with their individual goals.
Objectives must support one another: Objectives could interlock or interfere with
one another which require the need for coordination and balancing the activities of
the entire organization, otherwise its members may pursue different paths making
it difficult for the manager to achieve the company’s overall objectives.
Objectives must be precise and measurable: An objective must be spelled out
in precise, measurable terms. The reasons for this are
• The more precise and measurable the goal, the easier it is to decide the way of
achieving it.
• Precise and measurable goals are better motivators of people than general goals.
• Precise and general goals make it easier for lower level managers to develop their
own plans for actually achieving these goals.
• It is easier for managers to ascertain whether they are succeeding or failing if their
goals are precise and measurable.
Objectives should always remain valid: Means that the manager should
constantly review, reassess and adjust them according to the changed conditions.
• Advantages of objectives:
• Provide a basis for planning
• They act as motivators
• They eliminate haphazard action
• They facilitate coordinated behaviour.
• Function as a basis for managerial control.
• They facilitate better management.
• They lessen misunderstanding and conflict.
• They provide legitimacy to organization's activity
• Strategies
• Strategies is a plan which account the environmental opportunities and threats and the
organizational strengths and weaknesses and provides an optimal match between the firm
and the environment.
• Environment Appraisal: An analysis of the relevant environment result in the identification
of threats and opportunities. Some of the key factors are:
 Political and legal factors
 Economic factors
 Competitive factors
 Social and cultural factors
• Corporate Appraisal:
• Involves the analysis of company’s strengths and weaknesses.
• A company’s strength may lie in outstanding leadership, excellent product design, low-
cost manufacturing skill, efficient distribution, efficient customer service, personal
relationship with customers, efficient transportation and logistics, effective sales promotion,
high turnover of inventories and capital etc.
• The company must plan to exploit these strengths to the maximum. Similarly it may suffer
from a number of weaknesses.
• Standing Plans
• Policies: A policy is general guideline for decision-making. It sets up boundaries
around decisions, including those that can be made and shutting out those that
cannot.
• Policy is verbal, written or implied overall guide, setting up boundaries that
supply the general limits and directions in which managerial action will take
place.
• Policy deals with “how to do” the work.
Advantages of polices
• Policies ensure uniformity of action and makes action more predictable.
• Policies speed up decisions at lower levels.
• Policies make it easier for the superior to delegate more and more authority to his
• subordinates.
• Policies give a practical shape to the objectives.
• Types of policies: They are classified on the basis of sources, functions or
organizational level.
 Classification on the basis of sources:
On this basis, policies are divided into originated, appealed, implied and externally
imposed policies.
 Classification on the basis of organizational level:
On the basis of business functions, policies may be classified into production, sales,
finance, personnel policies etc.
Classification on the basis of organizational level:
Policies range from major company policies through major departmental policies to
minor or derivative policies applicable to the smallest segment of the organization
• Guidelines for effective policy-making:
 Policies should be in writing
 Policies should reflect the objectives
 Top managers and subordinates must participate in the formation of policies.
 Policy must strike a reasonable balance between stability and flexibility.
 Policies in the organization should not pull in different directions.
 Policies should not be detrimental to the interest of society.
 Policies must be comprehensive.
 Policies should be periodically reviewed.
• Procedures: A procedure provides a detailed set of instructions for performing a
sequence of actions involved in doing a certain piece of work.
• Procedures are to be followed every time when activity is performed
• Difference between policy and procedure:
Policy Procedure

General guidelines of the General guidelines at the action level.

organization.
Top level activity. Departmental activity.

Policies fulfill the objectives of an Procedures guide the way to implement the
organization policies.
Policies are often made Procedures are always made
Without any study or analysis After thorough study and analysis of work.
• Methods:
A method is a prescribed way in which one step of a procedure is to be performed.
Thus method is a part of procedure.
Medical examination is a part of recruitment and selection procedure , method
indicate the manner of conducting medical examination. Method help in
increasing the effectiveness and usefulness of the procedure.
A procedure has a number of steps, each step may have number of methods to do
it.
• Rules:
Rules are detailed and recorded instructions that a specific action must or must not
be done under the given instructions. Reporting time to office, lunch time,
availing of leaves, use of LTC facility etc., are some of the examples that follow
rules. A rule is different from a policy or procedure.
Since it does not give a guide to thinking, it is not a policy. Since it is not a
sequential procedure hence it is not a procedure.
• Single Use Plans:
• Programme:
A programme is a sequence of activities directed towards the achievement of
certain objectives.
The essential ingredients of every programme are time phasing and budgeting.
This means that specific dates should be laid down for the completion of each
successive stage of programme.
• Budgets:
A budget is a single use plan since it is drafted for a particular period of time.
A budget is a statement of expected results expressed in quantitative terms i.e.
rupees, man hours, product units etc.
Since it is a statement of expected results, it is also used as an instrument of
managerial control.
It provides a standard by which actual operations can be measured and variation
could be controlled.
One should not forget that making budget is clearly planning.
The important budgets are sales budgets, production budgets, cash budgets, and
revenue and expenses budgets.
STEPS IN PLANNING
• The main steps involved in planning are as follows:
1. Being aware of opportunities: This is very first step and starting point for planning.
Once we are aware of opportunities, we can think of setting realistic objectives.
2. Establishing Verifiable goals/objectives: It is very important to establish objectives
for the entire enterprise and the objectives for each subordinate work units. That is, the
major objectives are broken down into departmental and individual objectives. It is a
very crucial step in planning.
3,Establishing planning premises: This is the conditions under which planning activities
will be undertaken.
The planning premises can be classified as below:
Internal and External premises.
Tangible and Intangible premises.
Controllable and non-controllable premises
4.Finding alternative course of action: Next step is to search and identify some
alternative courses of action. It is very rare that for a plan there will be no
alternatives. In this step alternatives are listed.
5. Evaluating and selecting a course of action: Once the alternatives are found, then
the next step is to evaluate them with respect to the premises and goals. A desired
and best suitable alternative is selected by comparative analysis with reference to
cost, risk, and gain etc., keeping in mind the goals and objectives.
6. Developing derivative plan: In order to complete the task, the selected plan must
be translated into programs, working plans and financial requirements in the sub-
units. These sub-derived plans from main plan are termed as derivative plans.
7. Measuring and controlling the Process: This is the last step in planning. Each
activity of plan is monitored on a continuous basis and if any deviation or shortfall
is noticed, then the manager will initiate suitable corrective action.
LIMITATIONS OF PLANNING
• Planning is time consuming Process. It involves significant amount of money
energy and risk without any assurance of the fulfillment of organization's
objectives.
• Planning sometimes restricts the organization to the most rational and risk free
opportunities.
• Scope of planning is said to be limited in the case of organizations with rapidly
changing situations.
• Establishment of advance plans tend to make administration inflexible.
• Difficulty of formulating accurate premises.
• Planning may sometimes face people’s resistance to it.