PRINCIPLES OF MANAGEMENTby

Devipriya.MIndustrial Placement Co-Ordinator&Assist Professor

UNIT : I HISTORICAL DEVELOPMENT

Definition of Management Science or Art Management and Administration Development of Management Thought Contribution of Taylor and Fayol Functions of Management Managerial Roles Levels of management Types of Business Organisation

DEFINITION OF MANAGEMENT

Management : On expanding

Manage – men – tactfully Manage – Men – technology Manage – men – as team Manage – competencies Manage – objectives (MBO) Manage – men and things

According to Harold Koontz, “Management is an art of getting

things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform and individuals and can co-operate towards attainment of group goals”.

MANAGING SCIENCE OR ART:

Science influence in management: Organized science and Systematic body of

Knowledge Concepts and Universal principles Rational justification Cause & Effect relationship Test of validity and predictability Dependent and Independent variables Scientific enquiry and experiments Conditions and Influences

ARTS

Creativity Practice through Experience Interpretations from huge Knowledge base Cannot experiment accurately Decisions differ from Organization to organization Decision differ based on situations Clear cut cause- Effect could not be established because of

inability to control so any external and subjective issues Irrationality & Subjectivity in most of the decisions Deals with human beings , the most complex organism. Result oriented approach Improvement through people

Difference Between Management & Administration

S.No Features Administration Management

1 NatureDeterminative or Thinking function Executive or Doing function

2 Type of workDecision on Objectives & Policies Implementation of policies

3 Levels of authority Top level Middle and Lower level

4 InfluencePublic opinion & Outside sources

Objectives & Policies of concern

5Direction of human efforts Not directly concerned Actively concerned

6 Main functions Planning & Control Directing & Organizing

7 Skills required Conceptual and human skills Technical and Human skills

8 Usage Used in Govt. & Public sector Business organizations

9 DesignationsAdministrator, Incharge, Officer Manager, Supervisor

    Commissioner  

Evolution Of Management Thought

The origin of management as a discipline was developed in the late 19thcentury.

a) Classical approach, b) Behavioral approach, c) Quantitative approach, d) Systems approach, e) Contingency approach.

THE CLASSICAL APPROACH: The classical approach is the oldest formal approach of

management thought.

(i) Scientific Management. Frederick Winslow Taylor is known as the father of scientific

management. Scientificmanagement (also called Taylorism or the Taylor system) is a theory of management that analyzes and synthesizes workflows, with the objective of improving labor productivity.

Scientific Task and Rate-setting, work improvement, etc. Method study Motion study Time study Fatigue study Rate setting

Planning the Task. Having set the task which an average worker must strive to perform to get wages Vocational Selection and Training To entrust the task of selection to a central personnel department. Standardization (of working conditions, material equipment

etc.) Tools and equipment Speed Condition of work Materials

Specialization: The Route ClerkThe Instruction Card Clerk The Time and Cost Clerk The Shop Disciplinarian The Gang Boss The Speed Boss The Repair Boss The Inspector Mental Revolution: Enormous gain that arises from higher productivity

shared both by the management and workers in the form of increased profits and increased wages.

(ii) Administrative Management. Administrative management focuses on the managementprocess and principles of management Henry Fayol's 14 Principles of Management: 1.Division of work2. Authority and Responsibility3. Discipline: 4. Unity of Command5. Unity of Direction

6. Emphasis on Subordination of Personal Interest to General or Common Interest

7. Remuneration8. Centralization9. Scalar Chain10. Order 11. Equity12.Stability of Tenure 13. Esprit of Co-operation 14. Initiative

(iii) Bureaucratic Management.

Bureaucratic management focuses on the ideal form of organization. Max Weber was the major contributor to bureaucratic management

Behavioral Approach Human Relations.

Behavioral Science. The Quantitative Approach The quantitative approach focuses on improving decision

making via the application of quantitative techniques.

Management Science (Operations Research) Production And Operations Management. SYSTEMS APPROACH

EXTERNAL ENVIRONMENT

FEED BACK

PROCESSINPUT OUTPUT

Contingency Approach It emphasizes that there is no one best way to manage

and that it depends on various situational factors, such as the external environment, technology, organizational characteristics, characteristics of the manager, and characteristics of the subordinates.

THE FUNCTIONS OF MANAGEMENT

Managers

Planning Planning is deciding in

advance what to do, when to do & how

to do.

OrganizingBringing

together resources and

activities toachieve theorganization’sobjectives

StaffingTheorganizationwith qualifiedpeople

(put right man on right job)

DirectingEmployees’activitiestowardachievementof objectives

Controlling Measurement & correction of performance activities of subordinates

LEVELS OF MANAGEMENT

The three levels of management are as follows

Top Level

Middle LevelLower Level

MANAGERIAL ROLES

•Figure head

•Leader•Liaision

Interpersonal

•Monitor•Dissemi

nator•Spokesp

ersonInformationa

l

•Entrepreneur

•Negotiator

•Resource allocator

•Disturbance Handler

Decisional

TYPES OF BUSINESS ORGANIZATION

Sole Proprietorships These firms are owned by one person, usually the individual whohas day-to-day responsibility for running the business. Partnerships In a Partnership, two or more people share ownership of a singlebusiness. The Partners should have a legal agreement regardingprofit sharing, disputes will be resolved, how future partners will beadmitted to the partnership, how partners can be bought out, orwhat steps will be taken to dissolve the partnership when needed.

Corporations A corporation, chartered by the state in which it is headquartered, isconsidered by law to be a unique "entity", separate and apart fromthose who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. Joint Stock Company Limited financial resources & heavy burden of risk involved inboth of the previous forms of organization has led to theformation of joint stock companies these have limited

dilutives.

There are two main types of joint stockCompanies. (i) Private limited company:This type company can be formed by two or more persons. Te maximum number of member ship is limited to 50. (ii) Public limited company:Public Limited Company: Its is one whose membership is open togeneral public. The minimum number required to form suchcompany is seven, but there is no upper limit. Such

Public Corporations:A public corporation is wholly owned by the Government centre tostate. It is established usually by a Special Act of the parliament.Special statute also prescribes its management pattern power duties & jurisdictions. Government Companies:A government company is any company in which of the share capitalis held by the central government or partly by central government &party by one to more state governments. It is managed b the elected board of directors which may include private individuals.

UNIT II PLANNING

Nature and purpose Steps involved in Planning Objectives-Setting Objectives Types of Plan Process of managing by objective Strategies Policies and Planning Premises Forecasting Decision Making

DEFINITION

According to Koontz O'Donnel :

"Planning is an intellectual process , the consciousdetermination of courses of action, the basing of decisionson purpose, acts and considered estimates".

NATURE AND PURPOSE

Nature of Planning:1. Planning is goal-oriented2. Primacy of Planning3. Pervasiveness of Planning4. Efficiency, Economy and Accuracy5. Co-ordination6. Limiting Factors 7. Flexibility8. Planning is an intellectual process

PURPOSE OF PLANNING

To manage by objectives To offset uncertainty and change To secure economy in operation To help in co-ordination To make control effective To increase organizational effectiveness

Determining planning premises

Establish objectives

Develop Strategies

Establish policies

Develop program for accomplishments

Establish schedules and budgets

Establish procedures

Identify potential problems

Develop preventive &/or contingent action

Coordinate throughout the planning

How does a manager Plan?

PLANNING PROCESS

Perception of opportunity

Establishing sequence of

activities

Formulating support plans

Choice of alternative

plans

Evaluation of alternative

Identification of alternative

Planning premises

Establishing objectives

proces

s

OBJECTIVES

According to Koontz and O'Donnell,

“An objective is a term commonly used to indicate the end point ofa management programme." Objectives are the ends towards which the activities of theenterprise are aimed. They are present not only the end-point ofplanning but also the end towards which organizing, directing and controlling are aimed.

Features of Objectives:

Clear definition of objectives encourages unified planning. Objectives provide motivation to people in the

organization. When the work is goal-oriented, unproductive tasks can

be avoided. Objectives provide standards which aid in the control of

human efforts in an organization. Objectives serve to identify the organization and to link it

to the groups upon which its existence depends.

SETTING OBJECTIVE

Objectives are required to be set by management in every area which directly and vitally affects the survival and prosperity of the business.

Identifying objectives ( various field) Review of past performance The objectives to be set should be reasonable and

capable of attainment. Objectives must be consistent with one and other. Objectives must be set in clear-cut terms. For the successful accomplishment of the objectives,

there should be effective communication.

TYPES OF PLANS

Operational

Plans

Tactical Plans

Strategic Plans

Specify actions toachieve tactical plans(very short-term)

Designed to implementstrategic objectives(usually one year or less)

Establish long-rangeobjectives

MANAGEMENT BY OBJECTIVES (MBO)

MBO is a process whereby the superior and the mangers of anorganization jointly identify its common goals, define eachindividual’s major area of responsibility in terms of results expected of him.1.MBO is concerned with goal setting and planning for individual managers and their units. 2. Joint goal setting between a supervisor and a subordinate. 3. Superior -subordinates relationship to establish the performance goals 4. MBO focuses attention on appropriate goals and plans. 5. MBO facilitates control through the periodic development andsubsequent evaluation of individual goals and plans.

STEPS IN MBO

Setting goals Managers need to identify and set objectives both forthemselves, their units, and their organizations. Developing action plans Reviewing Progress Performance appraisal Performance appraisals communicate to employees howthey are performing their jobs, and they establish a plan forimprovement.

STRATEGIES

According to Koontz and O' Donnell, "Strategies must often denote ageneral programme of action and deployment of emphasis and resourcesto attain comprehensive objective.

• It is the right combination of different factors. • It relates the business organization to the environment. • It is an action to meet a particular challenge, to solve particular

problems or to attain desired objectives. • Strategy is a means to an end and not an end in itself. • It is formulated at the top management level. • It involves assumption of certain calculated risks. ensive objectives".

Strategic Planning Process / Strategic Formulation Process1. Input to the Organization2. Industry Analysis3. Enterprise Profile4. Orientation, Values, and Vision of Executives5. Mission (Purpose), Major Objectives, and Strategic Intent6. Present and Future External Environment7. Internal Environment8. Development of Alternative Strategies9. Evaluation and Choice of Strategies10. Medium/Short Range Planning, Implementation through

Reengineering the Organization Structure, Leadership and Control

11. Consistency Testing and Contingency Planning

TYPES OF STRATEGIES According to Michel Porter, the strategies can be classified

into three types. They are a) Cost leadership strategy b) Differentiation strategy c) Focus strategy

POLICIES

Policies are general statements or understandings that guide managers’ thinking in decision making.

Principles of departure

Statement of issues

Goals and objectives

Recommendations

Policy analysis

Implementation Plan

Monitoring and evaluation

FORECASTING TECHNIQUES

Qualitative techniques: Expert, judgmental, opinion based and subjective

Delphi method : Panel of experts were asked to judge or estimate and the average of all the estimations are considered as Final estimate.

Market research method: Systematic formal investigation Panel consensus: Open group discussion and estimation Visionary forecast: Personal insights and prophesies Historical analogy: History of one or more similar product investigation

is used. 

Quantitative techniques: Time series analysis ; Adjusted to trend, seasonal variations Extrapolation: Future projection based on past & Present

trends Regression analysis : Relative movements of one more

interrelated series. Input – output analysis : Cause- effect estimation Econometric model: Expressing in quantitative terms the

relationship between different variables that could influence.

DECISION MAKING

In the words of George R. Terry, "Decision-making is theselection based on some criteria from two or morepossible alternatives".Components of decision making process Decision maker Decision problem Environment around the problem Objectives of decision maker Alternative course of action Outcomes expected from various alternatives Final choice

Elements of decision making process Identification of problem situation Definition of problem situation Specification of objectives Collection of data Developing alternative course of actions. Evaluation of alternative course of actions Selecting appropriate techniques Implementation of decision

Types of decisions:

Routine and strategic decisions Routine: Regular, Normal, day to day, less significance, No

deviationsStrategic: Critical, high value, responsible for success/failure of the organization.

Policy and operating decisions Policy: Vital importance and taken by top management Operating decisions: Lower levels of management, activities,

tasks and processes. Organizational and Personal decision Organizational: Official capacity

Personal decisions: Individual

Programmed and non programmed decisions: Programmed: Routine and Repetitive Non programmed decisions : Situational, Accidental and

Contingency Individual and Group decisions Individual: Decisions of own by Leaders Group: Collective decisions

Decision Making styles: The Directive Style The Analytic Style The Conceptual Style The Behavioral Style