Management and Entrepreneurship

18ES35

MEANING

• Giving precise definition of management is not so simple because the term management is used in a variety of ways.
• Being a new discipline it has drawn concepts and principles from a number of disciplines such as Sociology, Economics, Psychology, Statistics, Anthropology and so on.
• The contributors from each of these groups have viewed management differently.
• For example economists have treated management as ‘a factor of production’; Sociologists treated it as ‘a group of persons’.

• Many definitions were given by various contributors; one popular definition is given by Mary Parker Follet.
• According to Follet management is ‘the art of getting things done through people’.
• This definition clearly distinguishes between manager and other personnel of the organization

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• A manager is a person who contributes to the organization’s goal indirectly by directing the efforts of others, not by performing the task by him.
• A person who is not a manager makes his contribution to the organization’s goal directly by performing the tasks by himself.
• Some times a person may play both roles simultaneously.
• For example, a sales manager plays managerial role by directing the sales force to meet the organization’s goal and plays non-managerial role by contacting an important customer and negotiating deal with him.

• There are two weaknesses of this definition.
• The first weakness is that the definition states that management is an art.
• Art deals with application of knowledge.
• But management is not merely application of knowledge.
• It also involves acquisition of knowledge i.e., Science.
• Managing using intuition or thumb rule is not correct management.
• The second weakness of this definition is that it does not explain the various functions of management.

the feeling or understanding

• A better definition is given by George R Terry who defines management as
• “a process consisting of
• planning,
• organizing,
• actuating
• and controlling performed to determine and accomplish the objectives by the use of people and resources”

• According to him, management is a process-a systematic way of doing thing using four managerial functions namely planning, organizing, actuating and controlling.
• ‘Planning’ means thinking of the manager’s action in advance.
• The actions of the managers are based on logic, plan or some method rather than hunch.

• ‘Organizing’ means coordinating machines, materials and human resources of the organization.
• ‘Actuating’ means motivating, directing the subordinates.
• ‘Controlling’ means that manager must ensure that there is no deviations from plans.
• This definition also indicates that managers use people, materials and other resources to accomplish the organizations objectives.

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�CHARACTERISTICS OF MANAGEMENT�

• The critical analysis of the above definitions, the following characteristics of management evolve.
• (1) Management is a continuous process:
• The process of management consists of planning, organizing, directing and controlling the resources to ensure that resources are used to the best advantages of the organization.
• A single function alone cannot produce the desired results.
• Management involves continuous planning, organizing, directing and controlling.

• (2) Management is an art as well as science:
• Management is an art in the sense of possessing managing skill by a person.
• Management is science because certain principles, laws are developed which are applicable in place where group activities are coordinated.

• (3) Management aims at achieving predetermined objectives:
• All organizations have objectives that are laid down.
• Every managerial activity results in achievement of these predetermined objectives.

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• (4) Management is a factor of production:
• An enterprise produce goods or services using resources like land, labour, capital, machines etc.
• These resources themselves cannot realize the organizations goals.
• The goals are achieved when these are effectively coordinated by the entrepreneur.
• In case of small enterprises an individual can do such type of job where as in large enterprises the coordination job is done by management.
• Therefore, management is a factor of production.

• (5) Management is decision-making:
• Decision-making is selecting the best among alternative courses.
• Decision-making is an important function of a manager.
• Whatever a manager does, he does it by making decisions.
• The success or failure of an organization depends upon the quality of decision.
• A manager must make a right decision at right time.

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• (6) Universal application:
• The principles and concepts of management are applicable to every type of industry.
• The practice of management is different from one organization to another according to their nature.
• (7) Management is needed at all levels:
• The functions of management are common to all levels of organization.
• The functions of planning, organizing, directing, controlling, decision-making are performed by top level as well as lower level supervisors.

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• (8) Management aims at maximum profit:
• The resources are properly utilized to maximize profit.
• Maximizing the profit is the economic function of a manager.
• (9) Dynamic:
• Management is not static.
• Over a period of time new principles, concepts and techniques are developed and adopted by management.
• Management is changed accordingly to the social change.

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• (10) Management as a career:
• Today management is developed as a career focused on specialization.
• Marketing management, finance management, personal management, industrial management, production management, quality management are some of the specializations in management.
• Specialists are appointed at various positions of the organizational hierarchy.
• Hence management is career.

• (11) Management is a profession:
• Management is a profession because it possesses the qualities of a profession.
• The knowledge is imported and transferred.
• The established principles of management are applied in practice.
• This is discussed in detail later in this chapter.

• (12) Management is a discipline:
• Discipline refers to the field of study having well defined concepts and principles.
• Classifying management as disciplines implies that it is an accumulated body of knowledge that can be learnt.
• Thus, management is a subject with principles and concepts.
• The purpose of studying management is to learn how to apply these principles and concepts at right circumstances, at the right time to produce desired result.

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atmosphere of a place

FUNCTIONAL AREAS OF MANAGEMENT�

• Management process involves several functions.
• A distinction should be maintained between management functions (planning, organizing, staffing, directing and controlling) and the organizational functions (productions, finance etc.)
• Organizational functions differ from organization to organization depending upon their nature while management functions are common to all.
• A manager may be put either in production or finance or marketing, he performs all the managerial functions.
• These organization functions are called functional areas of management.
• There are four functional areas of management namely production, finance, marketing and finance and personnel.
• Each functional area may have a number of sub-activities.

• Production: This is generally put under production manager and he is responsible for all production related activities.
• This area has a number of activities, few of them are given below:
• (1) Purchasing: Which is related with the purchase of various materials required by the organization. Purchasing involves procuring right quantity of materials at the right quality, at the right time and at the right price from the right supplier.
• (2) Materials management: This involves storing of materials, issue of materials to various departments.
• (3) Research and Development: It deals with improving the existing products and process and developing new products and process.

• Marketing: This area involves the distribution of organizations’ products to the buyers. The sub-activities are:
• (1) Advertising: Involves giving information about products to buyers.
• (2) Marketing research: It is related with the systematic collection, analysis of data relating to the marketing of goods and services.
• (3) Sales management: It involves management efforts directed towards movement of products and services from producers to consumers.

• Finance and accounting: It deals with intelligent investment of financial resources and record-keeping of various transactions.
• The various sub-functions are
• (1) Financial Accounting: Deals with record keeping of various transactions.
• (2) Management Accounting: Deals with analysis and interpretation of financial records so that management can take certain decision.
• (3) Costing: It deals with recording of costs, their classification and analysis for cost control.
• (4) Investment Management: Takes care of how financial resources can be invested in various alternatives to maximize returns.
• (5) Taxation: Deals with various direct and indirect taxes to be paid by the organization.

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• Personnel: It deals with the management of human resources with the following sub-activities:
• (1) Recruitment and Selection: It deals with recruitment and selection of employees.
• (2) Training and Development: It deals with training of employees and making them more efficient.
• (3) Wage and Salary Administration: Deals with fixing of salaries, job evaluation, promotion, incentives etc.
• (4) Industrial Relations: Deals with maintenance of good employee relations.

�MANAGEMENT: A SCIENCE OR ART?�

• 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.
• In fact management is both science and art as it clear from the following discussion.

• Management as science: Science is a systematized body of knowledge.
• We call a discipline scientific if its
• (1) Methods of inquiry are systematic and empirical. (based on experiments and practical experience,)
• (2) Information can be ordered and analyzed; and
• (3) Results are cumulative and communicable.

• ‘Systematic’ means, being orderly and unbiased.
• Moreover, enquiry must be empirical and not merely an armchair speculation.
• Scientific information collected in the raw form is finally ordered and analyzed with statistical tools.
• It is communicable which permits repetition of study.
• When study is replicated then the second try produces the results similar to the original.
• Science is also cumulative in that what is discovered is added to that which has been found before.
• We build upon the base that has been left by others.

• Science denotes two types of systematic knowledge; natural or exact and behavioural or inexact.
• In exact or natural science (such as physics and chemistry) we can study the effect of any one of many factors affecting a phenomenon.
• For example, we can study in the laboratory, the effect of heat on density by holding other factors (like humidity, pressure etc.) constant, whereas in behavioural or in exact science it is not possible.
• In management we have to study man and number of factors affecting him.

• For example, we cannot study the effect of monetary incentives on workers productivity, because in addition to monetary incentives other inseparable factors like leadership styles, workers need hierarchy and leadership styles will also have simultaneous effect on productivity.
• At the most we may get only rough idea of the relationship between monetary incentives and productivity.
• Therefore, management is in the category of behavioural science.

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• Management uses both scientific knowledge and art in managing an organization.
• As the science of management increases so should the art of management.
• A balance between the two is needed.

• Management is 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 practised.
• 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 1.3.

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MANAGEMENT AND ADMINISTRATION�

• The term administration and management are used synonymously. Some writers urge that running of a business requires skills, which is known as management and functioning of government departments and non-profit institutions requiring skill is known as administration.
• Various views expressed by thinkers of management led to the emergence of there approaches:
• (1) Administration is above management.
• (2) Administration is a part of management.
• (3) Management and administration are same.

• According to classical thinkers, Administration is above management so far as different in the organization are concerned.
• According to Spreigal, “Administration is that phase of business enterprise that concerns itself with the overall determination of institutional objectives and the policies necessary to be followed in achieving those objectives.

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• Management on the other hand is an executive function which is primarily concerned with carrying of broad policies laid down by the administration”.
• This implies that administration deals with establishing objectives and policies and is done by the top level whereas management is the execution of these policies by the middle and lower organizational level.
• Table 1.4 shows the distinction between administration and management.

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• E. El. Brech urges that administration is a part of management.
• According to Brech, “Management is a generic name for the total process of executive control in industry or commerce.
• It is a social process entailing responsibility for the effective and economical planning and regulation of the operation of an enterprise in the fulfilment of a given purpose or risk.
• Administration is that part of management which is concerned with the installation and carrying out of procedures by which it is laid down and communicated, and the process of activities regulated and checked against plans.
• According to this view, administration become a subordinate function to overall management function.
• According to the third approach which is the most popular and practical one, management and administration are same.

• Both involve the same functions, principles and objectives.
• The term administrator found its origin in bureaucratic structure of government or in regulation of some laws.
• The government often uses the terms administrator who is supposed to execute broad policies laid down by government.
• The basic point of controversy between management and administration lies in forms of coverage of activities.
• The content of policy formulation is higher at higher levels; it is lower at lower levels, while executive is more at lower levels and lower at higher levels.
• Hence, it becomes unimportant whether policy formulation function is known as administration or management.

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ROLE OF MANAGEMENT�

• A manager performs planning, organizing, directing and controlling to achieve the organizational objectives.
• It has been questioned whether these functions provide an adequate description of the management process.
• As against these management functions Henry Mintzberg has defined the role of managers to identify what managers do in the organizations.
• Mintzberg has identified ten roles of manager which are classified into three broad categories as shown in fig. 1.1.

• Interpersonal role: This role is concerned with his interacting with people both organizational members and outsiders. There are three types of interpersonal roles:
• (1) Figure head role: In this role manager has to perform duties of ceremonial nature such as attending social functions of employees, taking an important customer to lunch and so on.
• (2) Leader role: Manager’s leader role involves leading the subordinates motivating and encouraging them.
• (3) Liaison: In liaison role manager serves as a connecting link between his organization and outsiders.
• Managers must cultivate contacts outside his vertical chain to collect information useful for his organization.

• Information roles: It involves communication. There are three types of informational roles:
• (1) Monitor: In his monitoring role, manager continuously collects information about all the factors which affects his activities. Such factors may be within or outside organization.
• (2) Disseminator: In the disseminator role, manager possesses some of his privileged information to his subordinates who otherwise not be in a position to collect it.
• (3) Spokesperson: As a spokesperson manager represents his organization while interacting with outsiders like customers, suppliers, financers, government and other agencies of the society.

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• Decisional roles: Decisional role involves choosing most appropriate alternative among all so that organizational objectives are achieved in an efficient manner.
• In his decisional role manager perform four roles:
• 1. Entrepreneur: As an entrepreneur, a manager assumes certain risks in terms of outcome of an action.
• A manager constantly looks out for new ideas and seeks to improve his unit by adopting it to dynamic environment.

• 2. Disturbance handler: In this role manager works like a fire-fighter manager contains forces and events which disturb normal functioning of his organization.
• The forces and events may be employee complaints and grievances, strikes, shortage of raw materials etc.
• 3. Negotiator: In his role of negotiator, manager negotiates with various groups in the organization. Such groups are employees, shareholders and other outside agencies.
• Readers are advised to note that management functions and roles do not exist opposite to each other but these are two ways of interpreting what managers do.
• All these roles can be integrated with earlier classification of management which is presented in fig. 1.2.

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• In planning a manager performs informational and decisional role as he has to collect information on the basis in which he makes decisions.
• Similarly in performing other functions some or the other roles are performed by manager.

LEVELS OF MANAGEMENT�

• People in an organization are arranged in an hierarchy and they all have the relationship of superior-subordinates.
• Every manager in an organization performs all five management functions.
• The relative importance of these functions varies along the managerial levels.
• There may be as many levels in the organization as the number of superiors in a line of command.
• Some of these levels are merged into one on the basis of nature of functions performed and authority enjoyed.
• E.F.L. Brech has classified management levels into three categories – Top Management, Middle Management and Supervisory/Lower Level as shown in fig 1.3.

• Top management of an organization consists board of directors, chairman and chief executive officer.
• Top level management determines goals and objectives.
• It performs overall planning, organizing, staffing, directing and controlling.
• It integrates organization with environment, balances the interest groups and is responsible for overall results.
• Middle management stands between top management and supervisory management level.

• Middle level management establishes programs for department and carries out functions for achieving specific goals.
• The other functions of middle level management are training and development of employees, integrating various parts of the department.
• Supervisory management is concerned with efficiency in using resources of the organization.
• A supervisor is an executor of policies and procedures making a series of decisions with well-defined and specified premises.

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EVOLUTION OF MANAGEMENT�

• Management in one or other form has existed in every hook and corner of the world service the down of civilization.
• Although the 20th century is marked in history as an‘Era of scientific management’, yet it does not mean that management was totally absent in yester years.
• 1700 to 1800 highlights the industrial revolution and the factory system highlights the industrial revolution and the factory system highlighted the importance of direction as a managerial function.

• Several economists during this period explained the concept of management.
• For example, Adam Smith explained the concept of division of labour, Jacques Turgot explained the importance of direction and control, and Baptiste explained the importance of planning.
• But management is emerged as a separate discipline in the second half of 19th century with the introduction of Joint Stock Company.
• This form of enterprises separated management of business from their ownership and gave rise to labor inefficiency and inadequate systems of wage payments.

• In search of solution to this problem, people began to recognize management as a separate field of study.
• During 20th century, Management has become more scientific discipline with standard principles and practices.
• The evaluation of management thought during this period can be classified into two parts namely
• (1) Early management approaches represented by Taylor’s scientific management, Foyal’s administrative management and human relations movement.
• (2) Modern management approaches, represented by behavioral approach, quantitative/management science approach, systems approach and contingency approach.

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Modern Management Approaches

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• Behavioural Approach
• This is an improved and more matured version of human relations approach.
• The various contributors of this approach are Douglas Mc Gregor, Abraham Maslow, Curt Levin, Mary Porker Follelt, Rensis Likert etc. Behavioural Scientists regard the classical approach as highly mechanistic, which finds to degrade the human spirit.
• They prefer more flexible organization structures and jobs built around the capabilities and aptitudes of average employees.

• The behavioral approach has laid down the following conclusions.
• (1) Decision-making is done in a sub-optimal manner, because of practical and situational constraints on human rationality of decision-making.
• The behaviorists attach great weight age on participative and group decision-making.
• (2) Behavioral Scientists encourage self direction and control instead of imposed control.
• (3) Behavioral Scientists consider the organization as a group of individuals with certain goals.

• (4) In view of behavioural scientists the democratic-participative styles of leadership are desirable, the autocratic, task oriented styles may also be appropriate in certain situation.
• (5) They suggest that different people react differently to the same situation.
• No two people are exactly alike and manager should tailor his attempts to influence his people according to their needs.
• (6) They recognize that organizational conflict and change are inevitable.

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• Quantitative Approach Quantitative approach (also known as management approach) started during Second World War during which each participant country of the war was trying to seek solutions to a number of new and complex military problems.
• The interdisciplinary teams who were engaged for this purpose were known as operation research teams.
• These operation research teams developed quantitative basis for making military decisions.
• These quantitative tools later are used to make business, industry and enterprise decisions.
• The focus of quantitative approach is on decision making, and to provide tools and techniques for making objectively rational decisions.

• Objective rational it means an ability and willingness to follow reasonable, unemotional and scientific approach in relating means with ends and in visualizing the totality of the decision environment.
• This approach facilitates disciplined thinking while defining management problems and establishing relationships among the variables involved.
• This approach is widely used in planning and control activities where problems can be defined in quantitative terms.

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• Systems Approach
• A system is a set of interdependent parts which form a unit as a whole that performs some function.
• An organization is also a system composed of four independent parts namely, task, structure, people and technology.
• The central to the system approach is ‘holism’ which means that each part of the system bears relation of interdependence with other parts and hence no part of the system can be accurately analyzed and understood apart from the whole system.
• A system can be open or closed system.
• In open system, a system interacts with surrounding.
• An organization is open system because it interacts with it.

• Contingency Approach
• According to this approach, management principles and concepts have no general and universal application under all conditions.
• There is no best way of doing things underall conditions.
• Methods and techniques which are highly effective in one situation may not give the same results in another situation.
• This approach suggests that the task of managers is to identify which technique in a situation best contribute to the attainment of goals.
• Managers therefore have to develop a sort of situational sensitivity and practical selectivity.
• Contingency views are applicable in designing organizational structure, in deciding degree of decentralization, in motivation and leadership approach, in establishing communication and control systems, in managing conflicts and in employee development and training.

PLANNING

• Every person whether in business or not has framed a number of plans during his life.
• The plan period may be short or long.
• One of the characteristic of human being is that he plans.
• Planning is the first and foremost function of management.
• According to Koontz and O’Donnel “Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. It bridges the gap from where we are and to where we want to go. It is in essence the exercise of foresight”.
• According to M.S. Hardly “Planning is deciding in advance what is to be done. It involves the selection of objectives, policies, procedures and programmes from among alternatives.

• Plans derive the following benefits:
• (1) Planning focus managers to think ahead.
• (2) It leads to development of performance standards.
• (3) Having to formulate plans forces management to articulate clear objectives.
• (4) Planning makes organization to be better prepared for sudden developments.

• On the basis of definitions of planning the following features can be identified.
• (1) Planning is primarily concerned with looking into future. It requires forecasting the future.
• (2) Planning involves selection of suitable course of action. It means there are several ways to achieving objectives.
• (3) Planning is undertaken at all levels of the organization because managers at all level are concerned with determination of future course of action.
• (4) Planning is flexible. Planning involves selection of best course of action under specific environment. If environment changes an adjustment is needed between various factors of planning.
• (5) Planning is pervasive and continuous managerial function.

�NATURE OF PLANNING�

• The nature of planning may be understood in terms of it being a rational approach, open system, flexibility and pervasiveness. (the quality of spreading widely )
• Planning: A Rational (set of reasons) Approach
• Planning is a rational approach for defining where one stands, where one wants to go in future and how to reach there.
• Rationalist denotes a manager chooses appropriate means for achieving the stated objectives rational approach fills the gap between the current status and future status.

• The difference between two time periods T1 and T2 may be as long as 5 years or as short as one year.
• The desired and the current results are usually expressed in terms of objectives, which can be achieved by an action or set of actions.
• The actions required resources and the rational approach emphasis an appropriate use of resources.

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(Based on practical judgment)

Questions

• Explain the roles of Manager plays.
• Discuss the functional areas of Management
• Differentiate between Management and administration.
• Explain different levels of management and skills required
• Briefly explain the various steps in decision making process.
• Explain the Modern management approaches.
• Write notes on Characteristics of Management.
• Explain different types of plans.
• What are the objectives of planning? Explain.

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