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1

CHAPTER

NATURE AND SCOPE OF
MANAGEMENT
Learning Objectives

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Definition of Management
Concepts of Management
Role and Importance of
Management
Distinction between
Management and Administration

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Levels of Management
Nature of Management
Professionalisation of
Management
Skills of Management
Scope of Management

very human being has several needs and desires
...
Therefore, people work together to meet
their mutual needs which they cannot fulfil individually
...
It is
by working and living together in organised groups and institutions
that people satisfy their economic and social needs
...
, family, school, government, army, a
business firm, a cricket team and the like
...
The
task of getting results through others by coordinating their efforts is
known as management
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Management—Principles and Practices

1
...

Different scholars from different disciplines view and interpret
management from their own angles
...
The
bureaucrats look upon it as a system of authority to achieve business
goals
...

The definitions by some of the leading management thinkers and
practitioners are given below:
(i) Management consists in guiding human and physical resources
into dynamic, hard-hitting organisation unit that attains its
objectives to the satisfaction of those served and with a high
degree of morale and sense of attainment on the part of those
rendering the service
...
Appley
(ii) Management is the coordination of all resources through the
process of planning, organising, directing and controlling in
order to attain stated objectives
...
Sisk
...

—James L
...

—American Society of Mechanical Engineers
(v) Management is the creation and maintenance of an internal
environment in an enterprise where individuals, working in
groups, can perform efficiently and effectively towards the
attainment of group goals
...

—F
...
Taylor
(vii) To manage is to forecast and to plan, to organise to command,
to coordinate and to control
...

—Ralph C
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—E
...
L
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—George R
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—American Management Association
(xii) Management is a multipurpose organ that manage a business
and manages Managers and manages Workers and work
...
2 CONCEPTS OF MANAGEMENT
The term management has been interpreted in several ways; some of
which are given below:

Management as an Activity
Management is an activity just like playing, studying, teaching etc
...
Management is a group
activity wherein managers do to achieve the objectives of the group
...
It consists of getting the objectives of an organisation and taking steps to achieve objectives
...

Management as a process has the following implications:
(i) Social Process: Management involves interactions among people
...
Human factor is the most important part of the
management
...
Management also
integrates human efforts so as to maintain harmony among them
...
It is repeated every now and then till
the goal is achieved
...
For example, when a manager prepares plans, he is also
laying down standards for control
...
Management occupies the central place among productive factors as it combines and coordinates all other resources
...
1
...


Fig
...
1

Management as resource

Management as a Team
As a group of persons, management consists of all those who have the
responsibility of guiding and coordinating the efforts of other persons
...
Some of these managers have
ownership stake in their firms while others have become managers by
virtue of their training and experience
...
As a group managers have become an elite class in
society occupying positions with enormous power and prestige
...
It
comprises principles and practices for effective management of
organisations
...
Management offers a very rewarding and challenging
career
...
It refers to all those individuals who perform managerial
functions
...
g
...

For example, when one remarks that the management of Reliance
Industries Ltd
...
There are several types of managers which are listed
as under
...

(ii) Professional managers who have been appointed on account of
their degree or diploma in management
...

Managers have become a very powerful and respected group in
modern society
...
For example,
if the managers of Reliance Industries Limited decide to expand production it will create job for thousands of people
...
Senior managers also enjoy a high standard of living in
society
...


Nature and Characteristics of Management
The salient features which highlight the nature of management are as
follows:
(i) Management is goal-oriented: Management is not an end in itself
...
Management has no
justification to exist without goals
...
The basic goal of management is to ensure efficiency and economy in the utilisation of
human, physical and financial resources
...
Thus, management is purposefull
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Management—Principles and Practices

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

Wherever two or more persons are engaged in working for a
common goal, management is necessary
...
g
...
Thus, management is a
pervasive activity
...
Managers at all
levels perform the same basic functions
...
Management reconciles the individual goals with organisational
goals
...
It integrates human and
other resources
...
It is a social process because it is
concerned with interpersonal relations
...
According to Appley, “Management is the development of people not the direction of things
...
It is the pervasiveness of
human element which gives management its special character
as a social process”
...
Therefore, it
depends upon wide knowledge derived from several disciplines
like engineering, sociology, psychology, economics, anthropology, etc
...

Management is a continuous Process: Management is a dynamic
and an on-going process
...

Management is Intangible: Management is an unseen or invisible
force
...
However, the managers who perform the
functions of management are very much tangible and visible
...
Management is also a discipline
involving specialised training and an ethical code arising out of
its social obligations
...
It
involves both the determination and the accomplishment of organisational goals
...

(i) Organisational objectives: Management is expected to work for the
achievement of the objectives of the particular organisation in
which it exists
...
e
...

(c) Growth and expansion of the enterprise
(d) Improving the goodwill or reputation of the enterprise
...
These objectives are as follows:
(a) Fair remuneration for work performed
(b) Reasonable working conditions
(c) Opportunities for training and development
(d) Participation in management and prosperity of the enterprise
(e) Reasonable security of service
...
It is expected to fulfil the objectives of the society which are given below:
(a) Quality of goods and services at fair price to consumers
...

(c) Conservation of environment and natural resources
...

(e) Preservation of ethical values of the society
...
3 ROLE AND IMPORTANCE OF MANAGEMENT
Management is indispensable for the successful functioning of
every organisation
...

No business runs in itself, even on momentum
...

According to Peter Drucker,“ management is a dynamic lifegiving
element in an organisation, without it the resources of production
remain mere resources and never become production”
...
Each
person may be working efficiently, but the group as a whole
cannot realise its objectives unless there is mutual cooperation

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Management—Principles and Practices

(ii)

(iii)

(iv)

(v)

(vi)

and coordination among the members of the group
...
He
reconciles the objectives of the group with those of its members
so that each one of them is motivated to make his best contribution towards the accomplishment of group goals
...

Optimum utilisation of resources: Managers forecast the need for
materials, machinery, money and manpower
...
They create and maintain an
environment conducive to highest productivity
...
They provide training and guidance to
employeers so that they can make the best use of the available
resources
...
Management directs day-to-day operations in such a manner that all
wastage and extravagance are avoided
...

Survival and growth: Modern business operates in a rapidly
changing environment
...
Management keeps
in touch with the existing business environment and draws its
predictions about the trends in future
...
Changes in business environment create risks as well as opportunities
...
In this way, managers facilitate the
continuity and prosperity of business
...
People
earn their livelihood by working in these organisations
...
In this way
managers help to satisfy the economic and social needs of the
employees
...
Management is the most crucial
factor in economic and social development
...
Capital investment and import of technical knowhow cannot lead to economic growth unless wealth producing
resources are managed efficiently
...
That is why management is regarded as a key to the
economic growth of a country
...
4 DISTINCTION BETWEEN MANAGEMENT
AND ADMINISTRATION
There has been a controversy on the use of these two terms-management and administration
...
Several
American writers consider them as two distinct functions
...
But Schuze and Sheldon found
distinction between these two concepts
...

Oliver Sheldon in his “The Philosophy of Management” defines
‘Administration as a function is concerned with the determination of
the corporate policy, the coordination of finance, production and distribution, the settlement of the compass (i
...
, structure) of the organisation, under the ultimate control of the executive
...
Thus Sheldon declares administration as a thinking process and management as doing process
...
The following
figure depicts this line of thinking

Fig
...
2

Administration and Management

E
...
L
...

Breach considers management as a social process entailing the responsibility for effective planning, regulation, coordination and control of
operations including the responsibility for personnel supervision
...

Few authors treat administration as part of management
...

(i) Administration is different from management: According to this view
point, administration is a higher level activity while management is a lower level function
...
This view is held largely by American experts on management
...

According to them, administration is superior to management
as the latter has only a peripheral role in determination of objectives and policies
...
This viewpoint has been
propounded by Breach
...
Administration is that part of management
which is concerned with the installation and carrying out of the
procedures by which the programme is laid down and communicated and the progress of activities is regulated and checked
against plans”
...
According to them, administration is only
an implementing agency while management is determinative
...

(iii) Administration and management are one: Many writers like Henri
Fayol, William Newman, Chester Barnard, George Terry, Louis
...
Allen, Koontz and O’ Donnell make no distinction between
management and administration
...
According to Fayol, all undertakings require
the same functions and all must observe the same principles
...
Therefore, the distinction between
administration and management is superfluous or academic
...
The term
administration is more popular in Government and other public organisations while the word management is more commonly
used in the business world, where economic performance is of
primary importance
...

It may be possible to make theoretical or conceptual distinction between
the two
...
In order to
resolve the terminological conflict between administration and management, we may classify management into:
(i) Administrative management; and
(ii) Operative management
...
At every
level of management, an individual manager performs both types of
functions
...

Distinction between Administration and Management
Points of distinction Administration

Management

1
...
Type of work
3
...
Influence

5
...
Main functions
7
...

Conceptual and human skills

It is largely a middle and
lower level function
Managerial decisions are
influenced by objectives
and policies of the
organisation
...

Technical and human skills

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Management—Principles and Practices

8
...
Illustrations

Used largely in Government
and Public sector
Commissioner, Registrar,
Vice-Chancellor, Governor etc
...


1
...
These positions are created through
the process of delegation of authority from top to lower levels
...
3 Levels of Organisation

Nature and Scope of Management

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relationships
...
As one moves upward in the organisation, the
managerial position plays an important role, larger the contribution,
greater the authority and higher the responsibility
...
Broadly speaking, an organisation
has two important levels of management, namely functional and
operative
...
The operative level of management is related to implementation
of plans and decisions, and pursuit of basic policies for achieving the
objectives of the organisation
...

But, in a joint stock company, for conducting its business efficiently,
managerial personnel may be placed in three levels, that is, top, middle
and lower or supervisory level
...
In a joint stock company, equity shareholders are the real owners of the company
...
Besides the board, other functionaries including
managing director, general manager or Chief executive to help directors, are included in this level
...
The
top level managers are accountable to the owners and responsible for
overall management of the organisation
...

(ii) To decide upon the matters which are vital for the survival, profitability and growth of the organisation such as introduction of
new product, shifting to new technology and opening new plant
etc
...

(iv) To decide structure of organisation, creating various positions
there in
...

(vi) To make decisions regarding disposal and distribution of profits
...

(viii) To coordinate various sub-systems of the organisation
...

(x) To formulate basic policies and providing direction and leadership to the organisation as a whole
...
Middle level management consists of departmental managers, deputy managers, foreman and administrative officers etc
...
They act as a link between top and lower level
managers
...

The main functions performed by these managers are as under:
(i) To prepare departmental plan covering all activities of the
department within the basic framework of the corporate plan
...

(iii) To perform all other managerial functions with regard to
departmental activities for securing smooth functioning of the
entire department
...

(v) Middle level managers explain and interpret policy decisions
made at the top level to lower level managers
...
It consists of factory supervisors, superintendents, foremen, sales supervisors, accounts officers etc
...
They issue
orders and instructions and guide day to-day activities
...

Supervisory management performs the following functions:
(i)
(ii)
(iii)
(iv)

Planning of day to day work
Assignment of jobs and issuing orders and instructions
Supervising and guiding workers
Maintaining close personal contacts with workers to ensure
discipline and team-work
(v) Evaluating operating performance
(vi) Sending reports and statements to higher authorities
(vii) Communicating the grievances and suggestions of workers to
higher authorities
...
6 NATURE OF MANAGEMENT
To understand the basic nature of management, it must be analysed in
terms of art and science, in relation to administration, and as a profession, in terms of managerial skills and style of managers
...
Every discipline of art is always backed by science which is basic knowledge of
that art
...
Art basically deals with an application of
knowledge personal skill and know-how in a specific situation for efficiently achieving a given objective
...

During the primitive stages of development of management knowledge, it was considered as an art
...
It was not codified and systemised
...
This kind of loose and
inadequate understanding of management supported the view that it
was an art
...
It contains general principles and facts which explains a
phenomenon
...
These principles and theories help to
explain past events and may be used to predict the outcome of actions
...
The principles of science have universal
application and validity
...

Their Validity can be verified and they serve as reliable guide
for predicting future events
...

These help to explain events and serve as guidelines for managers in different types of organisations
...
These are objective and represent
best thinking on the subject
...
Exceptions, if any, can be logically
explained
...
This law can be applied in all
countries and at all points of time
...
Management contains sound
fundamental principles which can be universally applied
...
This
principle can be applied in all types of organisation-business or
non business
...
They are flexible and
need to be modified in different situations
...
It means that there
is an objective or unbiased assessment of the problem situation
and the action chosen to solve it can be explained logically
...
Rather these can be scientifically proved at
any time
...
For example, the principle
that the earth revolves around the sun has been scientifically
proved
...
These have been developed through experiments and practical experience of a large number of managers
...

(iv) Cause and effect relationship: Principles of science lay down
a cause and effect relationship between related factors
...
Similarly, the principles of management
establish cause and effect relationship between different variables
...

(v) Tests of validity and predictability: Validity of scientific principles
can be tested at any time and any number of times
...
Moreover, the future events
can be predicted with reasonable accuracy by using scientific
principles
...
Principles of management can also be tested
for their validity
...
The performance of
the first person will be higher than that of the second
...
It contains a
systematic body of knowledge in the form of general principles which
enjoy universal applicability
...
This
is because management deals with people and it is very difficult to
predict accurately the behaviour of living human beings
...
That is why management is known as
a soft science
...
It is still growing, with
the growing needs of human organisations
...
The essential elements of arts are:
(i) Practical knowledge
(ii) Personal skill
(iii) Result oriented approach

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(iv) Creativity
(v) Improvement through continuous practice
Let us judge how far management fulfils these requirements:
(i) Practical knowledge: Every art signifies practical knowledge
...

For example, a person may have adequate technical knowledge
of painting but he cannot become a good painter unless he knows
how to make use of the brush and colours
...
He must
also learn to apply his knowledge in solving managerial
problems in practical life
...

(ii) Personal skill: Every artist has his own style and approach to his
job
...
This is
due to the level of their personal skills
...
Similarly, management is personalised
...
The success of a manager depends on his
personality in addition to his technical knowledge
...

The process of management is also directed towards the accomplishment of desirable goals
...
He uses men,
money, materials and machinery to promote the growth of the
organisation
...
Therefore, every piece
of art requires imagination and intelligence to create
...
A manager effectively combines and coordinates the factors of production to create goods
and services
...

(v) Improvement through people: Practice makes one perfect
...
A dancer, for example, learns to perform better by continuously practicing a dance
...


Nature and Scope of Management

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Thus, “management is both a science as well as an art”
...
It is known as an art because it involves creating results through practical application of knowledge and skills
...
They are not
mutually exclusive
...
Art
without science has no guide and science without art is knowledge
wasted
...

Similarly, a successful manager must know the principles of
management and also acquire the skill of applying those principles for
solving managerial problems in different situations
...
One cannot become an effective
manager simply by learning management principles by heart
...


Management as a Profession
A profession is calling that requires specialised knowledge and often,
long intensive academic preparation
...
In
order to practice a profession, a person requires specialised
knowledge of its principles and techniques
...
There exists a
substantial and rapidly expanding body of knowledge in
management
...

In addition, there should be competent application or judicious
utilisation of this knowledge in solving complex problems
...


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Management—Principles and Practices

(ii) Restricted entry: There exists institutions and universities to
impart education and training for a profession
...
For example one must pass the Chartered Accountancy
examination to practice accountancy profession
...
Several
management consultancy firms have also come into existence to
offer advise for solving managerial problems
...

But no minimum qualification or course of study has been
prescribed for managers by law
...
For example, a doctor earns his living from his medical
practice
...
He has a concern for the suffering of others and a desire
to help the community
...
Similar is the case with managers
...

(iv) Representative association: In every profession there is a statutory
association or institution which regulates that profession
...
In management also associations have been established
both in India and abroad
...
In India,
there is the All India Management Association
...
No university accepted criteria or
standard exists for their evaluation
...

(v) Code of conduct: Members of one profession have to abide by a
code of conduct which contains rules and regulations providing
the norms of honesty, integrity and professional ethics
...
The code of conduct is by the representative
association to ensure self-discipline among its members
...
The All India Management Association has
framed code of conduct for managers
...
Members

Nature and Scope of Management

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of the association are expected not to disclose the trade secrets
of their employers and to make personal gain from the
knowledge of internal working of the organisation
...
However, observing business
ethics is always helpful in becoming a more effective manager
...
But like other professions, management does
not restrict the entry into managerial jobs to people with a special
academic degree
...
No management association has the authority
to grant certificates of practice or to regulate entry into management
careers
...
The management associations have no legal right to
enforce their code of conduct
...
Moreover, there is no single client group to which
managers owe complete loyalty
...

But managers are responsible to the owners as well as to other social
groups
...
Some experts
believe that there should be no control over entry into management
careers
...
Drucker, “Management is a practice rather
than a science or profession through containing elements of both
...


1
...
Management still
remains a developing field, changes are taking place regularly in its
nature, significance and scope
...

In the recent past, society has been challenging ethical and moral
basis of management decisions and demanding professionalisation of
management
...

(i) In a popular firm of business organisation, that is, joint stock
company, ownership has been separated from its management
and control
...
Modern managers have to

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(ii)

(iii)
(iv)

(v)

Management—Principles and Practices

promote and protect the interest of many social groups such as
consumers, employers and the society, as a whole, and balance
it with the profit motive
...

Rapid expansion and growth of universities and other institutions for imparting management knowledge and growing
significance of training programmes in business organisations
are indicative of the trend of professionalisation in the days to
come
...
Multinational corporations have been attempting to
enhance their global market share strictly by adopting
professional outlook and approach towards management of
operations
...


1
...

Several skills are required to manage successfully a large organisation
in a dynamic environment
...


(i) Technical Skills
Technical skills refer to the ability and knowledge in using the equipment, technique and procedures involved in performing specific tasks
...
Ability in programming and operating computers is, for instance, a technical skill
...
In the first place, he must
know which skills should be employed in his particular enterprise and
be familiar enough with their potentiality to ask discerning questions
of his technical advisors
...


Nature and Scope of Management

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(ii) Human Skills
Human skills consists of the ability to work effectively with other people
both as individual and as members of a group
...
Such skills
require a sense of feeling for others and capacity to look at things from
others point of view
...
An awareness of the
importance of human skills should be part of a managers orientation
and such skills should be developed throughout the career
...


(iii) Conceptual Skills
Conceptual skills comprise the ability to see the whole organisation
and the interrelationships between its parts
...
Such skills help the manager to conceptualise the environment,
to analyse the forces working in a situation and take a broad and farsighted view of the organisation
...
Such competence is necessary for
rational decision-making
...
These types of skills are interrelated
...
4
...
1
...
As one moves up the management hierarchy, technical
skills become less important
...
Conceptual skills are very important for top
management in formulating long-range plans, making broad policy
decisions, and relating the business enterprise to its industry and the

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Management—Principles and Practices

economy
...
This would be self evident as management is the process of getting things done through
people
...


(iv) Diagnostic Skills
Diagnostic skills include the ability to determine by analysis and
examination the nature and circumstances of particular conditions
...
It is the ability to cut
through unimportant aspects and quickly get to the heart of the problem
...


1
...
The operational areas of business management may be classified into the following categories:
(i) Production Management: Production management implies
planning, organising, directing and controlling the production
function so as to produce the right goods, in right quantity, at
the right time and at the right cost
...

(ii) Marketing Management: Marketing management refers to the
identification of consumers needs and supplying them the goods
and services which can satisfy these wants
...
It comprises the following activities:
(a) estimating the volume of funds required for both long-term
and short-term needs of business
(b) selecting the appropriate source of funds
(c) raising the required funds at the right time
(d) ensuring proper utilisation and allocation of raised funds so
as to maintain safety and liquidity of funds and the creditworthiness and profitability of business, and
(e) administration of earnings
Thus, financial management involves the planning, organising
and controlling of the financial resources
...
1
...
It consists of the following activities:
(a) manpower planning
(b) recruitments,
(c) selection,
(d) training
(e) appraisal,
(f) promotions and transfers,
(g) compensation,
(h) employee welfare services, and
(i) personnel records and research, etc
...
1
...

2
...

4
...

6
...

8
...

10
...

“Management is an art as well as science” Explain
...

Explain the various levels of management
...

Explain the objectives and importance of management
...

Explain the scope of management
...


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