Class 12th Business Studies Chapter Explaination

Chpater- Nature and Significance of Management

Meaning of Management:

process of getting things done with the aim of achieving goals effectively and efficiently.

Meaning of Effectiveness:

achieving the target or objective in or before time.

Meaning of Efficiency:

achieving the target or objective with the optimum utilisation of resource, but might be not in time.

Characteristics of Management:
  1. Management is a goal-oriented process: every organisation has a set of basic goals which are the basic reason for their existence these objectives affects the management of the organisation.
  2. Management is all pervasive: management is requirement of each and every organisation irrespective of its type, scale or any other characteristics.
  3. Management is multidimensional:
    1. Management of work: All organisations exist for the performance of some work.
    2. Management of people: Human resources or people.
    3. Management of operations: each and every has some basic product or service to provide in order to survive.
  4. Management is a continuous process: it is a series of continuous, composite, but separate functions, planning, organising, directing, staffing and controlling). These functions are simultaneously performed by all managers all the time.
  5. Management is a group activity: it requires team work and coordination of individual effort in a common direction.
  6. Management is a dynamic function: An organisation interacts with its external environment which its d has to adapt itself with.
  7. Management is an intangible force: Management is an intangible force that cannot be seen but its presence can be felt in the way the organisation functions.

Objectives of Management:
  1. Organisational Objectives:
    1. Survive: means an organisation must earn enough revenues to cover costs.
    2. Profit: Profit provides a vital incentive for the continued successful operation of the enterprise. Profit is essential for covering costs and risks of the business.
    3. Growth: management must exploit fully the growth potential of the organisation.
  2. Social objectives: refers to consistently creating economic value for various constituents of society.
  3. Personnel objectives: Management has to reconcile personal goals with organisational objectives for harmony in the organisation.

Importance of Management:
  1. Management helps in achieving group goals: it gives a common direction to the individual effort in achieving the overall goal of the organisation.
  2. Management increases efficiency: reduce costs and increase productivity through better planning, organising, directing, staffing and controlling the activities of the organisation.
  3. Management creates a dynamic organisation: it helps people adapt to these changes so that the organisation is able to maintain its competitive edge.
  4. Management helps in achieving personal objectives: it leads personnel in such a manner that individual members are able to achieve personal goals while contributing to the overall organisational objective.
  5. Management helps in the development of society: it provides good quality products and services, creates employment opportunities and leads the path towards growth and development.

Nature of Management

Management as an Art:

Management can be said to be an art since it satisfies the following criteria:

  1. Theoretical knowledge: There is a lot of literature available in various areas of management, there is existence of theoretical knowledge.
  2. Personalised application: A manager applies these principles differently depending on how creative they are and the prevailing business environment situations.
  3. Based on practice and creativity: A manager studies critical situations and formulates his own theories for use in a given situation.

Management as a Science:

management has following characteristics of science:

  1. Management has a systematised body of knowledge: It has its own theory and principles that have developed over a period of time its own vocabulary of terms and concepts.
  2. Principles based on experimentation: The principles of management have evolved over a period of time based on repeated experimentation and observation in different types of organisations.

This is why management is not exact science:

  1. Not Predetermined: The outcomes of these experiments are not capable of being accurately predicted or replicated. Therefore, management can be called an inexact science.
  2. Universal validity: the principles of management, their application and use are not universal. They have to be modified according to a given situation.

Management as a Profession:

Features common in management and profession:

  1. Well-defined body of knowledge: It is based on a systematic body of knowledge comprising well-defined principles based on a variety of business situations.
  2. Professional association: There are several associations of practising managers in India, like the AIMA that has laid down a code of conduct to regulate the activities of their members, no compulsion for managers to be members of such an association.
  3. Service motive: The basic purpose of management is to help the organisation achieve its stated goal. This may be profit maximisation for a business enterprise and service for a hospital.

Why management is not profession:

  1. There is no restriction: There is no restriction on anyone being designated or appointed as manager in any business enterprise. Anyone can be called a manager irrespective of the educational qualifications possessed.

Level of Management:

  1. Top Management: They consist of the senior-most executives of the organisation.

    Functions of top-level management:
    1. integrate diverse elements and coordinate the activities of different departments according to the overall objectives of the organisation.
    2. These are responsible for the welfare and survival of the organisation.
    3. They formulate overall organisational goals and strategies for their achievement.

  2. Middle Management: usually known as division heads.

    Functions of middle-level management:
    1. link between top and lower level managers
    2. responsible for implementing and controlling plans and strategies developed by top management.
    3. interpret the policies framed by top management.
    4. ensure that their department has the necessary personnel.
    5. assign necessary duties and responsibilities to them.
    6. motivate them to achieve desired objectives.
    7. cooperate with other departments for smooth functioning of the organisation.

  3. Supervisory or Operational Management: Foremen and supervisors comprise the lower level

    Functions of Supervisory or Operational management:
    1. interact with the actual work force and pass on instructions of the middle management to the workers.
    2. quality of output is maintained; wastage of materials is minimised and safety standards are maintained

Functions of Management:
  1. Planning: the process of setting up of organisational objective, and developing the course of action to achieve those objectives.
  2. Organizing: the process which coordinates human efforts, assembles resources and integrates both into a unified whole for the achievement of the organisational objectives.
  3. Staffing: instructing, guiding, supervising, motivating, leading and coaching people in the organization to achieve its objectives.
  4. Directing: the process of obtaining, utilizing and maintaining satisfactory & satisfied work force.
  5. Controlling: the process of ensuring that actual activities conform to planned activities.


Meaning of Coordination:

It is The Essence of Management, Process of synchronisation of the different actions or efforts of the various units of an organisation.

Characteristics of Coordination:
  1. Coordination integrates group efforts: It gives a common focus to group effort to ensure that performance is as it was planned and scheduled.
  2. Coordination ensures unity of action: It acts as the binding force between departments and ensures that all action is aimed at achieving the goals of the organisation.
  3. Coordination is a continuous process: It begins at the planning stage and continues till controlling.
  4. Coordination is an all-pervasive function: it is required at all levels of management due to the interdependent nature of activities of various departments.
  5. Coordination is a deliberate function: to coordinate the efforts of different people in a conscious and deliberate manner.

Importance of Coordination:
  1. Growth in size: organisations grow in size, the number of people employed by the organisation also increases. It may become difficult to integrate their efforts and activities.
  2. Functional differentiation: Departments may have their own objectives, policies and their own style of working, coordination helps to integrate efforts of such departments.
  3. Specialisation: as Specialisation arises out of the complexities of modern technology and the diversity, it reduces conflict amongst different specialists as well as others in the organisation.