Basic Concepts of Management

1. By
A. Raja
Management Theory & Organizational Behavior/
Principles of Management
(9 no. of Basic concepts covered)

2. 1. Definition and Nature of Organization
2. Managerial Roles
3. Importance of Management
4. Vertical Organizational Structure
5. Approaches towards structure of Organization
6. Challenges of Management
7. Approaches to Management
8. Control Techniques
9. Nature of Management & Functions of a Manager
Topics Covered

3. DEFINITION OF ORGANISATION
There is no standard definition for the word “organization”. Different writers have
definition the word differently.
According to Amital Etzioni
“An organization is a social unit or human grouping deliberately
structured for the purpose of attaining specific goals”
DEFINITION AND NATURE OF ORGANISATION

4. SEHIEN DEFINES
organization as a rational coordination of the activities of a number of
people for the achievement of some common explicit purpose or goal , through division of
labour and function, and through a hierarchy of authority and responsibility.
ALLEN DEFINES
The term organization as the process of identifying and grouping of the work
to be performed, defining and delegating responsibility and authority and establishing
relationships for the purpose of enabling people to work most effectively together in
accomplishing their objectives

5. Examples of organisations
In terms of all the above definitions, corporations, armies, schools, hospitals, churches,
prisons, etc all are organisations
But
Tribes, ethnics and friendship groups and families are not organisations because they do
not involve any significant amount of conscious planning, coordination or deliberate
structuring.

6. NATURE OF ORGANISING
 Division of labour makes work easier and increases the efficiency of individual
employees.
 coordination among different activities performed
 Organisation is a social system
 Well defined objectives
 Creating cooperative relationship among various members of the group
 Well defined hierarchy
 Effective communication

7. MANAGERIAL ROLES
Henry Mintzberg devised a new approach of managerial roles . He closely
observed day to day activities of a manager and concluded that managers play
ten different roles
These roles are classified into three. They are
INTERPERSONAL ROLES
INFORMATIONAL ROLES
DECISIONAL ROLES
Topic: MANAGERIAL ROLES

8. INTERPERSONAL ROLES
1.FIGURE HEAD:
A manager as a figure head performs all ceremonial and symbolic duties
2.LEADER:
Manager acts as a leader . He is required to motivate and train the employees.
3.LIASION:
This role often serves as a coordinator or link among people or groups . He interacts with people
both within the organization and outside the organization

9. INFORMATIONAL ROLES
1.RECIPIENT :
A recipient actively seek information that may have value. He receives information involving
opportunities , changes and problems
2.DISCRIMINATOR:
In this role manager transmitting relevant information to the subordinates that would help in their
work
3.SPOKESPERSON:
A spokesperson should represent the organization in public

10. DECISIONAL ROLES
1.ENTREPRENAUR:
He takes bold decisions and seeks innovative methods and improve the performance of the
unit .
2.DISTURBANCE HANDLER:
Manager performs this role by handling problems in decisions and problems relating to public
image.
3.RESOURCE ALLOCATOR:
The manager decides how resources are allocated and with whom for running an effective
business
4.NEGOTIATION:
Manager enters into negotiations with other groups of organization.

11. The importance of management has been highlighted clearly in the
following points:
1) Achievement Of Group Goals:
•The group as a whole can not realise its objectives unless there is a
mutual co-operation and co-ordination among the members of the group.
• Management creates team work among the people and directs towards
achievement of common goals.
IMPORTANCE OF MANAGEMENT

12. 2) Optimum Utilization Of Resources:
• Management creates and maintain an environment for higher productivity
by using efficient methods of work.
• It provides training and guidance to employers so that they can make the
best use of the available resources.
3) Minimization Of Cost:
• In modern era of competition, every business enterprise must minimize the
cost of production and distribution.
• A study of the principles of management helps in knowing techniques used for
reducing costs.

13. 4) Change And Growth:
• An enterprise has to change & adjust itself in the ever changing
environment.
• Management moulds not only the enterprise but also alerts the
environment itself to ensure the success of business.
• Many business corporations of today had a humble beginning and grew
continuously through effective management.

14. 5) Management Directs The Organization:
• The human mind directs & controls the functioning of human body.
• Similarly management directs and controls the activities of an organization.
6) Higher Profits:
• Profit can be earned by two ways:
a) By increasing the sales revenue.
b) By reducing costs.
• Increase of sales revenue is out of control of an enterprise. Management by
decreasing costs, increases its profits thus provides opportunities for future
growth and development.

15. 7) Innovation:
• Better results can be obtained from new ideas. Management provides
new ideas & implements in the organization for the growth of it.
8) Generation Of Employment & Social Benefits:
• An efficient management can expand the business, this provides
employment for people.
• In this way management helps to satisfy the economic & social needs of
society.

16. BUSINESS IS ORGANIZED IN TWO WAYS.
• VERTICAL ORGANIZATON : UP AND DOWN STRUCTURE WHERE MANAGERS LOOK UP TO HIGHER
LEVELS OF MANAGEMENT OR DOWN TO EMPLOYEES WITHIN A SINGLE DEPARTMENT.
• HORIZONTAL ORGANIZATION : INVOLVES SELF-MANAGING TEAMS THAT SET THEIR OWN GOALS &
MAKE THEIR OWN DECISIONS.
VERTICAL ORGANIZATIONAL STRUCTURE

17. VERTICAL ORGANIZATIONAL STRUCTURE
 Strict hierarchy that creates layers of officials within an organization
 Apply to a company as a whole entity or to a specific project within a company that may be organized overall by other
means.
 A number of considerations go into the design and must be integrated into company planning.
 Difficult to change a structure once it is in place and thus it is important to think carefully during the planning phase.

18. ADVANTAGES :
 Benefits of a vertical organizational structure can include tight control and consistency within
a company.
 When only a limited number of people can make decisions, those decisions tend to be
consistent in nature
 Company personnel may be less likely to conflict with each other in their decisions and
public statements.
 Staff members also have clear guidance ,when it comes to seeking permission for activities,
requesting assistance, and performing other tasks.

19. LIMITATIONS :
 The inability to make some decisions on a lower level can create lag when it comes to implementing
decisions.
 A situation that could have been defused by a low-level employee might escalate, creating problems for
the company.
 contribute to inconsistency and problems like not knowing who to turn to when an authority figure is
needed.
 tend to trap a company in outdated techniques and practices because it may take longer to implement
changes.

21. APPROACHES TO STRUCTURE OF
ORGANIZATION
VIRTUAL MATRIX STRATERGIC DECENTRALIZED TEAM
APPROACHES TOWARDS STRUCTURE OF ORGANIZATION

22. VIRTUAL STRUCTURAL APPROACH
It defines the VIRTUAL appearance of the organization. This clearly depicts the
hierarchal structure.
In this type the task is divided among the Departmental sections i.e H.R.M ,
MARKETING , R&D , FINANCE , PRODUCTION.

23. MATRIX STRUCTURAL APPROACH
It combines Functional specialization with the focus of divisional structure.
It uses CROSS-FUNCTIONAL teams to integrate functional expertise with a divisional
focus.
 It increases flexibility and better customer service results in improvement of strategic
development.

24. STRATERGIC BUSINESS UNITS
 An S.B.U is a grouping of functional units that
are responsible for the Profit or loss of the
business units.
 It is a “customer focused organizational
structure”

25. DECENTRALISED BUSINESS UNIT STRUCTURE
In a Diversified firm the basic organizational building blocks are its Business
units. Each business Unit is operated as a stand alone profit centre.
The Business units of an organization should represent the quality and nature of
work done by the organization.

26. TEAM APPROACH OF ORGANIZATION
It organizes separate functions into group based on an overall objective or Goal.
These cross-functional teams are comprised of members from different departments who
work together as needed to solve problems & explore opportunities.
ADVANTAGES :-
Intra-departmental barriers break down.
Levels are managers are eliminated and employees feel motivated.
DISADVANTAGES :-
Conflicting Loyalties among team members & Time management issues.

27. Challenges of Management :
Management can be defined as a continuous process of planning , organizing
, directing ,and controlling to use limited resources such as men , machine ,
money and methods for fulfilling the predetermined objective.
Hence the challenges of the management can be at any level of the process
in utilizing the resources to get the work done.
The increasing pace of business in organization and in world create a
complex & dynamic environment , where managers must continuously adapt
to these changing conditions,

28.  “ Managers look at change as constant in their lives”.
In the overview of management practice , there are 3 concurrent new possibilities for
forging relationship changes that managers deal with
1. Need for vision
2. Need for ethics
3. Need for responsiveness to cultural diversity.
NEED FOR VISION
 The world is being reshaped ,both by technology and by political boundaries and alliances.
These new changes means that managers face new possibilities for forging relationships ,
that will carry organization into future.

29. A vision for living through and benefiting from these changing circumstances is important to
any manager,
Manager with vision created those new relationships.
NEED FOR ETHICS
 The study of who is – and should be – benefited or harmed by an action is called ethics. Ethics
deal with both conflict and opportunity in human resource.
 Ethical questions deal with right and wrong where the magnitude of decision is often great.
 Decisions made by managers in organization have a broad reach both inside and outside the
organization.

30. Thus managers must be concerned with values and decisions.
For example increasing alarm over industrial pollution is just over remainder that manager
inevitably allocate advantages and disadvantages no matter what they do.
NEED FOR RESPONSIVENESS TO CULTURAL DIVERSITY
Managers’ of today’s organization must be prepared to deal with diversity in their
organization and to draw on the talents of all their employees.
Managers find it necessary to rethink traditional policies to accommodate the varying
interests and needs of diverse groups of people.

31. Introduction
• In the past three to four decades , many management theorists and writers hav
made remarkable contribution
in the study of management.
• By studying the various approaches to management analysis , we can
understand the concept of management and have a better understanding of
managerial functions.
Approaches to Management

32. Some of various approaches to management analysis have been listed below:
• Socio-technical system approach
• Decision theory approach
• System approach
• Mathematical approach

33. Socio-technical system approach
• It realizes the impact of technical systems on personal attitudes and
group behaviour.
• This approach focuses on areas involving close relationships between
technical systems and the people involved.
Limitation
• Emphasis only on blue-collar and lower level office.
• Ignore much of other managerial knowledge.

34. Decision theory approach
• The focus in this approach is on the decision-making process and
people involved in it.
• Management is essentially Decision-making
• Quality of decision affects the organizational effectiveness.
Limitation
• There is more to managing than making decisions
• The focus is at the same time too narrow and too wide..

35. System approach
• It considers organizations to be open systems as they interact with
the external environment.
• It recognizes the importance of the inter-relationship between
planning , organizing , controlling.
Following is the diagrammatic representation of the system approach:
Transformation
External
Environment
Input Output
Feedback

36. Mathematical approach
• This also known as “ Management Science”
• This approach treats management as a logical process , which can be
expressed in terms of mathematical symbols and relationships.
Limitation
• Many aspects in managing cannot be modeled.
• Mathematics is a useful tool , but hardly an approach to
Management.

37. INTRODUCTION
 To enable managers effectively control the organizational
activities, a large number of controlling techniques are available.
 A manager should know these techniques and in which situation
it should be applied.
 There are two types of techniques of controlling.
Control Techniques
 Traditional techniques
 Modern techniques

38. TRADITIONAL TECHNIQUES
1. Personal observation
2. Budgeting
3. Break-even analysis
4. Financial statement
5. Statistical data & report
6. Setting examples
7. Standard costing
8. Written instructions

39. BUDGETING
 Meaning-
 A budget is a statement which
reflects future incomes
,expenditures & profits of the firm.
 Benefit of budgeting-
1. Standards of performance
2. Planning
3. Predicting the future
4. Financial planning

40. BREAK EVEN ANALYSIS
 It deals with the study of the relationship between costs, volume, &
profit.
 It determines the probable profit and losses at different levels of
activity.
 The sales volume at which there is no profit, no loss is known as
breakeven point.
 It can be calculated as ,
 Breakeven point=fixed cost/selling price per unit – variable cost per
unit.

41. FINANCIAL STATEMENT
 Financial statements shows financial position of a firm
over a period of time, generally one year.
 These are prepared along with last year statements, so
that firm can compare its present performance with last
year’s performance & improve its future performance.
 It offers information on ,
1. Liquidity
2. Financial strength
3. profitability

42. MODERN TECHNIQUES
1. Return on investment.
2. Management audit.
3. Management information system (MIS).
4. PERT/CPM.

43. RETURN ON INVESTMENT
 Investment consists of fixed asset and working capital used in
business.
 Profit on the investment is a reward for risk taking.
 If the ROI is high then the financial performance of a business is
good and vice-versa.
 It also shows the areas where corrective actions are needed.

44. MANAGEMENT AUDIT
 Management Audit is an evaluation of the management as a
whole. It critically examines the full management process.
 It finds out the efficiency of the management.
 Management auditing is conducted by a team of experts.
 The data is analyzed and conclusions are drawn about
managerial performance and efficiency.

45. •Multidisciplinary.
•Dynamic nature of principles.
•Relative but not absolute principles.
•Management is a science as well as an art.
•Group Effort.
•Management is universal in nature
Nature of Management

46. Multidisciplinary
Management gets concepts and information
from many disciplines.

47. Dynamic of Nature of Principles
Principles changes with the change in environment.

48. Group Effort
we’ll have many departments in a business, success can be
obtained only if all of them work as a group towards a
common organizational goal.
TEAM – TOGETHER EVERYONE ACHIEVES MORE.

49. Management is a science as well as an art
Why science?
Management consists of well defined principles which have
wide applications.
Why art?
The skills required to carry out those applications are a
personal possession of the manger.

50. Functions of a Manager
Planning
Organizing
Staffing
Leading
Controlling

51. Planning
 First and foremost function in the
management process.
 Planning tells us “what to do”.
 Planning is forward looking.
 Planning is an integrated process.

52. Organizing
Since planning tells what to do,
organizing tells “how to do”.
Organizing is of identifying, classifying
and grouping of similar activities and
assigning them to a person.

53. Staffing
Now a days, staffing is well known as Human
resource management.
It involves recruiting and managing of
personnel.
It also deals with compensation evaluation and
performance appraisal

54. Leading
Leading is about motivating, directing the
employees towards the achievement of
organizational goals.
 This is about boosting up the morale of the
employees of the organization.

55. Control
Control is the tool used to measure the
performance of an individual.
Control is a lot different from supervision,
infact supervision is a part of control.
Control is monitoring the progress of an
organization towards it’s goals.

56. Thank
You