Business-Studies---Part-1---Class-12

Business Studies Part I Principles and Functions of Management Textbook for Class XII 2018-19

ISBN 81-7450-697-7 First Edition ALL RIGHTS RESERVED May 2007 Chaitra 1928  No part of this publication may be reproduced, stored in a retrieval Reprinted system or transmitted, in any form or by any means, electronic, December 2007 Agrahayana 1929 mechanical, photocopying, recording or otherwise without the prior March 2009 Chaitra 1930 permission of the publisher. January 2010 Magha 1931 January 2011 Magha 1932  This book is sold subject to the condition that it shall not, by way of January 2012 Magha 1933 trade, be lent, re-sold, hired out or otherwise disposed of without January 2013 Magha 1934 the publisher’s consent, in any form of binding or cover other than November 2013 Kartika 1935 that in which it is published. December 2014 Pausa 1936 January 2016 Pausa 1937  The correct price of this publication is the price printed on this page, December 2016 Pausa 1938 Any revised price indicated by a rubber stamp or by a sticker or January 2018 Magha 1939 by any other means is incorrect and should be unacceptable. PD 300T HK OFFICES OF THE PUBLICATION Phone : 011-26562708 Phone : 080-26725740 © National Council of Educational DIVISION, NCERT Phone : 079-27541446 Research and Training, 2007 Phone : 033-25530454 NCERT Campus Sri Aurobindo Marg Phone : New Delhi 110 016 108, 100 Feet Road Hosdakere Halli Extension Banashankari III Stage Bengaluru 560 085 Navjivan Trust Building P.O.Navjivan Ahmedabad 380 014 CWC Campus Opp. Dhankal Bus Stop Panihati Kolkata 700 114 CWC Complex Maligaon Guwahati 781 021 0361-2674869 ` 95.00 Publication Team Printed on 80 GSM paper with NCERT Head, Publication : M. Siraj Anwar watermark Division Published at the Publication Division by the Secretary, National Council Chief Editor : Shveta Uppal of Educational Research and Training, Sri Aurobindo Marg, Chief Business Manager : Gautam Ganguly New Delhi 110 016 and printed at Gopsons Paper Limited, A-2 & 3, Chief Production : Arun Chitkara Sector-64, Noida - 201 301 (U.P.) Officer (In-charge) Assistant Editor : Vijay Kumar Production Assistant : Sunil Kumar Cover Shweta Rao Layout and Illustrations Ashwani Tyagi 2018-19

Foreword The National Curriculum Framework (NCF), 2005, recommends that children’s life at school must be linked to their life outside the school. This principle marks a departure from the legacy of bookish learning which continues to shape our system and causes a gap between the school, home and community. The syllabi and textbooks developed on the basis of NCF signify an attempt to implement this basic idea. They also attempt to discourage rote learning and the maintenance of sharp boundaries between different subject areas. We hope these measures will take us significantly further in the direction of a child-centred system of education outlined in the National Policy on Education (1986). The success of this effort depends on the steps that school principals and teachers will take to encourage children to reflect on their own learning and to pursue imaginative activities and questions. We must recognise that, given space, time and freedom, children generate new knowledge by engaging with the information passed on to them by adults. Treating the prescribed textbook as the sole basis of examination is one of the key reasons why other resources and sites of learning are ignored. Inculcating creativity and initiative is possible if we perceive and treat children as participants in learning, not as receivers of a fixed body of knowledge. These aims imply considerable change in school routines and mode of functioning. Flexibility in the daily time-table is as necessary as rigour in implementing the annual calendar so that the required number of teaching days are actually devoted to teaching. The methods used for teaching and evaluation will also determine how effective this textbook proves for making children’s life at school a happy experience, rather than a source of stress or boredom. Syllabus designers have tried to address the problem of curricular burden by restructuring and reorienting knowledge at different stages with greater consideration for child psychology and the time available for teaching. The textbook attempts to enhance this endeavour by giving higher priority and space to opportunities for contemplation and wondering, discussion in small groups, and activities requiring hands-on experience. The National Council of Educational Research and Training (NCERT) appreciates the hard work done by the textbook development committee 2018-19

iv responsible for this book. We wish to thank the Chairperson of the advisory group in Social Sciences Professor Hari Vasudevan and the Chief Advisor for this book, Professor D.P.S. Verma (Retd.) Delhi School of Economics, University of Delhi and Dr. G.L. Tayal, Reader, Ramjas College, University of Delhi for guiding the work of this committee. Several teachers contributed to the development of this textbook; we are grateful to their principals for making this possible. We are indebted to the institutions and organisations which have generously permitted us to draw upon their resources, material and personnel. We are especially grateful to the members of the National Monitoring Committee, appointed by the Department of Secondary and Higher Education, Ministry of Human Resource Development under the Chairpersonship of Professor Mrinal Miri and Professor G.P. Deshpande, for their valuable time and contribution. As an organisation committed to the systemic reform and continuous improvement in the quality of its products, NCERT welcomes comments and suggestions which will enable us to undertake further revision and refinement. Director New Delhi National Council of Educational 20 November 2006 Research and Training 2018-19

Textbook Development Committee Chairperson, Advisory Committee for Textbooks in Social Sciences at Senior Secondary Level Hari Vasudevan, Professor, Department of History, University of Calcutta, Kolkata Chief Advisor D.P.S. Verma, Retired Professor, Department of Commerce, Delhi School of Economics, University of Delhi, Delhi. Advisor G.L. Tayal, Reader, Ramjas College, University of Delhi, Delhi. Members Anand Saxena, Reader, Deen Dayal Upadhyaya College, University of Delhi. Davinder K. Vaid, Professor, Department of Education in Social Sciences and Humanities, NCERT, New Delhi. M.M. Goyal, Reader, PG DAV College, University of Delhi. Narsimha Murthy, Principal, University Post-Graduate College, Subedari, Anam Konda, Distt. Warangal, Andhra Pradesh. Pooja Dasani, PGT (Commerce) Convent of Jesus and Mary, Gol Dakkhana, New Delhi. R.B. Solanki, Principal, B.R. Ambedkar College, University of Delhi. Ruchi Kakkar, Lecturer, Acharya Narendra Dev College, University of Delhi. Shruti Bodh Aggarwal, Vice-Principal, Rajkiya Pratibha Vikas Vidyalaya, Kishanganj, Delhi. Sumati Verma, Reader, Sri Aurobindo College, University of Delhi. Y.V. Reddy, Reader, Department of Commerce, Goa University, Goa. Member Coordinator Minoo Nandrajog, Reader, Department of Education in Social Sciences and Humanities, NCERT, New Delhi. 2018-19

Note to the Teacher This textbook is expected to provide a good understanding of the environment in which a business operates. A manager has to analyse the complex, dynamic situations in which a business is placed. Therefore, content enrichment in the form of business news and abstracts of articles from business journals and magazines has been given as inset material (boxes). This will encourage students to be observant about all business activity and discover what is happening in business organisations with the expectation that they will update their knowledge through the use of libraries, newspapers, business oriented TV programmes and the internet. Various types of questions are given and case problems have been introduced to test the application of subject knowledge to realistic business situations. Acknowledgements The National Council of Educational Research and Training acknowledges the valuable contributions of the following persons in preparing exercises, activities and projects for the textbook: Seema Srivastava, Lecturer, Inservice Department, DIET, Moti Bagh, New Delhi; Rajni Rawal, Vice–Principal, Rajkiya Pratibha Vikas Vidyalaya, Paschim Vihar, Delhi; Shruti Bodh Aggarwal, Vice Principal, Rajkiya Pratibha Vikas Vidyalaya, Kishanganj, Delhi; Manju Chawla, PGT Commerce, Rajkiya Pratibha Vikas Vidyalaya, Surajmal Vihar, Delhi; Shivani Nagrath, PGT Commerce, Summer Fields School, Kailash Colony, New Delhi. Special thanks are due to Savita Sinha, Professor and Head, Department of Education in Social Sciences and Humanities, NCERT for her support and guidance, during the development of this book. The Council acknowledges the efforts of Computer Incharge, Dinesh Kumar; DTP Operator, Uttam Kumar, Archana Gupta and Sr. Proof Reader, NCERT, Rishi Pal Singh. 2018-19

Contents Foreword iii 1 Chapter 1 Nature and Significance of Management 31 72 Chapter 2 Principles of Management 95 112 Chapter 3 Business Environment 146 178 Chapter 4 Planning 215 Chapter 5 Organising Chapter 6 Staffing Chapter 7 Directing Chapter 8 Controlling 2018-19

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NATURE AND SIGNIFICANCE 1 OF MANAGEMENT CHAPTER Management at HCL LEARNING OBJECTIVES At a time when India had a total of 250 computers, Shiv Nadar led a young team which passionately believed in the growth After studying this of the indigenous IT industry. That vision in 1976, born out of chapter, you should a Delhi ‘barsaati’, has resulted three decades later in creating a be able to: US $ 3.5 billion global enterprise. HCL is today a leader in the IT industry, employing 41,000 professionals and having a global n Describe the presence in 16 countries spanning locations in the US, Europe, characteristics of Japan, ASEAN and the Pacific Rim. HCL’s business today spans management and IT hardware manufacturing and distribution, system integration, its importance in technology and software services, business process outsourcing, an organisation; and infrastructure management. HCL Enterprises is a leader in global technology and IT services. n Explain the nature of management HCL’s basic plan of developing an indigenous microcomputer as an art, science bore fruit in 1978 at the same time as Apple and three years and profession; before IBM. This was considered by many industry observers as the birth of the Indian computer industry. Under the able n Explain the direction of its founding fathers it commenced global operations functions of in the US in 1988. Shiv Nadar’s risk-taking ability is legendary management; and and he has often made daring forays based on his conviction of the future. At a time when hardware was the name of the game, n Appreciate Nadar foresaw the huge potential in the area of IT education and the nature and learning from which NIIT was born. Yet again when software importance of development was still in the nascent stages, Shiv Nadar took coordination. the lead and today HCL is a force to reckon with in the global markets. The organisation structure of HCL Enterprises consists of two listed companies in India – HCL Technologies and HCL Infosystems. Shiv Nadar, Chairman and CEO, attributes the success of the group to its management team and their entrepreneurial spirit, which together have enabled it to handle rapid changes in environments and technologies, and to transform threats into opportunities. Fundamental to the process has been the development of new paradigms for the unprecedented situations into which the group ventures. These include guidelines for organisation restructuring, market creation, technology leveraging 2018-19

2 Business Studies and business up-scaling. Like any other business enterprise profits are important for the survival and growth of HCL as an enterprise. At HCL the management believes that a satisfied employee creates a satisfied customer, who in turn creates profits that lead to satisfied shareholders. HCL has a strong sense of social responsibility. It has set up educational institutions in the fields of management, engineering and computer education, in which one-third of the students are girls. According to Shiv Nadar, the future belongs to the global enterprise which is able to transform itself according to the challenges of global economy. Source: www.hcl.in Introduction Suhasini to the rural artisans who actually implement them. The above case is an example of a successful organisation which Fabmart is a private limited is amongst the top companies in company with several branches all India. It has risen to the top because over the country. It has a complex of its quality of management. organisation structure in which Management is required in all kinds actual production is in the hands of of organisations whether they are several skilled artisans and marketing manufacturing computers or hand- is done by staff at branches such as looms, trading in consumer goods the one managed by Suhasini. This or providing hairstyling services and means constantly providing direction even in non-business organisations. and motivation to her employees. She Let us take another example. also has to ensure that production is carried out according to plans in Suhasini is the branch manager order to ensure regular sales. of Fabmart, an organisation that promotes the sales of Indian A typical day in Suhasini’s life handloom and handicraft products consists of a series of interrelated while providing equitable employment and continuous functions. She has to traditional artisans. Fabmart to plan a special festive collection sources its products from over 7500 for Diwali and Christmas. This craft persons and artisans across means organising more funds and India. Planning the products is a recruiting more artisans. She also difficult task that is done by a team has to regularly communicate with of marketing and design experts to her suppliers to ensure that deadlines ensure that whatever is produced is regarding delivery of goods are met. according to market demand. These In the course of the day she meets plans are then communicated by customers for a general feedback 2018-19

Nature and Significance of Management 3 and any suggestions that they Management is essential for all may have. organisations big or small, profit or Suhasini is the manager of non-profit, services or manufacturing. Fabmart. So is Nusli Wadia of Bombay Management is necessary so that Dyeing, Bill Gates of Microsoft, Shiv individuals make their best contri- Nadar of HCL Enterprises, Indra bution towards group objectives. Nooyi of Pepsico and the Principal Management consists of a series of your school. They all manage of interrelated functions that are organisations. Schools, hospitals, performed by all managers. Shiv shops and large corporations are all Nadar, the CEO of HCL Enterprises organisations with diverse goals that performs all these functions and so are aimed at achieving something. does Suhasini at Fabmart. Later in No matter what the organisation is or this chapter you will understand that what its goals might be, they all have although both of them are managers, something in common – management they function at different levels in and managers. the organisation. The time spent You have observed that Suhasini’s by managers in different functions work as a manager consists of however is different. Managers at the a series of different activities or top level spend more time in planning functions aimed at achieving the and organising than managers at goals of the organisation. These lower levels of the organisation. interconnected and interdependent Concept functions are part of management. Successful organisations do not Management is a very popular term achieve their goals by chance but and has been used extensively for by following a deliberate process all types of activities and mainly for called ‘management’. taking charge of different activities in Definitions of Management “Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.” Harold Koontz and Heinz Weihrich “Management is defined as t he process of planning, organising, actuating and controlling an organisation’s operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives.” Robert L. Trewelly and M. Gene Newport “Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment.” Kreitner 2018-19

4 Business Studies any enterprise. As you have seen from also, i.e., being efficient or as we say the above example and case study doing work efficiently. that management is an activity which is necessary wherever there is a group Efficiency means doing the task of people working in an organisation. correctly and with minimum cost. People in organisations are performing There is a kind of cost-benefit diverse tasks but they are all working analysis involved and the relationship towards the same goal. Management between inputs and outputs. If aims at guiding their efforts towards by using less resources (i.e., the achieving a common objective — a inputs) more benefits are derived goal. Thus, management has to see (i.e., the outputs) then efficiency has that tasks are completed and goals increased. Efficiency is also increased are achieved (i.e., effectiveness) with when for the same benefit or outputs, the least amount of resources at a fewer resources are used and less minimum cost (i.e., efficiency). costs are incurred. Input resources are money, materials, equipment and Management, has therefore, been persons required to do a particular defined as a process of getting things task. Obviously, management is done with the aim of achieving goals concerned with the efficient use effectively and efficiently. We need of these resources, because they to analyse this definition. There reduce costs and ultimately lead to are certain terms which require higher profits. elaboration. These are (a) process, (b) effectively, and (c) efficiently. Effectiveness versus Eff iciency Process in the definition means the primary functions or activities that These two terms are different but they management performs to get things are interrelated. For management, done. These functions are planning, it is important to be both effective organising, staffing, directing and and efficient. Effectiveness and controlling which we will discuss later efficiency are two sides of the same in the chapter and the book. coin. But these two aspects need to be balanced and management Being effective or doing work at times, has to compromise with effectively basically means finishing efficiency. For example, it is easier the given task. Effectiveness in to be effective and ignore efficiency management is concerned with doing i.e., complete the given task but at a the right task, completing activities high cost. Suppose, a company’s target and achieving goals. In other words, it production is 5000 units in a year. To is concerned with the end result. achieve this target the manager has to operate on double shifts due to power But it is not enough to just complete the tasks. There is another aspect 2018-19

Nature and Significance of Management 5 failure most of the time. The manager (i) Management is a goal-oriented is able to produce 5000 units but at a process: An organisation has a higher production cost. In this case, set of basic goals which are the the manager was effective but not so basic reason for its existence. efficient, since for the same output, These should be simple and more inputs (labour cost, electricity clearly stated. Different organ­ costs) were used. isations have different goals. For example, the goal of a retail store At times, a business may con- may be to increase sales, but the centrate more on producing goods goal of The Spastics Society of with fewer resources i.e., cutting India is to impart education to down cost but not achieving the children with special needs. target production. Consequently, the Management unites the efforts goods do not reach the market and of different individuals in the hence the demand for them declines organisation towards achieving and competitors enter the market. these goals. This is a case of being efficient but not effective since the goods did not (ii) Management is all pervasive: reach the market. The activities involved in managing an enterprise are common to all Therefore, it is important for organisations whether economic, management to achieve goals social or political. A petrol pump (effectiveness) with minimum needs to be managed as much resources i.e., as efficiently as possible as a hospital or a school. What while maintaining a balance between managers do in India, the USA, effectiveness and efficiency. Usually Germany or Japan is the same. high efficiency is associated with How they do it may be quite high effectiveness which is the aim of different. This difference is due all managers. But undue emphasis to the differences in culture, on high efficiency without being tradition and history. effective is also not desirable. Poor management is due to both ineffi- (iii) Management is multidimen- ciency and ineffectiveness. sional: Management is a complex activity that has three main Characteristics of dimensions. These are: Management (a) Management of work: All organisations exist for the After going through some of the performance of some work. In definitions we find some elements a factory, a product is that may be called the basic manufactured, in a garment characteristics of management: 2018-19

6 Business Studies The Management Mantra from GE Jack Welch was appointed CEO of GE in 1981. At that time the firm had a market capitalisation of $13 billion. In 2000 when he stepped down the firm’s turnover had increased multifold to $500 billion. What was the secret of Welch’s success? He has laid down the following pointers for managers to be successful: n Create a vision and then ignite your organisation to make this vision a reality. Get people so passionate about what they are doing that they cannot wait to execute this plan. Have great energy, competitive spirit and the ability to spark excitement and achieve results. Search for leaders who have the same qualities. n Focus on strategic issues. Your job is to understand the vital issues within each of your businesses. Recognise the talent needed to win in those markets. n Focus on the main issue . Your job is to see the big picture. Don’t manage every detail. Don’t get caught up in the minute details, but instead inspire others to execute some of your vision. Surround yourself with great people and trust them to do their job and contribute their best to the organisation. n Involve everyone and welcome great ideas from everywhere. Anyone can be a leader, just so long as they contribute, and the most meaningful way for anyone to contribute is to come up with a good idea. Business is all about getting the best ideas from everyone. New ideas are the lifeblood of the organisation, the fuel that makes it run. “The hero is the person with a new idea.” There is simply nothing more important to an organisation than expressing ideas and creating a vision. n Lead by example. To spark others to perform, you must lead by example. Jack Welch’s mastery of the four E’s of leadership – Energy, Energise, Edge, and Execution – was always in evidence. “He had great energy, sparked others, had incredible competitive spirit, and had a record of execution that was second to none. This is a key of the Welch phenomenon. Had he been lacking in any of the traits he espoused, he would not have commanded such acclaim.” Source: www.ge.co.in store a customer’s need is (b) Management of people: Human satisfied and in a hospital a resources or people are an patient is treated. Management organisation’s greatest asset. translates this work in terms Despite all developments in of goals to be achieved and technology “getting work done assigns the means to achieve through people” is still a major it. This is done in terms of task for the manager. Managing problems to be solved, people has two dimensions decisions to be made, plans to (i) it implies dealing with be established, budgets to be employees as individuals with prepared, responsibilities to diverse needs and behavior; be assigned and authority to (ii) it also means dealing with be delegated. individuals as a group of people. 2018-19

Nature and Significance of Management 7 The task of management is to is interlinked with both the make people work towards management of work and the achieving the organisation’s management of people. goals, by making their strengths (iv) Management is a continuous effective and their weaknesses process: The process of manage- irrelevant. ment is a series of continuous, (c) Management of operations: No composite, but separate functions matter what the organisation, (planning, organising, directing, it has some basic product or staffing and controlling). These service to provide in order to functions are simultaneously survive. This requires a prod- performed by all managers all the uction process which entails time. You may have observed that the flow of input material and Suhasini at Fabmart performs the technology for transfor- several different tasks in a single ming this input into the desired day. Some days she may spend output for consumption. This more time in planning a future Together Everyone Achieves More as a Team 2018-19

8 Business Studies exhibition and on another day gement should enable all its she may spend time in sorting members to grow and develop as out an employee’s problem. The needs and opportunities change. task of a manager consists of an (vi) Management is a dynamic ongoing series of functions. function: Management is a (v) Management is a group activity: dynamic function and has to An organisation is a collection of adapt itself to the changing diverse individuals with different environment. An organisation needs. Every member of the group interacts with its external envi- has a different purpose for joining ronment which consists of the organisation but as members various social, economic and of the organisation they work political factors. In order to be towards fulfilling the common successful, an organisation must organisational goal. This requires change itself and its goals team work and coordination of according to the needs of the individual effort in a common environment. You probably know direction. At the same time mana- that McDonalds, the fast food Management – a multidimensional activity 2018-19

Nature and Significance of Management 9 giant made major changes in its and material resources to the menu to be able to survive in the maximum possible advantage, Indian market. i.e., to fulfill the economic objectives of a business. These (vii) Management is an intangible are survival, profit and growth. force: Management is an intangi­ Survival: The basic objectives ble force that cannot be seen but of any business is survival. its presence can be felt in the Management must strive to ensure way the organisation functions. the survival of the organisation. In The effect of management is order to survive, an organisation noticeable in an organisation must earn enough revenues to where targets are met according to cover costs. plans, employees are happy and Profit: Mere survival is not enough satisfied, and there is orderliness for business. Management has instead of chaos. to ensure that the organisation makes a profit. Profit provides a Objectives of Management vital incentive for the continued successful operation of the Management seeks to achieve enterprise. Profit is essential for certain objectives which are the covering costs and risks of the desired result of any activity. They business. must be derived from the basic purpose Growth: A business needs to add of the business. In any organisation to its prospects in the long run, there are different objectives and for this it is important for the management has to achieve all business to grow. To remain in objectives in an effective and efficient the industry, management must manner. Objectives can be classified exploit fully the growth potential into organisational objectives, social of the organisation. Growth of objectives and personal or individual a business can be measured in objectives. terms of sales volume increase in the number of employees, (i) Organisational Objectives: the number of products or the Management is responsible for increase in capital investment, setting and achieving objectives etc. There can be other indicators for the organisation. It has to of growth. achieve a variety of objectives in (ii) Social objectives: It involves all areas considering the interest the creation of benefit for of all stakeholders including, society. As a part of society, shareholders, employees, cust­ every organisation whether it is omers and the government. The main objective of any organisation should be to utilise human 2018-19

10 Business Studies business or non-business, has amenities like schools and a social obligation to fulfill. This crèches to employees. The box refers to consistently creating given below illustrates how a economic value for various company can fulfill its social constituents of society. This responsibility. includes using environmental (iii) Personal objectives: Organi- friendly methods of production, sations are made up of people giving employment opportunities who have different personalities, to the disadvantaged sections backgrounds, experiences and of society and providing basic objectives. They all become part ITC – Empowering Rural India A quiet digital revolution is reshaping the lives of farmers in remote Indian villages. In these villages, farmers grow soyabeans, wheat and coffee in small plots of land, as they have done for thousands of years. A typical village has no reliable electricity and has antiquated telephone lines. The farmers are largely illiterate and have never seen a computer. But farmers in these villages are conducting e-business through an initiative called E-Choupal, created by ITC, one of India’s largest consumer product and agribusiness companies. ITC’s E-Chaupal initiative is a fine example of a business organisation fulfilling corporate social responsibility. The basic aim of the programme is to provide farmers in rural India with the opportunity to make use of a direct marketing channel eliminating multiple intermediation and wasteful handling and unnecessary transaction costs. It is the single-largest information technology-based intervention by a corporate entity in rural India, transforming the Indian farmer into a progressive knowledge-seeking citizen, enriching him with knowledge and elevating him to a new order of empowerment. E-Choupal delivers real-time information and customised knowledge to improve the farmer’s decision-making ability, thereby better aligning farm output to market demands; securing better quality, productivity and improved price discovery. Given the low levels of literacy in the rural sector, the role of the Choupal Sanchalak, the lead farmer of the village, in facilitating physical interface between the computer terminal and the farmers is central to the project. E-Choupal Smart Cards enable farmer identification to provide customised information on the E-Choupal website. Online transactions are captured to reward farmers for volume and value of usage. The E-Chaupal initiative has found its way into the Harvard Business School as a leading case study illustarating the use of modern technology by a leading business house for the benefit of the rural poor. Source: Mohanbir Sawhney, McCormick Tribune Professor of Technology, Kellogg School of Management, USA. 2018-19

Nature and Significance of Management 11 of the organisation to satisfy as it often means moving from a their diverse needs. These vary familiar, secure environment into from financial needs such as a newer and more challenging competitive salaries and perks, one. Management helps people social needs such as peer adapt to these changes so that the recognition and higher level organisation is able to maintain needs such as personal growth its competitive edge. and development. Management (iv) Management helps in achieving has to reconcile personal goals personal objectives: A manager with organisational objectives for motivates and leads his team in harmony in the organisation. such a manner that individual members are able to achieve Importance of Management personal goals while contributing to the overall organisational Having understood that management objective. Through motivation and is a universal activity that is integral leadership the management helps to any organisation we now examine individuals to develop team spirit, some of the reasons that have made cooperation and commitment to management so important: group success. (i) Management helps in achieving (v) Management helps in the development of society: An orga- group goals: Management nisation has multiple objectives is required not for itself but to serve the purpose of the for achieving the goals of the different groups that constitute it. organisation. The task of a manager In the process of fulfilling all is to give a common direction to the these, management helps in the individual effort in achieving the development of the organisation overall goal of the organisation. and through that it helps in the (ii) Management increases effici­ development of society. It helps to ency: The aim of a manager is provide good quality products to reduce costs and increase and services, creates employment productivity through better opportun­ ities, adopts new techno- planning, organising, directing, logy for the greater good of the staffing and controlling the people and leads the path towards activities of the organisation. growth and development. ( iii) Management creates a dynamic organisation: All organisations Nature of Management have to function in an environment which is constantly changing. It Management is as old as civilisation. is generally seen that individuals Although modern organisations are in an organisation resist change 2018-19

12 Business Studies of recent origin, organised activity has art is concerned with personal existed since the time of the ancient application of knowledge some kind civilisations. In fact, organisations of ingenuity and creativity is required may be considered the distinguishing to practice the basic principles learnt. feature that separated civilised society The basic features of an art are from uncivilised ones. The earliest as follows: management practices were a set of (i) Existence of theoretical rules and regulations that grew out of the experiences of governmental knowledge: Art presupposes the and commercial activities. The existence of certain theoretical development of trade and commerce knowledge. Experts in their gradually led to the development of respective areas have derived management principles and practices. certain basic principles which are applicable to a particular form of The term ‘management’ today has art. For example, literature on several different connotations that dancing, public speaking, acting highlight the different aspects of its or music is widely recognised. nature. The study of management has (ii) Personalised application: The evolved over a period of time along use of this basic knowledge varies with the modern organisations; based from individual to individual. both on the experience and practice Art, therefore, is a very person­ of managers and a set of theoretical alised concept. For example, two relationships. Over a period of time, dancers, two speakers, two actors, it has grown into a dynamic subject or two writers will always differ in with its own special characteristics. demonstrating their art. However, one question that needs (iii) Based on practice and to be addressed pertaining to the creativity: All art is practical. nature of management is whether Art involves the creative practice it is a science or an art or both? of existing theoretical knowledge. In order to answer this let us We know that all music is based examine the features of both science on seven basic notes. However, and art to see how far management what makes the composition of fulfills them. a musician unique or different is his use of these notes in a Management as an Art creative manner that is entirely his own interpretation. What is art? Art is the skillful and Management can be said to be an art personal application of existing since it satisfies the following criteria: knowledge to achieve desired results. (i) A successful manager practices It can be acquired through study, the art of management in the observation and experience. Since 2018-19

Nature and Significance of Management 13 day-to-day job of managing qualities such as ambition, self- an enterprise based on study, motivation,creativityandimagination, observation and experience. There a desire for development of the self is a lot of literature available in and the organisation they belong to. various areas of management like All management practices are based marketing, finance and human on the same set of principles; what resources which the manager has distinguishes a successful manager to specialise in. There is existence from a less successful one is the of theoretical knowledge. ability to put these principles into (ii) There are various theories of practice. management, as propounded by many management thinkers, Management as a Science which prescribe certain universal principles. A manager applies Science is a systematised body of these scientific methods and body knowledge that explains certain of knowledge to a given situation, general truths or the operation of an issue or a problem, in his own general laws. The basic features of unique manner. A good manager science are as follows: works through a combination of (i) Systematised body of knowledge: practice, creativity, imagination, initiative and innovation. A Science is a systematic body manager achieves perfection of knowledge. Its principles are after long practice. Students of based on a cause and effect management also apply these relationship. For example, the principles differently depending phenomenon of an apple falling on how creative they are. from a tree towards the ground is (iii) A manager applies this acquired explained by the law of gravity. knowledge in a personalised (ii) Principles based on experimen- and skillful manner in the light tation: Scientific principles are of the realities of a given situation. first developed through observation He is involved in the activities of and then tested through repeated the organisation, studies critical experimentation under controlled situations and formulates his conditions. own theories for use in a given ( iii) Universal validity: Scientific situation. This gives rise to principles have universal validity different styles of management and application. The best managers are committed Based on the above features, we and dedicated individuals; highly can say that management has some trained and educated, with personal characteristics of science. (i) Management has a systematised body of knowledge. It has its 2018-19

14 Business Studies Some Interesting Cross-disciplinary Perspectives Anthropology – Anthropology is the study of societies, which helps us learn about human beings and their activities. Anthropologists’ work on cultures and environments, for instance, has helped managers to better understand differences in fundamental values, attitudes, and behavior between people in different countries and within different organisations. Economics – Economics is concerned with the allocation and distribution of scarce resources. It provides us with an understanding of the changing economy as well as the role of competition and free markets in a global context. An understanding of free trade and protectionist policies is absolutely essential to any manager operating in the global marketplace, and these topics are addressed by economists. Philosophy – Philosophy courses inquire into the nature of things, particularly values and ethics. Ethics are standards that govern human conduct. These ethics have shaped today’s organisations by providing a basis for legitimate authority, linking rewards to performance, and justifying the existence of business and the corporate form. Political Science – Political science is the study of the behavior of individuals and groups within a political environment. Management is affected by a nation’s form of government – by whether it allows its citizens to hold property, by its citizens’ ability to engage in and enforce contracts, and by the appeal mechanisms available to redress grievances. A nation’s stand on property, contracts, and justice, in turn, shapes the type, form, and policies of its organisations. Psychology – Psychology is the science that seeks to measure, explain, and sometimes change the behaviour of humans and other animals. Today’s managers confront both a diverse customer base and a diverse set of employees. Psychologists’ efforts to understand gender and cultural diversity provide managers with a better perception of the needs of their changing customer and employee populations. Psychology courses are also relevant to managers in terms of gaining a better understanding of motivation, leadership, trust, employee selection, performance appraisals, and training techniques. Sociology – Sociology is the study of people in relation to their fellow human beings. What are some of the sociological issues that have relevance to managers? Here are a few. How are societal changes such as globalisation, increasing cultural diversity, changing gender roles, and varying forms of family life affecting organisational practices? What are the implications of schooling practices and education trends on future employees’ skills and abilities? Answers to questions such as these have a major effect on how managers operate their businesses. Source: Fundamentals of Management Stephen P. Robbins David A. DeCenzo 2018-19

Nature and Significance of Management 15 own theory and principles that Fayol which you will study in the have developed over a period next chapter. of time, but it also draws on (iii) Since the principles of mana- other disciplines such as gement are not as exact as Economics,Sociology,Psychology the principles of science, and Mathematics. Like all other their application and use is organised activity, management not universal. They have to has its own vocabulary of terms be modified according to a and concepts. For example, all given situation. However, they of us discuss sports like cricket provide managers with certain and soccer using a common standardised techniques that vocabulary. The players also can be used in different use these terms to communicate situations. These principles with each other. Similarly are also used for training and managers need to communicate development of managers. with one another with the help You must have understood from the of a common vocabulary for a foregoing discussion that manage- better understanding of their ment has features of both art and work situation. science. The practice of management (ii) The principles of management is an art. However, managers can have evolved over a period work better if their practice is based on of time based on repeated the principles of management. These experimentation and observation principles constitute the science of in different types of organisations. management. Management as an However, since management art and a science are therefore not deals with human beings and mutually exclusive, but complement human behaviour, the outcomes each other. of these experiments are not capable of being accurately Management as a Profession predicted or replicated. Therefore, management can You have understood so far that be called an inexact science. all forms of organised activity need Despite these limitations, to be managed. You would also management scholars have been have observed that organisations able to identify general principles look for individuals with specific of management. For example, qualifications and experience to scientific management principles manage them. It has also been by F.W. Taylor and Functional observed that there has been an Management principles by Henri increase in the corporate form of business on the one hand and 2018-19

16 Business Studies increasing emphasis on managed oath of ethical practice at the business concerns. Does this imply time they enter the profession. that management is a profession? To (v) Service motive: The basic motive answer this question let us examine of a profession is to serve their the salient features of a profession client’s interests by rendering and see whether management dedicated and committed service. satisfies them. The task of a lawyer is to ensure that his client gets justice. A profession has the following Management does not meet the characteristics: exact criteria of a profession. However, (i) Well-defined body of know- it does have some of the features of a profession: ledge: All professions are based on (i) All over the world there is a well-defined body of knowledge marked growth in management that can be acquired through as a discipline. It is based instruction. on a systematic body of (ii) Restricted entry: The entry to knowledge comprising well- a profession is restricted defined principles based on a through an examination or variety of business situations. through acquiring an educational This knowledge can be acquired degree. For example, to become at different colleges and professional a chartered accountant in institutes and through a number India a candidate has to clear a of books and journals. The specified examination conducted subject of management is taught by the Institute of Chartered at different institutions. Some Accountants of India. of these have been set up with (iii) Professional association: All the specific purpose of providing professions are affiliated to a management education such professional association which as the Indian Institutes of regulates entry, grants certificate Management (IIMs) in India. of practice and formulates and Entry to different institutes is enforces a code of conduct. To be usually through an examination. able to practice in India lawyers (ii) There is no restriction on anyone have to become members of the being designated or appointed Bar Council which regulates and as manager in any business controls their activities. enterprise. Anyone can be (iv) Ethical code of conduct: All called a manager irrespective of professions are bound by a code the educational qualifications of conduct which guides the possessed. behaviour of its members. All doctors, for example, take the 2018-19

Nature and Significance of Management 17 Unlike professions such as Levels of Management medicine or law which require a practicing doctor or lawyer to Shiv Nadar and Suhasini are both possess valid degrees, nowhere managers of an enterprise. Shiv Nadar in the world is it mandatory is the CEO of HCL and Suhasini is a for a manager to possess any branch manager at Fabmart. They such specific degree. But manage their enterprise at different professional knowledge and levels. Management is a universal term training is considered to be a used for certain functions performed desirable qualification, since by individuals in an enterprise who there is greater demand for those are bound together in a hierarchy of who possess degrees or diplomas relationships. Every individual in the from reputed institutions. hierarchy is responsible for successful Therefore, as such the second completion of a particular task. To be criterion has not been strictly met. able to fulfill that responsibility he is assigned a certain amount of authority (iii) There are several associations or the right to take a decision. This of practising managers in authority-responsibility relationship India, like the AIMA (All India binds individuals as superiors and Management Association) that subordinates and gives rise to different has laid down a code of conduct levels in an organisation. Generally to regulate the activities of their speaking there are three levels in the members. There is, however, hierarchy of an organisation. no compulsion for managers (i) Top Management: They consist to be members of such an association nor does it have any of the senior-most executives of the statutory backing. organisation by whatever name they are called. They are usually (iv) The basic purpose of manage- referred to as the chairman, ment is to help the organisation the chief executive officer, chief achieve its stated goal. This may operating officer, president and be profit maximisation for a vice-president. Top management business enterprise and service is a team consisting of managers for a hospital. However, profit from different functional levels, maximisation as the objective heading finance, marketing etc. of management does not hold For example chief finance officer, true and is fast changing. vice president (marketing). Their Therefore, if an organisation basic task is to integrate diverse has a good management team elements and coordinate the that is efficient and effective it activities of different departments automatically serves society by providing good quality products at reasonable prices. 2018-19

18 Business Studies according to the overall objectives (iv) motivate them to achieve of the organisation. These top desired objectives, and (v) co­- level managers are responsible operate with other departments for the welfare and survival of for smooth functioning of the the organisation. They analyse organisation. At the same time the business environment and they are responsible for all the its implications for the survival activities of first line managers. of the firm. They formulate (iii) Supervisory or Operational overall organisational goals and Management: Foremen and strategies for their achievement. supervisors comprise the lower They are responsible for all the level in the hierarchy of the activities of the business and for organisation. Supervisors directly its impact on society. The job oversee the efforts of the workforce. of the top manager is complex Their authority and responsibility and stressful, demanding long is limited according to the plans hours and commitment to the drawn by the top management. organisation. Supervisory management plays a very important role in the (ii) Middle Management: is the organisation since they interact link between top and lower level with the actual work force and pass managers. They are subordinate on instructions of the middle to top managers and superior to the first line managers. “You don’t learn management They are usually known as from books alone...” division heads, for example production manager. Middle management is responsible for implementing and controlling plans and strategies developed by top management. At the same time they are responsible for all the activities of first line managers. Their main task is to carry out the plans formulated by the top managers. For this they need to: (i) interpret the policies framed by top management, (ii) ensure that their department has the necessary personnel, (iii) assign necessary duties and responsibilities to them, 2018-19

Nature and Significance of Management 19 management to the workers. be done and who is to do it. This Through their efforts quality of implies setting goals in advance output is maintained, wastage and developing a way of achieving of materials is minimised and them efficiently and effectively. In safety standards are maintained. Suhasini’s organisation the objective The quality of workmanship and is procurement and sale of traditional the quantity of output depends Indian handloom and handicraft on the hard work, discipline and items. They sell fabrics, furnishings, loyalty of the workers. readymades and household items made out of traditional Indian fabrics. Functions of Management Suhasini has to decide quantities, variety, colour and texture of all the Management is described as the above and then allocate resources process of planning, organising, for their purchase from different directing and controlling the efforts suppliers or for their inhouse of organisational members and of development. Planning cannot using organisational resources to prevent problems, but it can predict achieve specific goals. them and prepare contingency plans Planning is the function of to deal with them if and when they determining in advance what is to occur. Organising is the management TOP function of assigning duties, grouping MANAGEMENT tasks, establishing authority and allocating resources required to carry MIDDLE out a specific plan. Once a specific MANAGEMENT plan has been established for the accomplishment of an organisational goal, the organising function examines OPERATIONAL Managerial MANAGEMENT Levels 2018-19

20 Business Studies the activities and resources required employees to do their best. Motivation to implement the plan. It determines and leadership are two key what activities and resources are components of direction. Directing required. It decides who will do a also involves communicating particular task, where it will be done, effectively as well as supervising and when it will be done. Organising employees at work. Motivating involves the grouping of the required workers means simply creating an tasks into manageable departments environment that makes them want or work units and the establishment of to work. Leadership is influencing authority and reporting relationships others to do what the leader wants within the organisational hierarchy. them to do. A good manager directs Proper organisational techniques through praise and criticism in help in the accomplishment of work such a way that it brings out the and promote both the efficiency of best in the employee. Suhasini’s operations and the effectiveness of design team developed some prints results. Different kinds of business for bedcovers in bright colours on require different structures according silk. Although they looked very to the nature of work. You will read impressive, the use of silk made more about this in a later chapter. the product too expensive for the Staffing simply stated, is finding the average customer. Praising their right people for the right job. A very effort, Suhasini suggested that they important aspect of management is keep the silk bedcovers for special to make sure that the right people occasions like Diwali and Christmas with the right qualifications are and offer the cotton bedcovers on a available at the right places and regular basis. times to accomplish the goals of the organisation. This is also known as Controlling is the management the human resource function and it involves activities such as recruitment, function of monitoring organisational selection, placement and training of personnel. Infosys Technologies which performance towards the attainment develops software needs systems analysts and programmers, whereas of organisational goals. The task Fabmart needs a team of designers and craftspeople. of controlling involves establishing Directing involves leading, influ­ standards of performance, measuring encing and motivating employees to perform the tasks assigned to current performance, comparing them. This requires establishing an atmosphere that encourages this with established standards and taking corrective action where any deviation is found. Here management must determine what activities and outputs are critical to success, how and where they can be measured and who should have the authority to take corrective action. When Suhasini 2018-19

Nature and Significance of Management 21 discovered that her team of designers It is however, the essence of had produced bedcovers that were management, for achieving harmony more expensive than they had among individual efforts towards planned to sell, she decided to change the accomplishment of group goals. the fabric to keep costs in check. Each managerial function is an exercise contributing individually to The various functions of a manager coordination. Coordination is implicit are usually discussed in the order and inherent in all functions of an given above, suggesting that a organisation. manager first plans, then organises, puts staff in position, then directs, The process of coordinating the and finally controls. In reality, activities of an organisation begins managers are rarely able to carry at the planning stage itself. Top out these functions in isolation. management plans for the entire The activities of a manager are organisation. According to these interrelated and it is often difficult plans the organisational structure to pinpoint where one ended and the is developed and staffed. In order to other began. ensure that these plans are executed according to plans directing is Coordination — The required. Any discrepancies between Essence of Management actual and realised activities are then taken care of at the stage of You have understood by now that controlling. It is through the process a manager has to perform five of coordination that a manager interrelated functions in the process of ensures the orderly arrangement of managing an organisation which is a individual and group efforts to ensure system made up of different interlinked unity of action in the realisation of and interdependent subsystems. A common objectives. Coordination manager has to link these diverse therefore involves synchronisation groups towards the achievement of a of the different actions or efforts of common goal. The process by which the various units of an organisation. a manager synchronises the activities This provides the requisite amount, of different departments is known as quality, timing and sequence of coordination. efforts which ensures that planned objectives are achieved with a Coordination is the force that minimum of conflict. binds all the other functions of management. It is the common Characteristics of thread that runs through all activities Coordination such as purchase, production, sales, and finance to ensure continuity The definitions given above in the working of the organisation. highlight the following features of Coordination is sometimes considered coordination: a separate function of management. 2018-19

22 Business Studies (i) Coordination integrates group (iii) Coordination is a continuous efforts: Coordination unifies process: Coordination is not unrelated or diverse interests into a one-time function but a purposeful work activity. It gives continuous process. It begins at a common focus to group effort the planning stage and continues to ensure that performance is as till controlling. Suhasini plans it was planned and scheduled. her winter collection in the month of June itself. She has to then (ii) Coordination ensures unity ensure that there is adequate of action: The purpose of workforce and continuously coordination is to secure unity monitor whether production is of action in the realisation of proceeding according to plans. a common purpose. It acts Her marketing department also as the binding force between has to be briefed in time to departments and ensures that prepare their promotional and all action is aimed at achieving advertising campaigns. the goals of the organisation. You have observed that at (iv) Coordination is an all pervasive Fabmart, the production and function: Coordination is required sales department have to at all levels of management due coordinate their work, so that to the interdependent nature of production takes place according activities of various departments. to the demand in the market. It integrates the efforts of different departments and different levels. In the absence of The purchase, production and coordination what sales departmental efforts have results is chaos to be coordinated by Suhasini for achieving organisational objectives harmoniously. The purchase department is responsible for procuring fabric. This then becomes the basis of the activities of the production department and finally sales can take place. If fabric purchased is of an inferior quality or is not according to the specifications of the production department, further sales will also decline. In the absence of coordination there is overlapping 2018-19

Nature and Significance of Management 23 and chaos instead of harmony coordination without cooperation and integration of activities. may lead to dissatisfaction (v) Coordination is the responsibi- among employees. lity of all managers: Coordi- Coordination, therefore, is not a nation is the function of every separate function of management, manager in the organisation. Top but its very essence. For an level managers need to coordinate organisation to effectively and with their subordinates to ensure efficiently achieve its objectives that the overall policies for the coordination is required. Like a organisation are duly carried thread in a garland, coordination is out. Middle level management a part of all management functions. coordinates with both the top level and first line managers. Importance of Coordination Operational level management coordinates the activities of its Coordination is important as it workers to ensure that work integrates the efforts of individuals, proceeds according to plans. departments and specialists. The (vi) Coordination is a deliberate primary reason for coordination is function: A manager has that departments and individuals in to coordinate the efforts of the organisation are interdependent, different people in a conscious i.e. they depend on each other and deliberate manner. Even for information and resources to where members of a department perform their respective activities. willingly cooperate and work, Thus, managers need to reconcile coordination gives a direction to differences in approach, timing, effort that willing spirit. Cooperation or interest. At the same time, there is in the absence of coordination a need to harmonise individual goals may lead to wasted effort and and organisational goals. Definitions of Coordination Coordination is balancing and keeping together the team by ensuring suitable allocation of tasks to the various members and seeing that the tasks are performed with harmony among the members themselves. E.F.L. Brech Coordination is the process whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of action in the pursuit of common purpose. McFarland Coordination is the orderly synchronising of efforts of subordinates to provide proper amount, timing and quality of execution so that their united efforts lead to the stated objectives, namely, the common purpose of the enterprise. Theo Haimann 2018-19

24 Business Studies (i) Growth in size: As organisations goals and organisational goals grow in size, the number of people through coordination. employed by the organisation also increases. At times, it may become (ii) Functional differentiation: difficult to integrate their efforts and Functions of an organisation are activities. All individuals differ in divided into departments, divisions and their habits of work, background, sections. In an organisation there may approaches to situations and be separate departments of finance, relationships with others. It becomes production, marketing or human necessary to ensure that all individuals resources. All these departments may work towards the common goals of have their own objectives, policies the organisation. But employees may and their own style of working. For have their own individual goals also. example, the marketing department’s Therefore, for organisational efficiency, objective may be to increase sales it is important to harmonise individual by 10 per cent by offering discounts. But, the finance department may ‘DABBAWALLAS’ – Excellence through Coordination The Dabbawallas of Mumbai is the story of a SIX SIGMA business enterprise. The success of the business lies in the complex yet well coordinated exercise that is carried out on the streets of Mumbai day after day. What is the secret behind the efficiency with which their business is conducted? The story of the dabbawallas begins in the kitchens of Mumbai. After they step out of their door, someone begins the time-consuming process of preparing the worker a fresh, home- cooked lunch. What happens next for demonstrates the coordination of the dabbawallas system. The first dabbawalla picks up the tiffin from home and takes it to the nearest railway station.The second dabbawalla sorts out the dabbas at the railway station according to destination and puts them in the luggage carriage. The third one travels with the dabbas to the railway stations nearest to the destinations. The fourth one picks up dabbas from the railway station and drops them off at the offices. By mid-morning, thousands of dabbawallas are bicycling through the streets of Mumbai, ensuring a hot home cooked lunch for their customers. The whole tiffin distribution requires negligible technology. The dabbawallas rely on low capital and use cycles, wooden carriages and local trains to achieve their target.There are several groups that work independently and network with each other to achieve their goal. Each area is divided into several small distribution sectors and each sector is handled by a particular person. This person understands the address in that locality very well. Also, this perfection comes with practice. Many new employees work for months under the guidance of their seniors. Punctuality and time management are on top of the agenda for dabbawallas. Whatever be the circumstances, the dabbawallas never get delayed even by a few minutes. 2018-19

Nature and Significance of Management 25 not approve of such discounts as it Specialisation arises out of the means loss of revenue. These kinds of complexities of modern technology conflict arise in organisations because and the diversity of tasks to be each unit/department is performing performed. Organisations, therefore, activities in isolation from others and need to employ a number of barriers between departments are specialists. Specialists usually becoming more rigid. think that they only are qualified to evaluate, judge and decide according However, all departments and to their professional criteria. They individuals are interdependent and do not take advice or suggestions they have to depend on each other for from others in matters pertaining information to perform their activities. to their area of specialisation. This The activity of each department often leads to conflict amongst needs to be focused on attainment different specialists as well as others of common organisational goals. The in the organisation. Therefore, process of linking the activities of some coordination is required by an various departments is accomplished independent person to reconcile the by coordination. differences in approach, interest or opinion of the specialists. (iii) Specialisation: Modern organisations are characterised by a high degree of specialisation. The Challenge of Being a Global Manager Rajat Lal is the director of a firm that develops software solutions for the travel industry on a global level. He represents a US software services firm that outsources project work to its delivery partners in Gurgaon, the software hub of North India. It develops software for companies in the technology, transportation and leisure sectors, across the world. Rajat is the interface between his global clients and his domestic technical team. That makes his job more challenging than that of a manager who functions in a totally domestic environment. This is what Rajat has to say about the challenges of his job: • In the capacity of the ‘country manager’ – the global manager has to deal with establishing his company’s legal and business presence in the form of a local office or business partner, contacting and negotiating with clients, with legal bodies including lawyers and immigration authorities since the services involve having technical staff from India to be based in USA/Europe, as also with local companies offering recruitment services. Another key role he plays is establishing a sense of comfort in potential clients by stressing on the positive effects of cross-cultural and multi-cultural opportunities that outsourcing and global delivery entail, while addressing any concerns out of these. • In the capacity of the ‘functional manager’ – the global manager has to ensure he is able to source the right technical skills, build a strong resource base of these skills, and be able to deliver on software projects with these skill-sets working in a globalised 2018-19

26 Business Studies work environment – in terms of multiple time-zones, understanding of client’s priorities based on the business cycles that the client’s business operates in, understanding and adapting to the processes and methodologies the client is familiar with. Finally this function also includes customer expectation management, where the functional manager has to coordinate activities in India and in USA/Europe according to the customer’s priorities, communicate what is possible and what is not possible, and accordingly also manage the expectations and satisfaction levels of his own employees. • In the capacity of the ‘business leader’ – the global manager has to be alive to changing business situations and customer priorities – he has to keep track of the trends in outsourcing – and have the ability to envision upcoming opportunities as well as potential risks. For example, having a firm grip on the changing legislations on outsourcing is critical for a business manager to understand if his current clients are going to continue giving him business. The global manager also needs to be extremely responsive in what customers may perceive as gaps between the operating environment in India vis-à-vis their own countries. He has to position the advantages that outsourcing to India offers – in terms of lowered costs and access to a wide talent-base, while expertly addressing concerns on weak areas like infrastructure in India. What do all these mean for a global manager today? To summarise, a global manager today is one who possesses what can be termed as ‘hard’ types of skills as well as ‘softer’ types of skills. Managers who understand analysis, strategy, engineering, and technology are still going to be needed, but extremely critical to global success are people who understand how teams work, how organisations work, how people are motivated. A manager who really understands different cultures should be able to work in a West European, non-English speaking country, then move to a developing country like Malaysia or Kenya, and then be transferred to an office based in New York, USA, and be almost immediately productive in all three places. It can thus be understood that the role of a global manager has evolved in much the same way that the global industry and economy have evolved. It has changed from being a single dimensional role in a defined business context, to being a multi-faceted role that calls for a diverse combination of technical skills, soft management and people skills, and the ability to imbibe and learn different cultural experiences. Source: Harvard Business School, Working Knowledge Management in the makes it possible to think of the Twenty-first Century world as a ‘global village’, the scope of international and intercultural Even as you read this chapter, the relationships is rapidly expanding. organisation and its management The modern organisation is a are changing. As boundaries between global organisation that has to be cultures and nations get blurred managed in a global perspective. and new communication technology What does this imply? 2018-19

Nature and Significance of Management 27 Key Terms Management Process Efficiency Effectiveness Art Science Profession Planning Organising Staffing Directing Controlling Coordination Summary Concept Management is the process of planning, organising, staffing, directing and controlling the enterprise resources efficiently and effectively for achieving the goals of the organisation. Effectiveness in management is concerned with doing the right task, completing activities and achieving goals. Efficiency means doing the task correctly and with minimum cost. Characteristics The key features of management are: (i) goal oriented process (ii) all pervasive (iii) multidimensional (iv) continuous process (v) group activity (vi) dynamic function (vii) tangible force. Objectives Management fulfills three basic objectives: organisational, social and personal. Importance Management is important because it helps in achieving group goals, increases efficiency, creates a dynamic organisation, helps achieve personal objectives and contributes to the development of society. Nature Management is a combination of an organised body of knowledge (science) and its skillful application (art). Although it does not satisfy all the requirements of a profession, it is to a large extent professional in character. Levels Management is considered a three-tier activity. The top management focuses on determination of objectives and policies, middle management attempts to achieve these objectives through the effort of other managers and supervisory or operational management directly oversees the efforts of the workforce. Functions All managers perform the following interrelated functions: Planning, Organising, Staffing, Directing and Controlling. Coordination Coordination is the essence of management. It is the process of achieving unity of action among interdependent activities and departments of an organisation. 2018-19

28 Business Studies Exercises Short Answer Type 1. Define management. 2. Name any two important characteristics of management. 3. Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions? 4. Why is management considered a multi-faceted concept? 5. Discuss the basic features of management as a profession. Long Answer Type 1. Management is considered to be both an art and science. Explain. 2. Do you think management has the characteristics of a full fledged profession? 3. Coordination is the essence of management. Do you agree? Give reasons. 4. “A successful enterprise has to achieve its goals effectively and efficiently.” Explain. 5. Management is a series of continuous interrelated functions. Comment. Multiple Choice 1. Which is not a function of management of the following (a) planning (b) staffing (c) cooperating (d) controlling 2. management is (a) an art (b) a science (c) both art and science (d) neither 3. the following is not an objective of management (a) earning profits (b) growth of the organisation (c) providing employment (d) policy making 4. policy formulation is the function of (a) top level managers 2018-19

Nature and Significance of Management 29 (b) middle level managers (c) operational management (d) all of the above 5. coordination is (a) function of management (b) the essence of management (c) an objective of management (d) none of the above Case Problems 1. Company X is facing a lot of problems these days. It manufactures white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are not of good quality meeting customers expectations. The finance department blames both production and marketing for declining return on investment and bad marketing. What quality of management do you think the company is lacking? Explain briefly. What steps should the company management take to bring the company back on track? 2. A company wants to modify its existing product in the market due to decreasing sales. You can imagine any product about which you are familiar. What decisions/steps should each level of management take to give effect to this decision? 3. A firm plans in advance and has a sound organisation structure with efficient supervisory staff and control system. On several occasion it finds that plans are not being adhered to. It leads to confusion and duplication of work. Advise remedy. These activities are meant to reinforce concepts and to make the learning joyful. They also aim to give pupils simulated experiences of the managerial activities relevant to their level of understanding. Activity 1 Make groups of 5 – 6 students each according to the size of class. Let them run a garment manufacturing company. Assign the following tasks to each group. 2018-19

30 Business Studies Activity 2 (i) Let group ‘A’ identify the activities that take place in the company. (ii) Let group ‘B’ classify these activities into managerial and non-managerial activities. (iii) Let group ‘C’ identify the planning activities. (iv) Let group ‘D’ identify the organising activities. (v) Let group ‘E’ identify the staffing activities. (vi) Let group ‘F’ identify the directing activities. (vii) Let group ‘G’ identify the controlling activities. (viii) Let group ‘H’ identify the coordinating activities. The teacher can then summarise these activities and derive appropriate conclusions. The above activity can be done for any sector such as software export house, or an auto company. The teacher should do some preparation in finding out the actual activities with the help of Internet and printed material relevant to the sector which is selected. The students can also be involved in the searching exercise by the teacher. This activity involves classifying the activities identified in activity 1 into those taking place at higher management level, middle management level and lower management level. Accordingly 3 groups A, B and C can be formed for the three levels. If the teacher so desires she/he can form more groups. Then the findings of the groups can be summarised by the teacher. Note: The teacher can organise a panel discussion for both these activities where the group leaders can give their findings and the students of the class can ask questions which can be answered by the panel members with the help of the teacher. It should be noted that no expertise is required for the students. This exercise is just to give the feel to the students of the real life work environment and relate it to what they have learnt. 2018-19

PRINCIPLES OF 2 MANAGEMENT CHAPTER Business Principles of Toyota Motor Corporation LEARNING OBJECTIVES Toyota follows certain well-defined business principles guiding its functioning. These are: After studying this 1. Honour the language and spirit of law of every nation and chapter, you should be able to: undertake open and fair corporate activities to be a good corporate citizen around the world. n State the 2. Respect the culture and customs of every nation and meaning, nature contribute to economic and social development through and significance corporate activities in local communities. of principles of 3. To provide clean and safe products and to enhance the management; quality of life everywhere. 4. Create and develop advanced technologies and provide n Explain Taylor’s outstanding products and services that fulfil the needs of principles and customers worldwide. techniques 5. Foster a corporate culture that enhances individual creativity of Scientific and teamwork value, while honouring mutual trust and Management; and respect between management and labour. 6. Pursue growth and harmony with global community through n Explain Fayol’s innovative management. principles of 7. Work with business partners in research and creativity to management. achieve stable, long-term growth and mutual benefits and be open to new partnerships. These principles, will guide the company in its global vision 2010. This global vision envisages continuous innovations in future, use of environment friendly technologies, respecting and working with different sections of society and establishing an interactive relationship with society. Based on www.toyota.co.jp/en/enviornmental_rep/03 /rinen.html on 17.10.2006 It is clear from the foregoing case that stating the vision as well as the ways managerial pursuits at Toyota Motor to achieve it. Similarly, many other Corporation are driven by principles business enterprises have followed that serve as broad guidelines for various principles in their working 2018-19

32 Business Studies over a period of time. A number of fascinating. In this chapter we will management thinkers, and writers study the contributions of Fredrick have also studied principles of Winslow Taylor and Henri Fayol who management from time-to-time. as you have read are associated with In fact, there is a long history of the classical management theory. management thought. Management Both of them contributed immensely principles have evolved and are in towards the study of management as the continuous process of evolution. a discipline. Whereas F.W. Taylor was (see box.) an American mechanical engineer, Henri Fayol was a French mining You can see that the evolution of engineer. Taylor gave the concept management thought has been very Evolution of Management Principles In tracing the history of management, one comes across various schools of thought that have outlined principles to guide management practices. These schools of thought may be divided into 6 distinctive phases: 1. Early Perspectives; 2. Classical Management Theory; 3. Neo Classical Theory — Human Relations Approach; 4. Behavioural Science Approach — Organisational Humanism; 5. Management Science/Operational Research; 6. Modern Management. EARLY PRESPECTIVES The first known management ideas were recorded in 3000-4000 B.C. One Pyramid built by Egyptian ruler Cheops required work to be done by 100,000 men for over twenty years in 2900 B.C. It covered 13 acres of land and measured 481 meters in height. The stone slabs had to be moved thousands of kilometres of distance. As folklore goes, even the sound of a hammer was not heard in the villages in the vicinity of the site of these pyramids. Such monumental work could not be completed without adherence to principles of sound management. CLASSICAL MANAGEMENT THEORY Rational economic view, scientific management, administrative principles, and bureaucratic organisation characterise this phase. While the rational economic view assumed that people are motivated by economic gains primarily; scientific management of F.W. Taylor and others emphasised one best way of production etc; administrative theorists personified by Henri Fayol etc looked at the best way to combine jobs and people into an efficient organisation; bureaucratic organisation theorists led by Max Weber looked at ways to eliminate managerial inconsistencies due to abuse of power which contributed to ineffectiveness. This was the era of the industrial revolution and factory system of production. Large scale production would not have been possible without adherence to the principles governing organising production based on division of labour and specialisation, relationship between man and the machine, managing people and so on. 2018-19

Principles of Management 33 NEO CLASSICAL THEORY — HUMAN RELATIONS APPROACH This school of thought developed between 1920s to 1950s felt that employees simply do not respond rationally to rules, chains of authority and economic incentives alone but are also guided by social needs, drives and attitudes. Hawthorne Studies at GEC etc., were conducted then. It was quite natural that in the early phases of the industrial revolution, the emphasis was on development of techniques and technology. The attention to the human factor was the salient aspect of this school of thought. This attention was to serve as a precursor to the development of behavioural sciences. BEHAVIOURAL SCIENCE APPROACH — ORGANISATIONAL HUMANISM Organisational behaviourists like Chris Argyris; Douglas McGregor, Abraham Maslow and Fredrick Herzberg used the knowledge of psychology, sociology and anthropology to develop this approach. The underlying philosophy of organisational humanism is that individuals need to use all of their capacities and creative skills at work as well as at home. MANAGEMENT SCIENCE/OPERATIONAL RESEARCH It emphasises research on operations and use of quantitative techniques to aid managers to take decisions. MODERN MANAGEMENT It sees modern organisations as complex systems and underlies contingency approach and use of modern techniques to solve organisational and human problems. Source: Adapted from Internet modern history source book on www.fordham.edu of ‘Scientific Management’ whereas seniority, whereas the other may Fayol emphasised ‘Administrative follow the principle of merit. Principles’. One may distinguish principles But before we go into the details of management from those of pure of their contributions let us study science. Management principles are the meaning of the principles of not as rigid as principles of pure management. science. They deal with human behaviour and, thus, are to be Principles of Management: applied creatively given the demands The Concept of the situation. Human behaviour is never static and so also technology, A managerial principle is a broad which affects business. Hence all and general guideline for decision- the principles have to keep pace making and behaviour. For example with these changes. For example, while deciding about promotion of an in the absence of Information and employee one manager may consider 2018-19

34 Business Studies Communications Technology (ICT), a cannot be neglected, as businesses manager could oversee only a small have to fulfil social and ethical work force that too within a narrow responsibilities towards society. geographical space. The advent of ICT has expanded the capability of Nature of Principles of the managers to preside over large Management business empires spread across the globe. Infosys headquarters in By nature is meant qualities and Bangalore boast of the Asia’s largest characteristics of anything. Principles flat screen in their conference room are general propositions, which are from where their managers can applicable when certain conditions interact with their employees and are present. These have been customers in all parts of the world. developed on the basis of observation and experimentation as well as In developing an understanding personal experiences of the managers. of the meaning of principles of Depending upon how they are management, it is also useful to derived and how effective they are in know what these are not. The explaining and predicting managerial principles of management should behaviour, they contribute towards be distinguished from techniques the development of management both of management. Techniques are as a science and as an art. Derivation procedures or methods, which of these principles may be said to be involve a series of steps to be taken to a matter of science and their creative accomplish desired goals. Principles application may be regarded as an are guidelines to take decisions or art. These principles lend credibility actions while practicing techniques. of a learnable and teachable discipline Likewise, principles should also be to the practice of management. As understood as being distinct from such, ascent to managerial position values. Values are something, which may not be a matter of birth, but a are acceptable or desirable. They matter of requisite qualifications. have moral connotations. Principles Clearly, management principles have are basic truths or guidelines for gained importance with increasing behaviour. Values are general rules professionalisation of management. for behaviour of individuals in society formed through common practice These principles are guidelines whereas principles of management to action. They denote a cause and are formed after research in work effect relationship. While functions situations, which are technical in of management viz., Planning, nature. However, while practicing Organising, Staffing, Directing and principles of management values Controlling are the actions to be 2018-19

Principles of Management 35 taken while practising management, but do not provide readymade, Principles help managers to take straitjacket solutions to all decisions while performing these managerial problems. This functions. The following points is so because real business summarise the nature of principles situations are very complex of management. and dynamic and are a result (i) Universal applicability: The of many factors. However, the importance of principles cannot principles of management are be underestimated because even intended to apply to all types of a small guideline helps to solve organisations, business as well as a given problem. For example, non-business, small as well large, in dealing with a situation public sector as well as private of conflict between two sector, manufacturing as well as departments, a manager may the services sectors. However, emphasise the primacy of the the extent of their applicability overall goals of the organisation. would vary with the nature of the (iii) Formed by practice and experi­ organisation, business activity, mentation: The principles scale of operations and the like. For of management are formed example, for greater productivity, by experience and collective work should be divided into small wisdom of managers as well as tasks and each employee should experimentation. For example, it be trained to perform his/her is a matter of common experience specialised job. This principle is that discipline is indispensable applicable to a government office for accomplishing any purpose. where there is a diary/despatch This principle finds mention clerk whose job is to receive and in management theory. On the send mail or documents, a data other hand, in order to remedy entry operator whose task is to the problem of fatigue of workers input data on the computer, a peon in the factory, an experiment and an officer etc. This principle may be conducted to see the is also applicable to a limited effect of improvement of physical company where there are separate conditions to reduce stress. departments like Production, (iv) Flexibile: The principles of Finance, Marketing and Research management are not rigid and Development etc. Extent of prescriptions, which have to be division of work, however, may followed absolutely. They are vary from case to case. flexible and can be modified by (ii) General guidelines: The prin­ the manager when the situation ciples are guidelines to action 2018-19

36 Business Studies so demands. They give the number of cases. As such, they manager enough discretion to do so. For example, the degree tell us if a particular principle of concentration of authority (centralisation) or its dispersal was applied in a particular (decentralisation) will depend upon the situations and situation, what would be its circumstances of each enterprise. Moreover individual principles likely effect. The principles are like different tools serving different purposes, the manager of management are less than has to decide which tool to use under what circumstances. perfect since they mainly apply (v) Mainly behavioural: Manage­ ment principles aim at to human behaviour. In real influencing behaviour of human beings. Therefore, principles life, situations are not identical. of management are mainly behavioural in nature. It is So, accurate cause and effect not that these principles do not pertain to things and relationships may be difficult phenomenon at all, it is just a matter of emphasis. Moreover, to establish. However,principles principles enable a better understanding of the relationship of management assist between human and material resources in accomplishing managers in establishing organisational purposes. For example, while planning the these relationships to some layout of a factory, orderliness would require that workflows are extent and are therefore useful. matched by flow of materials and movement of men. In situations of emergencies, (vi) Cause and effect relationships: The principles of management it is desirable that someone are intended to establish relationship between cause and takes charge and others effect so that they can be used in similar situations in a large just follow. But in situations requiring cross-functional expertise, such as setting up of a new factory, more participative approach to decision-making would be advisable. (vii) Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time. The application of principles has to be changed as per requirements. For example, employees deserve fair and just remuneration. But what is just and fair is determined by multiple factors. They include contribution of the employee, paying capacity of the employer and also prevailing 2018-19

Principles of Management 37 wage rate for the occupation in the accompanying box. You should under consideration. be able to see how she was able to Having described the inherent transform a little known sector of qualities and characteristics of biotechnology into a very profitable management principles, it should company and earn titles which any be easy for you to appreciate the one would dream of. significance of these principles in managerial decision-making. But From the foregoing story it is before that you can read the following clear that success of Biocon due to case study of ‘Kiran Mazumdar the efforts of Dr. Kiran Mazumdar Shaw’ a highly successful Indian Shaw was not a mere chance. It businesswoman and CEO of ‘Biocon’ was a sincere effort, which involved application of qualities, which are The story of Dr. Kiran Mazumdar Shaw is very inspiring. She foresaw the tremendous potential of biotechnology when no one dared to think about it. She started her own company Biocon India in her garage with a meagre capital of Rs 10,000 in collaboration with Biocon Biochemicals limited of Ireland. When she wanted to take loans no financial institution was willing to help her because of three reasons: biotechnology was a new area of operation; her company lacked assets and thirdly women entrepreneurs were a rarity at that time in 1978. She even faced problems recruiting people. The initial operation of the company consisted of extracting an enzyme from papaya. Now Biocon limited is an integrated biotechnology enterprise focused on the development of biopharmaceuticals, custom research, clinical research and enzymes. It delivers products and solutions to partners and customers in over 50 countries. According to the company’s website, “At Biocon our success has been our ability to develop innovative technologies and products and to leverage them to adjacent domains. This unique ‘integrated innovation’ approach has yielded a host of patented products and technologies that have enabled multilevel relationships with our global clientele”. It has two subsidiary companies. The first one is Syngene International Private limited, which provides chemistry and molecular based custom research services in early stage drug discovery and development. The second subsidiary company is Clinigene International Private Limited, which conducts longitudinal research in diabetes and offers a wide range of comprehensive services in drug development and clinical trials. Biocon was the first biotechnology company of India to receive ISO 9001 certification. Biocon Limited is what it is today due to adherence to the principles underlying good management practices. Adapted from www.biocon.com and other sources 2018-19

38 Business Studies a part of management principles such management principles directly or indirectly. Now you can see the significance of these principles. increase managerial efficiency. Significance of Principles For example, a manager can of Management leave routine decision-making The principles of management derive their significance from their utility. They to his subordinates and deal provide useful insights to managerial behaviour and influence managerial with exceptional situations practices. Managers may apply these principles to fulfil their tasks and which require her/his expertise responsibilities. Principles guide managers in taking and implementing by following the principles of decisions. It may be appreciated that everything worthwhile is governed by delegation. an underlying principle. The quest of the management theorists has (ii) Optimum utilisation of resources been and should be to unearth the and effective administration: underlying principles with a view to using these under repetitive circums­ Resources both human and tances as a matter of management habit. The significance of principles material available with the of management can be discussed in terms of the following points: company are limited. They have (i) Providing managers with useful to be put to optimum use. By insights into reality:The principles of management provide the optimum use we mean that the managers with useful insights into real world situations. resources should be put to use Adherence to these principles will add to their knowledge, ability in such a manner that they and understanding of managerial situations and circumstances. should give maximum benefit It will also enable managers to learn from past mistakes with minimum cost. Principles and conserve time by solving recurring problems quickly. As equip the managers to foresee the cause and effect relationships of their decisions and actions. As such the wastages associated with a trial-and-error approach can be overcome. Effective administration necessitates impersonalisation of managerial conduct so that managerial power is used with due discretion. Principles of management limit the boundary of managerial discretion so that their decisions may be free from personal prejudices and biases. For example, in deciding the annual budgetsfordifferentdepartments, rather than personal preferences, 2018-19

Principles of Management 39 managerial discretion is bounded Limited in divesting non-core by the principle of contribution businesses of chemicals and to organisational objectives. seeds. Some companies are (iii) Scientific decisions: Decisions outsourcing their non-core must be based on facts, thoughtful activities like share-transfer and justifiable in terms of the management and advertising to intended purposes. They must outside agencies. So much so, that be timely, realistic and subject even core processes such as R&D, to measurement and evaluation. manufacturing and marketing Management principles help in are being outsourced today. thoughtful decision-making. Haven’t you heard of proliferation They emphasise logic rather of ‘Business Process Outsourcing’ than blind faith. Management (BPO) and ‘Knowledge Process decisions taken on the basis of Outsourcing’ (KPO)? principles are free from bias and (v) Fulfilling social responsibility: prejudice. They are based on The increased awareness of the objective assessment of the the public, forces businesses situation. especially limited companies to (iv) Meeting changing enviornment fulfill their social responsibilities. requirements: Although the Management theory and principles are in the nature management principles have of general guidelines but they also evolved in response to are modified and as such help these demands. Moreover, the managers to meet changing interpretation of the principles requirements of the environment. also assumes newer and You have already studied that contemporary meanings with management principles are the change in time. So, if one flexible to adapt to dynamic were to talk of ‘equity’ today, it business environment. For does not apply to wages alone. example, management principles Value to the customer, care for emphasise division of work and the environment, dealings with specialisation. In modern times business associates would all this principle has been extended come under the purview of this to the entire business whereby principle. As an application companies are specialising in of this principle, we find that their core competency and Public Sector Undertakings divesting non-core businesses. have developed entire townships In this context, one may cite as, for example, BHEL has the decision of Hindustan Lever developed Ranipur in Hardwar 2018-19

40 Business Studies (Uttaranchal). One may also cite These principles enable the story of Shri Mahila Griha refinement of management Udyog Lijjat Papad as can be practices as well by facilitating the seen in the accompanying box development of new management on page 41. techniques. Thus, we see that (vi) Management training, education techniques like Operations and research: Principles of Research (OR), cost accounting, management are at the core of ‘Just in Time’, ‘Kanban’ and ‘Kaizen’ management theory. As such have developed due to further these are used as a basis for research on these principles. management training, education and research. You must be aware In conclusion it can be said that that entrance to management understanding the meaning, nature institutes is preceded by and significance of principles management aptitude tests. Do of management will help us to you think that these tests could appreciate their applicability in real have been developed without an life situations. understanding of management principles and how they may be As stated at the beginning of the applied in different situations? chapter, management principles have These principles provide basic undergone a long history of evolution. groundwork for the development And, they continue to evolve. What of management as a discipline. follows is a description of the Professional courses such management principles pertaining to as MBA (Master of Business the classical school; more precisely, Administration), BBA (Bachelor those propounded by F.W. Taylor and of Business Administration) also Henri Fayol. teach these principles as part of their curriculum at the Taylor’s Scientific beginner’s level. Management Scientific management refers to an important stream of one of the earlier Test Your Understanding 1. Do you think innovativeness evident from the examples of Toyota and Kiran Mazumdar Shaw can be linked to the nature of management principles? 2. To what aspects of the significance of management principles would you attribute the endeavours of BHEL and Shri Mahila Griha Udyog Lijjat Papad? 2018-19

Principles of Management 41 Shri Mahila Griha Udyog Lijjat Papad – Combining Business with Social Responsibility (An Organisation Of the Women, By the Women and For the Women) The story of Shri Mahila Griha Udyog lijjat Papad is very inspiring for would be managers. It shows how an organisation can combine business with social responsibility and make its stakeholders self-reliant. The stakeholders are various women who, numbering over 40,000, are given the task of making lijjat papads, which are famous for their quality throughout the world. The organisation which started with a modest loan of Rs 80 now has a turnover of over Rs 301 crores. Its exports exceed Rs 10 crores. The profits are distributed to the stakeholders in proportion to their contribution. It has struck to its core values for over 40 years. It has shown how it is possible to combine Gandhian values with business. The company has at least 61 branches. Any woman subscribing to these core values can become a member of the organisation. According to the website of the organisation www.lijjat.com, Shri Mahila Griha Udyog Lijjat Papad is synthesis of three different concepts (core values) namely: 1. The concept of business 2. The concept of family 3. The concept of devotion All these concepts are completely and uniformly followed in this institution. As a result of this synthesis, a peculiar Lijjat way of thinking has developed therein. The institution has adopted the concept of business from the very beginning. All its dealings are carried out on a sound and pragmatic footing-production of quality goods and at reasonable prices. It has never and nor will it in the future accept any charity, donation, gift or grant from any quarter. On the contrary, the member-sisters donate collectively for good causes from time-to-time according to their capacity. Besides the concept of business, the institution along with all its member- sisters has adopted the concept of mutual family affection, concern and trust. All the affairs of the institution are dealt with in a manner similar to that of a family carrying out its own daily household chores. But the most important concept adopted by the institution is the concept of devotion. For the member-sisters, employees and well-wishers, the institution is never merely a place to earn one’s livelihood — it is a place of worship to devote one’s energy not for his or her own benefits but for the benefit of all. In this institution work is worship. The institution is open to everybody who has faith in its basic concepts. Source: Adapted from http/www.lijjat.com/organisation/core value 2018-19

42 Business Studies schools of thought of management who sought to improve industrial referred to as the ‘Classical’ school. efficiency. In 1874, he became an The other two streams belonging apprentice mechanist, learning to the classical school are Fayol’s factory conditions at the grass Administrative Theory and Max roots level. He earned a degree in Weber’s Bureaucracy. We will not mechanical engineering. He was be describing bureaucracy here. one of the intellectual leaders of A discussion of Fayol’s principles, the efficiency movement and was however, will follow the discussion of highly influential in reshaping the scientific management. factory system of production. You must appreciate that he belonged to Fredrick Winslow Taylor (March the era of the industrial revolution 20,1856 – March 21, 1915) was an American mechanical engineer characterised by mass production. Fredrick Winslow Taylor – Founder of Scientific Management Movement LIFE TIME: March 20,1856 to March 21, 1915 PROFESSION: American mechanical engineer EDUCATION: Degree in Mechanical Engineering from Stevens Institute of Technology in 1883. POSITIONS HELD— 1. Apprentice Machinist in 1874. 2. Executive at Midville Steel Company in 1884. 3. At Bethlehem Iron Company in 1898, which later became Bethlehem Steel Company. 4. Professor at ‘Tuck School of Business’ founded in 1900. 5. President of ‘American Society of Mechanical Engineers’ from 1906 to 1907. WRITINGS:1. ‘The Principles of Scientific Management’ series of articles published in ‘The American Magazine’ During march-may 1911, later published in book form. 1. ‘Concrete, Plain and Reinforced’ in 1906. 2. ‘Notes on Belting’ in 1893 3. ‘On the Art of Cutting Metals’ December 1906. 4. ‘A Piece Rate System’ in June 1895. 5. ‘The making of a putting green’ a series of articles published in 1915. 6. ‘Not for the genius but for the average man’ published in ‘The American Magazine’ in March 1918. Adapted from www.wikipedia.org and www.stevens.edu/library 2018-19