Chapter 1

ESSENTIALS OF
MANAGEMENT

Management: Principles, Processes & Practices

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Learning Objectives

To understand the role of organizations in

modern societies
To appreciate the importance of
management for organizations
To understand difference between
efficiency and effectiveness
To comprehend generic functions of
management
To learn about different managerial roles
To appreciate different types of managerial
skills and their importance at different
levels of organization

Management: Principles, Processes & Practices

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In Modern
times it is appropriate in
thatModern
Role
of Organizations
TermMarket Economy be replaced by term
Societies
Organizational Economy- Herbert Simon

Positive association between prosperity of an

Economy and Role of Companies- Sumantra
Ghoshal
Companies engender Value-Creation through
Resource Combination and Exchange that
markets alone can not do
Companies have Distinct capability to Share,
Transfer, Synthesize and Create Knowledge over
Markets

Management: Principles, Processes & Practices

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Efficiency and Effectiveness

Efficiency refers to Doing Things Right

Effectiveness refers to Doing the Right
Thing- Peter Drucker
Efficiency is concerned with getting most
output out of scarce resources (Capital,
Human Resource, Raw Material etc.)
Effectiveness is achieved by setting right
organizational goals. No amount of
efficiency can make up for lack of
effectiveness.

Management: Principles, Processes & Practices

Oxford University Press 2008

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MANAGEMENT" Variously
Understood

Specific Organ Of an Organization that

has the responsibility to deliver results
consistently
Process that drives an Organization
towards its Performance
People who have authority to Plan,
Organize, Lead and Control different
Organizational activities
Applied Discipline
Profession or a career

Management: Principles, Processes & Practices

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Generic Functions of Management

Managerial Jobs are characterized by

Variety, Fragmentation, Brevity and
Oral communication with several
people.
First written about by Henri Fayol and
later elaborated by Lyndall Urwick,
Classical Management functions are:

PLANNING
ORGANIZING
LEADING
CONTROLLING

Management: Principles, Processes & Practices

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Management Functions

Henri Mintzberg called these functions as

folklore. He forwarded Role theory of
Managerial work.
Harold Koontz defends Fayols approach
As managerial work is largely cerebral and
not directly observable.
Further it allows us to look at universal
aspects of management across different
contexts.
Managerial functions approach also helps in
classification of management knowledge

Management: Principles, Processes & Practices

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PLANNING

Setting Objectives
Formulating Strategies
Policies
Procedures
Methods

Management: Principles, Processes & Practices

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Management: Principles, Processes & Practices

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ORGANIZING

An Intentional Structure of Roles

Organizational Structure
Responsibility & Authority for
achieving objectives
Departmentation
Span of Control
Line & Staff Relationships

Management: Principles, Processes & Practices

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LEADING

Leadership Skills
Motivation
Team Work
Communication
Negotiation
Conflict Resolution

Management: Principles, Processes & Practices

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CONTROLLING

Anticipate, Monitor & Respond to changing

Environment.

Measurement of Actual Performance

Comparison against the Standard
Managerial Action to correct Deviation

Traditional Financial Controls are based on

LIQUIDITY
ACTIVITY
PROFITABILITY
LEVERAGE
BALANCE SCORECARD

Management: Principles, Processes & Practices

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Managerial Roles

INTERPERSONAL

Figurehead

Leader

Liaison
INFORMATIONAL

Monitor

Disseminator

Spokesperson
DECISION

Entrepreneur

Disturbance Handler

Resource Allocator

Negotiator

Management: Principles, Processes & Practices

Oxford University Press 2008

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Management Skills

TECHNICAL SKILLS
CONCEPTUAL SKILLS
HUMAN SKILLS
Managers at Top Level need
Conceptual Skills the most and FirstLine Managers Technical Skills the
most

Management: Principles, Processes & Practices

Oxford University Press 2008

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