Management – Concept, Process, Theories and Approaches, Roles and Skills
1. Meaning and Nature of Management
Definition:
Management is the process of planning, organizing, leading, and controlling organizational activities to achieve predetermined goals effectively and efficiently.
Nature / Characteristics:
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Goal-Oriented – focuses on achieving organizational objectives.
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Continuous Process – management is ongoing at all levels.
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Universal – applicable in all types of organizations.
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Integrative Force – unites efforts of individuals.
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Dynamic Function – adapts to changes in environment.
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Multidisciplinary – draws knowledge from economics, psychology, sociology, etc.
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Group Activity – always done through people.
Levels of Management:
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Top Level – Policy making (Board, CEO, MD).
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Middle Level – Interprets policies and coordinates (Department Heads).
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Lower Level – Supervisory, day-to-day control (Supervisors, Foremen).
2. Process of Management
The management process involves a series of interrelated functions:
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Planning: Setting objectives and deciding the future course of action.
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Organizing: Arranging resources and activities to implement plans.
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Staffing: Recruiting, training, and developing human resources.
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Directing: Guiding, motivating, and leading subordinates.
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Coordinating: Integrating efforts of different departments.
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Controlling: Measuring performance and taking corrective actions.
3. Theories and Approaches of Management
A. Classical Approach
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Scientific Management (F.W. Taylor):
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Emphasizes efficiency through scientific methods.
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Principles:
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Science, not rule of thumb
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Harmony, not discord
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Cooperation, not individualism
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Development of each worker to greatest efficiency
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Tools: Time and motion study, standardization, differential wage system.
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Administrative Management (Henri Fayol):
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Focused on management functions.
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14 Principles: Division of work, Authority, Discipline, Unity of Command, Unity of Direction, Subordination of individual interest, Remuneration, Centralization, Scalar Chain, Order, Equity, Stability of Tenure, Initiative, Esprit de Corps.
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Bureaucratic Approach (Max Weber):
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Focused on structured hierarchy, formal rules, and merit-based promotion.
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B. Neo-Classical Approach
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Human Relations Approach (Elton Mayo – Hawthorne Studies):
Emphasized the role of social factors, teamwork, and motivation in productivity.
Recognized informal groups and worker satisfaction.
C. Modern Approaches
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Systems Approach: Organization as an open system interacting with its environment.
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Contingency Approach: “It depends” – management style depends on situation.
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Quantitative Approach: Use of mathematical models and statistics for decision-making.
4. Management Roles and Skills
A. Mintzberg’s Managerial Roles
| Role Type | Roles | Examples |
|---|---|---|
| Interpersonal | Figurehead, Leader, Liaison | Representing firm, motivating employees |
| Informational | Monitor, Disseminator, Spokesperson |
Collecting and sharing information |
| Decisional |
Entrepreneur, Disturbance handler, Resource allocator, Negotiator |
Problem-solving and decision-making |
B. Managerial Skills (Katz)
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Technical Skills – Knowledge of specific tools and techniques.
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Human Skills – Ability to work effectively with people.
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Conceptual Skills – Ability to view the organization as a whole.
5. Management Functions (Detailed)
| Function | Description | Key Activities |
|---|---|---|
| Planning | Deciding objectives and actions in advance. | Forecasting, setting goals, policy formulation |
| Organizing | Arranging resources and defining structure. |
Departmentation, delegation, authority |
| Staffing | Managing human resources. |
Recruitment, training, performance appraisal |
| Coordinating | Harmonizing activities of all departments. |
Integration, communication, synchronization |
| Controlling | Measuring and correcting performance. |
Setting standards, comparing results, corrective action |
6. Communication
Definition: Process of transmitting information, ideas, and understanding from one person to another.
Types of Communication:
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Formal and Informal
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Upward, Downward, Horizontal, Diagonal
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Verbal, Non-verbal, and Written
Communication Process:
Sender → Message → Channel → Receiver → Feedback → Noise
Barriers:
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Physical (noise, distance)
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Semantic (language issues)
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Psychological (attitudes, emotions)
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Organizational (hierarchy, authority gaps)
7. Decision Making – Concept, Process, Techniques and Tools
Concept:
Decision making is the selection of the best alternative from available options.
Process:
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Identify problem
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Analyze situation
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Generate alternatives
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Evaluate alternatives
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Choose the best option
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Implement the decision
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Review and feedback
A. Techniques of Decision Making
1. Qualitative Techniques
| Technique | Description | Use |
|---|---|---|
| Brainstorming | Group idea generation without criticism | Creative problem-solving |
| Nominal Group Technique |
Structured brainstorming with ranking |
Policy formulation |
| Delphi Technique |
Expert consensus through repeated anonymous feedback |
Forecasting |
| Heuristics | Rules of thumb based on experience |
Quick operational decisions |
| Intuition | Gut feeling based on experience |
Strategic or emergency decisions |
| Participative Decision-Making | Involvement of employees |
Motivation and acceptance |
2. Quantitative Techniques
| Technique | Meaning | Application |
|---|---|---|
| Marginal Analysis | Compare marginal cost and marginal benefit | Pricing, production level |
| Cost–Benefit Analysis | Compare all costs and benefits |
Investment decisions |
| Break-even Analysis | Find no-profit no-loss point |
Sales and cost planning |
| Decision Tree | Diagram showing alternatives, probabilities, and payoffs |
Risky investments |
| Linear Programming | Mathematical optimization under constraints |
Resource allocation |
| Game Theory | Competitive decision-making |
Oligopoly pricing |
| Simulation | What-if scenario testing |
Risk and finance modeling |
| PERT/CPM |
Time and cost analysis for projects |
Project management |
| Probability Analysis | Expected value under risk |
Insurance, investments |
| Sensitivity Analysis |
Effect of variable changes on outcomes |
Budgeting, project planning |
B. Tools of Decision Making
| Tool | Purpose | Example |
|---|---|---|
| SWOT Analysis | Identify internal strengths, weaknesses, and external opportunities/threats | Strategic decisions |
| Delphi Method | Forecasting expert opinions |
Technological forecasting |
| Simulation Models |
Predict outcomes of different scenarios |
Financial projections |
| Operations Research Models | Optimize resource use |
Transportation, assignment |
| Brainstorming Sheets |
Record and evaluate creative ideas |
Product design |
| Decision Matrix |
Compare alternatives on weighted criteria |
Vendor selection |
Conditions of Decision Making
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Certainty: Outcomes are known.
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Risk: Probabilities of outcomes known.
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Uncertainty: No information about probabilities.
Common Decision-Making Errors:
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Overconfidence Bias
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Anchoring Bias
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Confirmation Bias
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Escalation of Commitment
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Availability Bias
8. Organisation Structure and Design
Meaning:
The framework that defines roles, responsibilities, authority relationships, and communication channels.
Types of Structures:
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Line Structure: Simple, authority flows top to bottom.
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Functional Structure: Based on specialization (e.g., HR, Finance).
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Line and Staff Structure: Combines authority and expert advice.
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Matrix Structure: Dual authority (project + function).
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Project and Network Structures: Temporary, flexible structures for innovation.
Key Concepts:
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Authority: Legal right to command.
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Responsibility: Obligation to perform assigned duties.
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Delegation: Assigning authority to subordinates.
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Centralization: Decision-making at top level.
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Decentralization: Decision-making distributed.
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Span of Control: Number of subordinates under one manager.
9. Managerial Economics
Meaning:
Application of economic principles to solve managerial problems and improve decision-making.
Importance:
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Demand forecasting
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Pricing decisions
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Production and cost analysis
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Profit management
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Capital budgeting
10. Demand Analysis
| Concept | Description |
|---|---|
| Law of Demand | Inverse relation between price and quantity demanded. |
| Utility Analysis |
Cardinal (measurable) and ordinal (preference-based) satisfaction. |
| Indifference Curve |
Different combinations of goods giving same satisfaction. |
| Elasticity of Demand |
Responsiveness of demand to change in price, income, etc. |
| Demand Forecasting | Estimation of future demand using statistical tools. |
11. Market Structures
| Type | Firms | Product | Price Control | Example |
|---|---|---|---|---|
| Perfect Competition | Many |
Homogeneous |
None | Agriculture |
| Monopoly | One |
Unique |
Complete | Railways |
| Monopolistic | Many |
Differentiated |
Limited | FMCG |
| Oligopoly | Few |
Similar/Differentiated |
Interdependent | Telecom, Airlines |
12. National Income
Concepts:
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GDP: Value of goods/services within a country.
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GNP: GDP + income from abroad – income to foreigners.
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NNP, NDP, PCI: Derived measures.
Measurement Methods:
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Product Method
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Income Method
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Expenditure Method
Difficulties: Non-monetary output, double counting, informal sector.
13. Inflation
Meaning: Continuous rise in the general price level.
Types:
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Demand-pull
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Cost-push
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Creeping, Walking, Galloping, Hyper
Measurement:
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CPI (Consumer Price Index)
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WPI (Wholesale Price Index)
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GDP Deflator
Effects:
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Reduces purchasing power
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Hurts fixed income groups
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Encourages speculation
14. Business Ethics and CSR
Business Ethics:
Set of moral principles guiding business behavior.
Importance: Builds trust, reputation, and long-term success.
Corporate Social Responsibility (CSR):
Company’s responsibility toward society beyond profit-making.
Carroll’s Model:
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Economic
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Legal
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Ethical
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Philanthropic responsibilities
Ethical Dilemmas: Conflict between profit and moral principles.
15. Corporate Governance
Meaning: System of rules, practices, and processes by which a firm is directed and controlled.
Principles:
Transparency – Accountability – Fairness – Responsibility
Mechanisms:
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Board of Directors
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Audit Committees
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Independent Directors
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SEBI Guidelines
16. Value-Based Organisation
Definition:
An organization guided by shared ethical values such as trust, honesty, and transparency.
Benefits:
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Strong culture
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Employee commitment
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Customer loyalty
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Long-term sustainability